Leasehold Policy

Introduction

This policy sets out some of the service standards for key leasehold management activities.

This policy applies to mhs homes and Heart of Medway Housing Association and the terms ‘mhs homes’, ‘we’, ‘our’ and ‘us’ relates to both organisations unless otherwise stated. The terms ‘you’ ‘your’ and ‘yours’ relates to sole or joint leaseholders.​​​​​​​

Policy

Aims and Objectives

  • The aims of this policy are to ensure that neither mhs homes nor our leaseholders act outside of the terms of each other’s contractual agreements, especially given the numerous types of leases in use.

  • The objectives are to provide an excellent service to leaseholders within the terms of the relevant lease and to comply at all times with legislation and good practice.

  • We will monitor legislative changes that affect leaseholders, and will co-ordinate management, financial and technical resources to provide a responsive and effective service to leaseholders.

  • The terms of leases will only be varied following consultation and with the agreement of the leaseholders involved. Where leases are defective we will consult but may need to vary the terms without agreement in order to bring them up to date with current legislation.

  • We will deliver services in accordance with our service standards and aim to fulfil our maintenance responsibilities effectively and in accordance with the provisions of each lease.

  • Service charges will be levied in accordance with our service charge policy and sinking fund provisions are based on stock condition surveys and life cycle costing of building elements. Sinking fund contributions will be separately accounted for, protected and reported on an annual basis.

  • We will comply with statutory requirements and best practice and will make available on request our equality and diversity statement on request to potential purchasers and residents.

Managing leasehold properties

Buying your property

If you’re considering buying a leasehold property it’s your responsibility to make sure you fully understand the terms of the lease as this governs the relationship between you and us. Leases can be complex documents, but there’s guidance here https://www.lease-advice.org/adviceguide/understanding-lease/. You should ask your conveyancing solicitor to explain anything you’re not clear about.

Retention monies - Unless your property is newly built and you’re the first owner, the service charges due on the property for the financial year will need to be apportioned between you and the previous owner depending on the date you buy.

How it works:

  • Your solicitors will usually hold back some of the purchase price so that service charges arising during the year of sale can be apportioned between you and the seller when the year end service charge accounts are issued in the September after the sale. Typically this is between £250 and £500, but could be more if major works are being done in the year.

  • This held back fund is called “retention monies”.

  • You will receive the year end accounts from us in the September after you’ve bought the property.

  • You’ll then need to contact your conveyancing solicitor to inform them that there is either a deficit or surplus in the service charge accounts. Your solicitors will be able to arrange to release the retention monies and distribute them between you and the seller as appropriate.

Selling your property

  • Leaseholders will usually need to market their property through an estate agent. Once a buyer has been found, you will need to instruct a solicitor to deal with the sale for you. The solicitor will contact us and ask us to provide a sales information pack. We charge a fee for this – see fees page on website.

  • Retention monies - see above

  • If you’re a shared owner, mhs Homes has a period of time in which to find a buyer for your property. Please contact our Homeownership team if you’re thinking of selling your shared ownership property. You’ll be guided through the whole process. If we don’t find a buyer in the time period set out in your lease, you can then market the property through other agents.

Subletting

  • If you’re a leaseholder – but NOT a shared owner – you can usually rent your property or part of your property to someone else. This is known as subletting.

  • Please check your lease to make sure it allows you to sublet.

  • You need to notify us about this by completing a form and by paying a fee. You can find further details, including the form and details of the fee on this link https://mhs.org.uk/existing-customer/shared-owners-and-leaseholders/rights-and-responsibilities/#subletting-a-leasehold-flat 

  • You also need to notify us of all subsequent sublettings in the same way.

  • Please note that our legal relationship remains solely with you and all correspondence will still be addressed to you. We will only ever contact your tenant or lettings agent in an emergency. It’s important for you to keep us informed of your current correspondence address and contact details at all times.

