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Jun 19, 2024 What is a Guarantor?

A guarantor is someone who agrees to pay a tenant’s rent if the tenant is unable to do so. This individual, often a family member or close friend of the tenant, provides assurance to the landlord that they will not incur financial losses if the tenant experiences a change in circumstances. Typically, a guarantor covers the full rent amount specified in the tenancy agreement, not just a portion of it if there are multiple tenants. When Might You Need a Guarantor? A guarantor becomes essential if there is a possibility that a tenant or co-tenants might struggle to meet their rental obligations during the tenancy. Common scenarios where a guarantor is beneficial include: Starting a new job with an uncertain income. Having an irregular income or being on a low income. Being a student. Experiencing any sudden change in financial circumstances. Landlords may request a guarantor if they have concerns about a tenant’s ability to consistently pay rent. This might be due to a poor credit history or if the tenant has recently moved to the UK from abroad. While not mandatory, having a guarantor can provide landlords with additional security. Who Can Be a Guarantor? Suitable guarantors are typically close friends, parents, relatives, or family members of the tenant. However, landlords usually look for guarantors who meet specific criteria, such as: Having a good credit history. Residing in the UK. Owning property. Having a regular income or significant savings. Individuals who are retired or living abroad are generally less likely to be accepted as guarantors. Landlords will conduct a credit check on potential guarantors to ensure their financial reliability. What Does a Guarantee Cover? A guarantor agreement specifies the liabilities that the guarantor will cover, which mainly include rent arrears and property damage costs. The agreement will detail: The individuals covered (usually all named tenants in the tenancy agreement). The duration of the guarantor's liability (often the length of the tenancy, but this can vary). There is no fixed rule regarding the duration of a guarantor agreement; it depends on the terms agreed upon by all parties involved. Rights and Responsibilities of Guarantors A guarantor is responsible for covering any unpaid rent or property damage costs incurred by the tenant during the period specified in the guarantor agreement. It is crucial that guarantors receive copies of both the guarantor agreement and the tenancy agreement before signing. Guarantors should not be coerced or misled into signing the agreement. If the terms of the tenancy change, such as a rent increase, the guarantor agreement is typically invalidated unless the guarantor agrees to the new terms. Claims against Guarantors Landlords can make a claim against a guarantor if the tenant fails to pay rent or causes property damage that is not compensated. If the guarantor does not fulfil their obligations, the landlord can seek a county court judgment (CCJ) against both the tenant and the guarantor. Seeking Assistance from Howards For further assistance with tenancy matters, including finding a rental property or understanding the role of guarantors, contact your local Howards branch. Start your property search today with Howards and benefit from expert advice and support. This guide aims to provide clear and precise information on the role of guarantors in the UK rental market, ensuring landlords and tenants are well-informed about their rights and responsibilities. Summary What is a Guarantor? An individual who agrees to pay rent if the tenant fails to do so. When Might You Need a Guarantor? When there is uncertainty about the tenant’s ability to pay rent. Who Can Be a Guarantor? Close friends, family, or relatives who meet specific financial criteria. What Does a Guarantee Cover? Rent arrears and property damage costs. Rights and Responsibilities of Guarantors: Cover unpaid rent or damages, must receive and agree to the terms. Claims Against Guarantors: Landlords can claim unpaid rent or damages; a CCJ can be sought if the guarantor defaults. For more detailed advice, contact Howards for expert guidance and support in managing your rental properties and understanding guarantor agreements.

