London Leaseholds

Ashley Gardens in Belgravia have been the focus of much media attention following the use, by one of the residents, of her £3 million apartment as a Bohemian bed and breakfast advertised on Airbnb.

It is alleged that raucous parties set chandeliers swinging in the flat below and caused disturbances to residents for a number of years with guests coming and going in the early hours.

It was held by the Judge that the owner had “demonstrated over many years that she either does not understand the rules or feels that they do not apply to her” and determined yesterday that an order for sale has been made, which if not challenged by the Owner, could result in forfeiture of the lease.

With leasehold transactions now dominating the London property market we set out below the small print on which you should have been advised and can have a huge impact on your property:

  1. Sub-letting

Leases usually prohibit the letting or sub-letting of part only of a property, and it is becoming increasing common for this prohibition to be re-enforced by an express condition that the property will be used as a private residence in the occupation of one family or household only. This restriction is intended to prevent the tenant from sharing occupation of the property or letting out rooms independently.

The letting or sub-letting of the whole of a property, provided this is done under an Assured Shorthold Tenancy, is generally acceptable, subject to the owner’s lender’s consent if the property was purchased with a residential mortgage and, in some instances, with the landlord’s consent.

  1. Pets

It is common for leases to contain a prohibition on pets or require landlord consent for pets.

Such landlord consent would typically be qualified so that the consent may be revoked if there are complaints from other leaseholders concerning noise and disturbances or if a new policy prohibiting pets is introduced.

Last month it was reported that a couples’ pet dog had been evicted from their Dockland penthouse following such a policy change.

  1. Alterations

To retain the structural integrity of a building, leases generally prohibit structural alterations.

If, however, such alterations are permitted, or the planned works are non-structural, it is common for a lease to impose a requirement that the landlord’s’ written consent is obtained prior to any such works being undertaken. This consent ensures that the landlord is provided with full information in respect of any proposed works and the potential disturbance to neighbouring properties, services and the building generally. The landlord’s reasonable legal and professional fees in respect of providing consent will be payable by the tenant, in addition to the tenant’s own legal and professional fees.

  1. Flooring

Especially in conversions there are provisions that floors at a property should be carpeted to prevent noise transmission between floors.

  1. Licences to Assign

A lease may require the formal consent of the landlord prior to any transfer or assignment of the property. This is called a “licence to assign”. The licence is intended to ensure that the incoming tenant has capacity to pay the service charges at the property and bank references may be required to evidence the tenant’s ability to meet these outgoings.

The landlord’s reasonable legal fees for giving its consent will be payable by the tenant and are typically in the region of £1,000.00 plus VAT.

In larger developments, landlords are increasingly insisting that an inspection of the property be undertaken prior to granting a licence to assign to ensure that no unauthorised works have been undertaken and that no breaches of the lease by the previous owner have occurred.

Should a lease contain some or all of the above provisions then failure to comply with them will constitute a breach of that lease which is actionable by the landlord. In extreme circumstances, and following court action, this could lead to forfeiture of the lease.

It is, therefore, essential, when purchasing a leasehold property that a tenant fully understands the covenants and conditions which affect the property. Often, because of the technical language employed, this will require a solicitor to clarify and flag up any issues which may be unclear or be of potential concern.

If you would like more information please contact Laura Owens on 0207 408 8870 or by email at laura.owens@dwfmbeckman.com.