Looking after your property

  • Your lease sets out the responsibility for repairs to your home. If you live in a block, you’re usually responsible for everything inside your flat and mhs Homes is responsible for the structure and exterior of the block. Leases can say different things, and in particular the responsibility for windows and doors can vary between leases. So if your windows or doors need repair, check your lease first and if you’re still not sure who’s responsible just contact us for guidance.

  • If you notice any disrepair in the communal areas in or around your block, please report this to us so we can arrange repairs. You can do this online via our website, or by emailing or telephoning us.

Making alterations to your property

  • If you’re thinking about making alterations to your property, it’s important to check your lease as this may affect your right to do so. Most leases say you need our permission to carry out structural alterations to your leasehold property. Some leases say you need permission for any alterations.

  • You don’t usually need permission for things like redecorating, putting up shelves or changing light fittings. But new kitchens and bathrooms, windows and external doors will normally need permission. Always check your lease and if in doubt, ask us.

  • For some types of alteration, we’ll need our surveyor to visit your property to make sure that what you’re planning to do is safe and permissible within the building regulations. We may also visit to inspect the work after it has been completed.

  • We charge a fee for giving permission and for surveyor’s visits, you can find details of fees on this link https://mhs.org.uk/existing-customer/shared-owners-and-leaseholders/information-for-solicitors/

  • If you don’t obtain permission when you should have done, you’ll be in breach of your lease. This may cause problems with any future sale of the property as buyers’ solicitors will usually query any alterations and ask to see written permission. The sale will not usually be allowed to proceed while there is a breach of the lease.

Buildings insurance

  • Most leases provide that the landlord arranges buildings insurance. You will need to arrange your own contents insurance.

  • This includes shared ownership houses. But as soon as you buy 100% equity share in your house, and are therefore no longer a shared owner, you will need to arrange your own buildings insurance too. This will be the case even if you still pay service charges to us for estate maintenance.

Consultation about major works

  • We will consult leaseholders in relation to major repairs, improvements and cyclical work and will provide opportunities for participation and involvement.

  • If the costs of the planned work exceed certain financial thresholds, we have to carry out a full consultation in compliance with Section 151 of the Commonhold and Leasehold Reform Act 2002. (This is usually know as a “Section 20 consultation”, as it was previously covered by Section 20 of the Landlord & Tenant Act 1985 and the old title is still commonly used.)

  • The First-Tier Tribunal (Property Chamber) can give us permission to dispense with the requirement to consult if they find it reasonable to do so, for example in the case of emergency works.

Income and Arrears

mhs Homes will implement effective procedures to ensure there are measures to prevent arrears accumulating. This will be achieved by:

  • Ensuring that there is a wide range of payment methods and advice available to customers. Payment by direct debit is preferred

  • Ensuring that Legal action to repossess the property is only taken as a last resort when other actions to recover the debt have been unsuccessful.

  • The income procedures adopt a staged arrears recovery process which enables us to monitor individual accounts and contact customers as appropriate.

Legislation

  • Legal requirements Landlord and Tenant Act 1985

  • Landlord and Tenant Act 1987

  • Commonhold and Leasehold Reform Act 2002

  • Leasehold Reform, Housing and Urban Development Act 1993

  • Law of Property Act 1925

  • Housing Act 1985

Policy Review

This policy will be reviewed in three years’ time or earlier if required by legislation; new significant guidance or in response to specific incidents.

Principles

Equality statement

mhs homes has a duty to ensure that no person receives less favourable treatment from the organisation on the grounds of age, disability, gender reassignment, marriage, civil partnership, pregnancy, religion or belief, race, sex or sexual orientation.

Data protection

mhs homes will only share information that meets the requirements of the Data Protection Act 2018 and the UK GDPR. Confidentiality and impartiality will be exercised by mhs homes at all times.

Feedback

We welcome suggestions and comments from people who use or provide our services. We believe that this can provide some important lessons to help us ensure that the service is improved for everyone.

If you have something to say about this policy or the information that is provided about them, then please let us know. Please refer any comments to the author of this document.