Jun 19, 2024 A Tenant's Guide to Ending a Tenancy Agreement

Tenancies can end for various reasons, and as a tenant, it's essential to know how to navigate this process smoothly. This guide provides clear information on how to end your tenancy agreement, the notice period required, and how to plan your move. Understanding Your Tenancy Type Before you proceed with ending your tenancy, it's important to know what type of tenancy you have. There are two main types: fixed-term and periodic. Fixed-Term Tenancy: This type of tenancy runs for a specific period, usually six months to a year. After this period, it can become periodic if neither party takes action. Periodic Tenancy: Also known as a rolling contract, this type runs on a week-to-week or month-to-month basis. Knowing your tenancy type will help you understand the notice period required to end your tenancy. Notice Periods for Ending Your Tenancy Fixed-Term Tenancy with a Break Clause: If your agreement includes a break clause, you can end your tenancy early. Check the agreement for details on when the break clause applies and any conditions that must be met. For example, if your tenancy runs from November to November, your break clause might allow you to end the tenancy after six months with one month's notice. This means you can move out in April by giving notice in March. Be sure to check for conditions such as no rent arrears. Fixed-Term Tenancy without a Break Clause: If there is no break clause, you cannot end your tenancy early without the landlord's permission. You don't need to give notice to leave on the last day of the fixed term unless specified in your agreement. Periodic Tenancy if You Live with Your Landlord: You can agree with your landlord on a move-out date or give notice as specified in your tenancy agreement. There's no set notice period, so it's whatever works for both parties. Periodic Tenancy if You Don’t Live with Your Landlord: You can end your tenancy at any time by giving the appropriate notice. Typically, this is four weeks' notice for week-to-week tenancies and one month's notice for month-to-month tenancies. If your rental period is longer, you must give notice equivalent to that period. Remember, you must pay rent until the end of your notice period. How to Give Notice to Your Landlord Once you know how much notice is required, make sure you provide it correctly. Ending Your Tenancy Due to Landlord Issues: If you're ending your tenancy because of issues with your landlord, such as failure to make repairs or breaches of contract, it's important to address these issues legally rather than just moving out. Both landlords and tenants have rights and responsibilities, so make sure you understand them to take appropriate action. Timing Your Notice: Your notice must end on the first or last day of your tenancy period. For instance, if your tenancy runs from the 5th of each month to the 4th of the next, your notice should end on the 4th or 5th of the month. Ending a Joint Tenancy Joint tenancies can be more complicated to end. All joint tenants must agree to end a fixed-term tenancy early. You can use a break clause to give notice or negotiate with the landlord. If some tenants want to stay, you might consider finding a replacement tenant. However, this requires agreement from the landlord and all remaining tenants, and a new joint tenancy agreement will be needed. Writing an End of Tenancy Letter Your end of tenancy letter should be clear and can be sent via email. Keep a dated copy for your records. Here’s an example of what to include: “Dear [Landlord’s Name/Company Name], I am giving [notice period] to end my tenancy as required by law. I will be leaving the property on [date]. I would like you to be at the property on the move-out day to check the premises and return the keys. I also request the return of my tenancy deposit of [amount].” You might also need to include details of any furnishings you’re leaving behind or any repairs made during your tenancy. Getting Your Landlord’s Agreement to Leave Early If you need to leave a fixed-term tenancy early and there's no break clause, you can discuss this with your landlord. They may agree to end the tenancy early, but they are not obligated to do so. If you leave without an agreement, you might still be liable for rent and bills until the tenancy ends. If you're uncomfortable speaking with your landlord directly, you can contact the company managing your contract or seek advice from Citizens Advice. Leaving Without Giving Notice Leaving without notice is not advisable. It doesn't automatically end your tenancy, and you will still owe rent until it officially ends. Additionally, you might be responsible for other bills, and your landlord can seek a court order to recover the owed rent plus court costs. You also risk losing your deposit, which could be crucial for securing your next home. Leaving at the End of Your Fixed Term You don't need to give notice to leave on the last day of your fixed term unless specified in your tenancy agreement. However, informing your landlord of your plans can facilitate a smoother transition, prompt return of your deposit, and possibly a good reference for future rentals. Preparing to Move Out Moving can be stressful, so it's essential to prepare thoroughly. Ensure the property is clean, return any furniture that came with the rental, pay all outstanding bills, and redirect your mail. A moving-out checklist can help you cover everything before you leave. Looking for a New Rental Property? If you’re planning to move and need a new place to rent, Howards can assist you. Our estate agents use their local knowledge to help you find a property that fits your budget and needs. Check out our renting process, and feel free to ask us about tenant rights and expectations under your tenancy agreement. Conclusion Ending a tenancy agreement involves several steps, but with the right knowledge and preparation, it can be a straightforward process. Always check your tenancy agreement for specific terms related to notice periods and break clauses. Communicate clearly with your landlord and keep records of all correspondence. Understanding your rights and responsibilities as a tenant will help ensure a smooth transition to your next home. By following these guidelines, you can confidently end your tenancy agreement and move on to your next adventure. If you need further assistance or have any questions, the team at Howards is here to help.

Jun 19, 2024 Evicting a Tenant: Comprehensive Guide for UK Landlords

Evicting a tenant is often a last resort for landlords, but it can become necessary due to various issues such as unpaid rent or property damage. The eviction process in the UK is governed by strict legal procedures that must be followed to avoid legal repercussions. This guide aims to provide landlords with detailed information on the steps and considerations involved in evicting a tenant. How to Evict a Tenant Evicting a tenant in the UK requires adherence to specific legal protocols. Landlords must be fully aware of their obligations and the rights of their tenants. There are two primary methods of eviction available: a Section 8 notice and a Section 21 notice. Understanding the nuances of these notices is crucial for a smooth eviction process. Section 8 and Section 21 Notices Explained Section 8 Notice: This notice is used when a tenant has breached the terms of their tenancy agreement. Common grounds for issuing a Section 8 notice include rent arrears, property damage, and antisocial behaviour. When issuing a Section 8 notice, landlords must specify the grounds for eviction and provide evidence to support their claim. If the tenant contests the eviction, the case will be heard in Court. Section 21 Notice: Often referred to as a 'no-fault' eviction notice, a Section 21 notice allows landlords to regain possession of their property without providing a specific reason. This notice is typically used when the landlord needs to reclaim the property for personal use or other unforeseen circumstances. Unlike Section 8, a Section 21 notice does not require Court involvement unless the tenant refuses to vacate the premises. Grounds for Eviction Several legitimate reasons can justify the eviction of a tenant. These include: Rent Arrears: One of the most common grounds for eviction. Landlords have a legal right to receive rent as per the rental agreement. Property Damage: If a tenant causes significant damage to the property, it can be grounds for eviction. Antisocial Behaviour: This includes actions that disturb the peace and safety of the neighbourhood or other tenants. Subletting Without Permission: Unauthorized subletting can lead to eviction. Refusal to Vacate: If the tenant refuses to leave the property after the tenancy period has ended. Illegal Activities: Evidence of illegal activities being conducted on the property. Unreasonable Requests: Continual unreasonable demands by the tenant that disrupt normal management practices. Operating a Business: Running a business from the property without the landlord's permission Evicting a Tenant without a Specific Reason Landlords can evict a tenant without providing a specific reason by issuing a Section 21 notice. This 'no-fault' eviction is typically used when the landlord needs to reclaim the property, possibly due to personal circumstances or to sell the property. Even though a reason is not required, landlords must still follow the legal procedures to ensure the notice is valid. Handling Rent Arrears Rent arrears are a prevalent issue that can lead to eviction. It is essential for landlords to keep detailed records of rent payments and any correspondence with the tenant regarding overdue payments. Documentation such as payment schedules, reminders, and formal requests for payment will support the case in the event of a dispute. Notice Periods The notice period required for evicting a tenant depends on the type of notice being served: Section 8 Notice: Landlords must provide 28 days' notice before initiating Court proceedings. Section 21 Notice: This notice requires a minimum of two months' notice after the fixed term of the tenancy has ended. The Eviction Timeline The time it takes to evict a tenant can vary significantly. Factors such as tenant cooperation and the speed of Court proceedings can influence the timeline. In some cases, eviction can be completed in as little as 14 days, but more commonly, it can take several months if the tenant contests the eviction. Cost of Eviction Evicting a tenant can be an expensive process. Costs can include: Serving a Notice: Approximately £100. Applying for a Possession Order: £355 when applied for online. County Court Bailiff Fees: Around £400 for enforcement. The total cost of evicting a tenant can exceed £1,500, especially if a quick and efficient eviction is desired. Possession Orders If a tenant ignores a Section 8 notice, landlords can apply for a possession order. This legal document, granted by the Court, requires the tenant to vacate the property. Obtaining a possession order typically takes 6-8 weeks. If the tenant still refuses to leave after receiving the order, landlords can apply for an eviction date with the County Court. County Court Bailiff vs High Court Enforcement Officer There are two types of enforcement officers who can carry out evictions: County Court Bailiffs: These officers must give the tenant seven days' notice before eviction and can only enter the property if allowed. They are restricted from entering between 9pm and 6am. High Court Enforcement Officers: Authorized by the Ministry of Justice, these officers handle cases where rent arrears exceed £5,000. They can arrive unannounced and use force to gain entry if necessary. High Court Enforcement Officers are typically used for more complex or high-value cases. Resources for Landlords Various resources are available to assist landlords with the eviction process and other aspects of property management. The National Residential Landlords Association (NRLA) provides a wealth of information, including documents, forms, and guides on ending a tenancy. Their comprehensive resources can help landlords navigate the complexities of tenancy law and ensure they are following best practices. Conclusion Evicting a tenant is a complex process that requires careful adherence to legal procedures. By understanding the differences between Section 8 and Section 21 notices, knowing the grounds for eviction, and being aware of the costs and timelines involved, landlords can navigate the eviction process more effectively. Utilizing available resources and seeking professional advice when necessary can also help ensure a smooth and successful eviction. Howards Can Help If you have questions about managing your tenants or need additional advice and support, contact the knowledgeable team at Howards.

Jun 18, 2024 What is an EPC Certificate and Why Do You Need One?

If you're planning to sell your property, you've likely heard about Energy Performance Certificates (EPCs). These documents are crucial as they provide a detailed look at a property’s energy efficiency and typical energy costs. Similar to gas safety certificates, EPCs have been a legal requirement since 2008. This guide aims to answer your questions about EPCs. If you need more information, feel free to contact the team at Howards, your local estate agent in Norfolk and Suffol What is an Energy Performance Certificate (EPC)? Think of an EPC like the energy rating stickers you see on new appliances, each property receives a rating from A (most efficient) to G (least efficient). This rating helps you understand how much it will cost to heat and cool your home. An EPC provides information on a property’s energy usage and typical costs, and it also offers recommendations on how to reduce energy use and increase efficiency. If you're a landlord or looking to sell your property, you need to obtain this certificate before putting your property on the market. If your EPC is still valid, you might be able to use the one you received when you bought the property. You can view EPCs for any property that has one on the national EPC register. Do I Need an EPC? Yes, since 2008, it's been a legal requirement to have an EPC if you're selling or renting out a property, this requirement also applies to commercial properties that you intend to sell or lease. There are a few exceptions to this rule: Rented rooms within a house (self-contained flats within a larger house that have their own front door and facilities will need one) Certain types of listed buildings Properties that cannot be modified to improve energy efficiency How Much Does an EPC Cost? If you're buying or renting a property, you should never be charged for an EPC, the seller or landlord (or their agent) should provide it for free. However, if you want to get an EPC for your own use, perhaps to find ways to improve your property’s energy efficiency, you will need to pay for it. The cost can range from around £35 to £120, so it's wise to shop around and get a few quotes. What Information is displayed on an EPC? An EPC resembles the multi-coloured energy rating stickers found on new household appliances. It includes: An energy efficiency rating Estimated costs of running your home A summary of energy performance-related features The energy efficiency rating, graded from A to G, shows how energy efficient your property is. Older properties without retrofitted energy-saving technology often fall around a D grade. Landlords must achieve at least an E grade and can face penalties of up to £4,000 for not meeting this requirement. The summary of energy performance-related features highlights how energy efficient different parts of your home are, this can guide you in focusing on areas that need improvement. Who Can Carry Out an EPC? An accredited domestic energy assessor must issue an EPC, you can find one through your estate or letting agent, or by searching for one on the EPC Register Selling or Letting Your Property with Howards If you have a property to sell or let, Howards can help you get it on the market and ready for viewings. Our team can guide you through the entire process, contact us today or visit your nearest branch for more information. By understanding the importance and requirements of an EPC, you can ensure your property meets legal standards and attracts potential buyers or tenants. If you need further assistance, Howards is here to help.

Jun 17, 2024 Understanding FENSA Certificates: Essential Information for Selling Your Property

Selling a property can be a complex process, requiring meticulous attention to detail and thorough preparation. Among the crucial aspects of this process is ensuring all necessary paperwork and certificates are in order, including the FENSA certificate. This article provides a comprehensive guide to FENSA certificates, their importance, and how to manage them effectively. For further assistance, Howards, a Norfolk/Suffolk-based estate agent, is available to offer expert guidance on all property-related matters. What is a FENSA Certificate? The Fenestration Self-Assessment Scheme (FENSA) was established in April 2002 to ensure that construction companies adhere to building regulations concerning the installation of windows and doors. FENSA certificates confirm that the installation of double-glazed windows, doors, or roof lights meets specific thermal performance standards and complies with FENSA regulations. Additionally, these certificates verify that the installers are deemed competent, meaning they adhere to the relevant building requirements. Duration of a FENSA Certificate A FENSA certificate is valid for as long as the windows and doors it covers remain in the property. This means the certificate is tied to the property itself, not to the individual who owns it, ensuring that the installations were performed correctly and in compliance with regulations. Why Do You Need a FENSA Certificate? In essence, you cannot legally sell a property without a FENSA certificate if the windows were replaced after April 1, 2002. This certificate or an equivalent building regulations certificate is necessary to demonstrate legal compliance. Failing to have this documentation can result in fines or prosecution due to non-compliance with building regulations. Obtaining a FENSA Certificate To ensure you receive a FENSA certificate, always select an installer who is a member of the FENSA scheme. After completing the installation, the installer will provide you with a copy of the certificate, which should be kept safely. If you lose your certificate, you can request a replacement from the FENSA website for a small fee. Verifying a FENSA Certificate for Your Property You can verify the presence of a FENSA certificate for your property, or a property you are considering purchasing, by visiting the FENSA website. By providing the house number and postcode, you can check the certificate’s status, although this service incurs a fee of £25. The Role of a FENSA Certificate in Property Transactions During property transactions, conveyancers will inquire about FENSA certificates and other regulatory documents through standard inquiry forms. Providing all relevant certificates is crucial. Without a FENSA certificate, the sales process may be delayed as additional inquiries are conducted to confirm compliance. What If You Don't Have a FENSA Certificate? Lacking a FENSA certificate does not render your property unsaleable, several options are available: Retrospective Building Regulation Compliance Certificate: You can apply to your local authority for this certificate, which may take time and costs between £300 and £400. Local Authority Searches: Conveyancers can check with the local authority during the transaction process. These searches can reveal installation details, including certification status and installer information. Double Glazing Building Regulations Indemnity Insurance: If the work was completed over a year ago, you could obtain this insurance. It covers costs if installations did not comply with building regulations and enforcement action is taken. Potential Consequences of Non-Compliance While it is not illegal to buy or sell a home that is non-compliant with building regulations, it can cause significant delays. Non-compliant windows and doors must be checked and certified before the sale can proceed, a local authority may mandate corrective measures for any non-compliant work done on a property. Howards: Your Partner in Property Transactions As this guide illustrates, complying with regulations when installing new windows and doors is vital to avoid future complications. Always ensure your installer is registered with FENSA to guarantee your installations are properly certified. A FENSA certificate ensures that your property can be sold without legal or administrative issues. If you're looking to buy or sell property, Howards a Norfolk/Suffolk-based estate agent, is here to assist. We combine expert staff with advanced technology to market your property effectively. Contact us today to see how we can help you navigate the property market with ease.

Jun 17, 2024 Understanding Property Covenants: A Comprehensive Guide

When purchasing a property, it's crucial to be aware of property covenants, as they can significantly impact your plans. Breaching a covenant can lead to substantial financial consequences, so understanding these legal obligations is essential. What is a Covenant? A covenant is a legal obligation contained within the title deeds of a property that a new owner must adhere to. Typically, covenants apply indefinitely, meaning they affect all future owners of the property, therefore, it's important for buyers to identify any covenants associated with a property they are considering. Types of Covenants There are two primary types of covenants: positive and restrictive. Positive Covenants Positive covenants require property owners to perform specific actions or contribute financially to certain aspects within the property boundaries. Legally known as "burdens," these obligations often involve maintenance or shared responsibilities. Positive covenants usually involve two parties, with one party benefiting from the covenant. Restrictive Covenants More common than positive covenants, restrictive covenants impose limitations on what property owners can do within their property boundaries. These covenants often prohibit specific activities or alterations, such as construction work. Like positive covenants, there is typically a party that benefits from and enforces the restrictive covenant. Common Examples of Covenants Restrictive Covenants: Prohibiting property alterations, such as building extensions or converting a house into flats. Restricting the construction of buildings or other substantial structures on certain parts of the land. Banning the operation of trades or businesses on the property. Prohibiting the keeping of livestock. Positive Covenants: Maintaining a fence or shared driveway. Repairing a shared roof. Why Are Covenants Needed? Covenants provide landowners with control over how the land they sell is used and its appearance. Often, covenants are established during the initial sale of land, possibly from a Greenfield site to a residential development. The seller might insert a restrictive covenant to maintain the area's residential nature or ensure that any building alterations align with the area's character. Sign up today to be among the first to know about property for sale in your area. Consequences of Breaching a Covenant Breaching a covenant can have serious repercussions. Depending on the covenant, you might have to undo extensive projects, such as extensions, if they are not permitted. Legal action or financial penalties can also result from covenant breaches. Therefore, it is imperative to thoroughly understand your property deeds before making any significant changes. Modifying or Removing Covenants If a covenant on your property deeds seems unreasonable, you can apply to the Lands Chamber of the Upper Tribunal to have it modified or discharged. However, this process can be costly and time-consuming, additionally you may need to compensate the party benefiting from the covenant and cover legal fees. Frequently Asked Questions How to Find Covenants on Property: When purchasing a property, request your conveyancer to examine the title deeds thoroughly for any covenants. Once you sign the deeds, these covenants become your responsibility, breaching a covenant, even unknowingly can lead to liability. Should I Buy a House with a Restrictive Covenant? The decision depends on the specific restrictive covenant. If the covenant does not hinder your plans, such as not intending to make prohibited alterations, it might not affect your decision. However, if you plan to utilize significant land attached to the property for building, ensure there are no restrictive covenants. Are Covenants Legally Binding? Properly established covenants are legally enforceable. It's important to check if a covenant "runs with the land," meaning it applies to all future owners, or if it was only enforceable on the first owner. How Long Does a Covenant Last on a Property? Covenants typically last indefinitely, even if a covenant dates back to the 19th century or earlier, it retains its legal status. Nonetheless, some very old covenants might be considered unenforceable due to their archaic nature or irrelevance due to subsequent developments. What Does a Deed of Covenant Mean? A deed of covenant is a legal document where the party burdened with a covenant agrees to fulfil the covenant's obligations. Contact Howards for Assistance with Your Property Search If you're interested in purchasing a property, reach out to your local Howards branch for expert assistance and guidance. Being informed about property covenants ensures that you make well-informed decisions and avoid potential legal and financial pitfalls. Whether it's maintaining a shared space or adhering to restrictions, understanding these obligations is crucial for any property owner.

Jun 13, 2024 What is Share of Freehold?

When you hear about properties with both a leasehold and a freehold, you might come across the term "share of freehold." Understanding what this means can be crucial if you're considering buying such a property. Essentially, acquiring a share of freehold means you gain shared ownership of the building's freehold title. What Does Share of Freehold Mean Purchasing a property with a share of freehold implies that you own the leasehold for your specific property, and a share of the freehold for the land and the building. This concept is most commonly associated with the purchase of flats. In such cases, the flat owners possess the leasehold for their individual flats and collectively own the freehold for the entire building and the land it stands on. This collective ownership can be managed in two ways: Through joint management or a management company, regardless of the method, you’ll still hold a share of the freehold for the property. Limited Company Share of Freehold One common method of managing a share of freehold, particularly when there are more than four freeholders, is to create a private limited company. In this scenario, the company is registered as the building's freehold owner, while you and the other co-owners are registered as shareholders and directors of the company. Using this method means you'll need to navigate company law procedures as part of your homeownership responsibilities. Sometimes, it might be preferable to appoint one occupant as the company director, with the others remaining as shareholders. Sign up today to be among the first to know about property for sale in your area. Share of Freehold in Personal Names Often referred to as "tenants in common," this approach means that each person holds an equal percentage of the freehold. For example, four share of freehold owners would each hold 25% of the freehold. This method operates based on trust, which can be risky, but it generally involves fewer administrative fees than a limited company. Each owner is equally invested in the property, which can make this method suitable in certain situations. Is Share of Freehold the Same as Leasehold The primary difference between a leasehold and a share of freehold lies in ownership and obligations. With a leasehold, you own the lease of your property for a specified period (often decades or centuries) and pay ground rent to the freeholder, who owns the building and the land it stands on. In contrast, owning a share of freehold means you have a stake in the building's freehold along with the leasehold for your individual property. The Pros and Cons of Share of Freehold Owning a share of freehold comes with both benefits and potential drawbacks. Here’s a closer look at what you can expect. Share of Freehold Benefits Control over Property Maintenance: With a share of freehold, you and your fellow freeholders have a direct say in the upkeep and management of the building. This often results in a higher standard of property maintenance. Lower or No Ground Rent: Typically, there are lower or no ground rent costs involved. Lease Extension: You have the ability to extend your lease up to 999 years at no extra cost, which can prevent the devaluation of your property associated with shorter leases. Lower Service Charges: Since the management company is internal (comprised of you and your co-freeholders), service charges are generally lower. Problems with Share of Freehold Variable Service Charges: While some months may have minimal maintenance costs, there can be times when significant repairs are needed, leading to higher charges. Time-Consuming Administration: Managing the building’s affairs can be time-consuming and, if handled incorrectly, costly to rectify. Insurance Costs: Obtaining home insurance might be more complex and expensive. Rental Restrictions: Renting out your property can be difficult if your neighbours are opposed or if your lease has restrictive terms. Share of Freehold Extension While owning a share of freehold allows for lease extension without paying a premium, all freeholders must agree to the proposed extension. Their cooperation is crucial for the transaction. Even though co-freeholders do not have to extend their leases simultaneously, collective lease extension can lead to modernised and updated lease terms. Service Charges and Ground Rent Even with a share of freehold, you’ll still need to pay ground rent and service charges unless otherwise specified. However, because you co-own the freehold, it’s less likely you’ll face excessive or unfair charges. Transferring Share of Freehold When selling your leasehold property, you can transfer your share of the building’s freehold. This involves using a formal deed to transfer ownership from you and your co-shareholders to the new property owner and your co-shareholders. Getting a Mortgage on a Share of Freehold Property Securing a mortgage for a share of freehold property is possible, although some lenders may view the associated costs as a potential risk. Nonetheless, many lenders are willing to provide mortgages under these conditions, here are some tips to improve your chances: Long Lease: Choose a flat with a long remaining lease, as this positively impacts the property’s value. Management Company: Ensure a management company is in place in the property you’re considering. Higher Deposit: Be prepared for a higher deposit or interest rate, as only certain lenders might offer a mortgage for share of freehold properties. Let Us Help You with Your Next Move If you're thinking about purchasing a property with a share of freehold, Howards, is here to assist. 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Jun 13, 2024 Buying a Second Home

There are numerous reasons why individuals may wish to purchase a second home. This might be for the enjoyment of a holiday retreat by the coast, a convenient city bolthole, or to provide a residence for a family member. It could also be intended as a holiday let or a long-term investment for the future. We have compiled the following guide to elucidate what purchasing a second home entails and how it differs from a standard house purchase. Can I Buy a Second Home Using Equity? Yes, it is indeed possible to buy a second property using the equity in your primary home. To secure a mortgage for a second home, you will need a deposit of 25%. A mortgage lender will assess whether you possess sufficient equity to cover the repayments on the second home mortgage. You can determine your available equity by subtracting the outstanding balance on your primary residence's mortgage from its current market value. Sign up today to be among the first to know about property for sale in your area. Does the Deposit Increase on a Second Home? Indeed, second home mortgages necessitate a minimum deposit of 25%, compared to the 5-10% typically required for a standard mortgage. You could potentially leverage the equity in your main home by remortgaging and using those funds as a deposit for your second property. What Kind of Mortgage Do I Need? You will need to apply for a second home mortgage. These mortgages involve more rigorous financial checks and criteria, as lenders must ensure you can manage mortgage payments on two properties. You may also need a specialised mortgage, depending on your intentions for the second home, such as: Buy to Let Mortgage: if you plan to rent out the property Holiday Let Mortgage: if you intend to let the property on a short-term basis to holidaymakers Is It More Difficult to Get a Mortgage on a Second Home? Securing a mortgage for a second home is indeed more challenging, lenders are aware that applicants already have significant financial obligations due to their primary residence mortgage. In addition to the larger deposit requirement of 25%, lenders will require proof of a substantial income that can cover mortgage repayments for two properties, they will also consider your age and how long you can maintain your current income level. How Does Buying a Second Home Impact Tax? Purchasing a second property has notable tax implications. You will incur a higher stamp duty rate than on your primary residence and will not benefit from the 0% rate on properties up to £250,000. The current rates (as of August 2023) for stamp duty on additional properties are as follows: Up to £250,000: 3% £250,001 - £925,000: 8% £925,001 - £1.5 million: 13% Above £1.5 million: 15% Capital gains tax is also applicable, basic rate taxpayers will pay 18% on any increase in value if they sell a property that is not their main residence. The only way to avoid paying capital gains tax on a second home is if the increase in the property's value is less than the individual capital gains allowance, currently set at £12,000. You will also need to pay council tax on the second home, unless you qualify for an exemption or discount. More information about council tax exemptions can be obtained from your local council. What Are the Additional Costs Involved? Purchasing a second property entails all the standard costs associated with buying a home, such as mortgage arrangement fees, mortgage valuation fees, conveyancing costs, and buildings insurance. Let Us Help with Your Property Search If you are contemplating purchasing a second home, we at Howards can assist you. Please contact your local branch today!