Home Ownership and Leaseholders

The Leasehold Reform and Urban Development Act 1993 allows owners of properties bought under the Right to Buy or the Social HomeBuy scheme to extend the length of their lease by 90 years. The additional years will be added to the outstanding term of your lease.

As a lease gets shorter, the value of the lease decreases and it becomes more expensive to extend the lease. Therefore, it is often a good idea to increase the term of the lease. In addition, it may be difficult to sell a property with a short lease because mortgage lenders may be reluctant to lend money on such properties.

We strongly advise that you seek legal advice before proceeding with any lease extension. To extend your lease, you must:

• Have owned the lease for two years
• Not be a commercial or business tenant
• Have a lease that the City Corporation will allow the extension of (if you are not the freeholder)

For further information about extending your lease, the costs involved and the steps to take please visit Lease Advice or get in touch with the Home Ownership Team.

You have the right under the Leasehold Reform, Housing and Urban Development Act 1993 to buy the freehold, also known as collective enfranchisement, if you meet the criteria set out in the act. The benefits of buying the freehold are:

• You will become the landlord and decide how to manage the building so for example how and when you do repairs to the building.
• There is no need to worry about your lease term reducing and associated extension costs.
• Often people looking to buy a leasehold property consider it more desirable where they also can have control of how the building is managed.
• The value of your property usually increases when you own a part or all of the freehold.

You will be responsible for:

• Taking out buildings’ insurance.
• Planning structural repairs and maintenance.
• Providing leasehold services for your fellow leaseholders, e.g. structural repairs and maintenance, service charge billing and collection, if you own 100% of the freehold.
• If you share the freehold with your neighbour, you will be jointly responsible for the tasks listed above.
• Providing us with information about future works and service charges if a tenant applies to buy their home.

There are two options to buy the freehold to your home, the formal route is known as collective enfranchisement or a simplified route of voluntary enfranchisement. Both options are set out in the Leasehold Reform and Urban Development Act 1993 and there is a range of criteria that must be met, and you can find out more about this by visiting Lease Advice or getting in touch with the Home Ownership Team.

As a leaseholder you are responsible for most repairs in your property, aside from any structural issues. We are responsible for maintaining the communal areas of your building and your estate.

You can find out more about your responsibilities and our responsibilities in your leaseholder handbook.

If you are not sure who is responsible for repairing something in your home call us on 0800 035 0003 or email the Property Services Team (non-urgent repairs only).

Visit the Report a Repair webpage for more details on how to report repairs, repair priorities, and repair policies.

If we deliver services on your behalf, you’ll receive a yearly service charge bill. The service charge covers the cost of providing services to your block, such as the caretaking service, grounds maintenance, repairs to the common parts and maintenance to any equipment in the block you live in such as lifts and door entry systems.

Your contribution is calculated using the rateable value of your property as a percentage of the total rateable value of all the other flats in your block. Your percentage share of the block costs is shown at the top of your account.

We’ll tell you the estimated cost of these services by the end of May each year. We will send you a schedule which sets out the estimated service charges you will have to pay during that particular financial year. The estimated service charges are billed in arrears on a quarterly basis in June, September, December and March. Alternatively, we accept 12 monthly payments from April to March.

Every September, we calculate the actual costs of providing the services during the previous financial year. If the amount is higher than the estimate we sent, you must pay the difference within one month. If the amount is lower, you’ll get a credit back to your service charge account.

How to pay

Every three months you will receive a ‘demand notice’ for a quarter of the total estimated service charge. The service charge is billed in arrears. A ground rent of £10 is billed in April and is for the financial year to come. Buildings insurance is invoiced in December and is for the coming 12 months.

If you wish to receive your ‘demand notice’ by email, please provide your email address to the Home Ownership team using the contact details above.

You can pay us in the following ways:

• By bank standing order or Direct Debit: please contact the Home Ownership team by email using the details below.
• Online via internet banking: details are on the back of your invoice
• By cash or cheque at the Barbican Estate Office, 3 Lauderdale Place, Barbican, London EC2Y 8EN
• By post to the Chamberlain of London, City of London, PO Box 270 Guildhall, London EC2P 2EJ
• Leaving a cheque at your estate office (not cash)

Always remember to quote your six-digit account number when making a payment. Please make cheques payable to the ‘City of London’. If you are having difficulty meeting your payments, please contact the Home Ownership Team immediately for advice.

You may sell your property (assign the lease if you are a leaseholder) at any time, but there are several things you should be aware of:

• You may not put up a ‘for sale’ board.
• Right of First Refusal (offering the property back to us): if you bought a property under the Right to Buy scheme, where the application was made after 17 January 2005, your lease or title deeds will contain an obligation that you must first offer it back to us. You are obliged to offer it to us first within the first 10 years of acquiring your property through the Right to Buy scheme. This means we have the right of first refusal to buy the property back at full open market value price. We do not operate a policy of buying properties back at this time. If we do wish to exercise this right, we must respond within a certain time scale.

For more information about selling your property, please get in touch with the Home Ownership Team.

Pre-assignment information

If you’re a leaseholder and selling your home, you or your solicitor may be asked to obtain pre-assignment information from us. The pre-assignment pack can also be used by your solicitor to complete the Law Society LPE1 and 2 forms. The information is not sent to your buyer or their solicitor.

We make a charge for supplying information the information requested. Please get in touch with the Home Ownership Team for details of the current fee. The charge covers the cost of correspondence and supplying the following:

• Copies of service charge accounts for the property for the past three years
• The most recent estimated service charge account for the property
• Details of any outstanding major works liability
• A schedule of future planned works for the block or estate
• A copy extract from our insurance policy

The charge does not cover information supplied by any other City Corporation department such as local land searches, copies of the lease, contract specifications, planning permission or any fee payable for the registration of notices or deeds.

Information will not be sent out until either the payment of the fee or a written undertaking is made by a solicitor to pay the fee. We can be contacted for bank details to transfer the fee.

If your property was originally sold under the Right to Buy scheme, you can sublet all or part of your property. But if you decide to do so, you must get in touch with the Home Ownership Team and tell us. You must also send us:

• A registration fee
• A copy of your agreement with your tenant: if your tenants break any of the terms of our lease or any of the conditions on the estate, we will take action through you. This means you will have to pay for any legal action and costs. However, you are strongly recommended to ask your tenant(s) to sign a deed of covenant requiring them to abide by the terms of the lease in the same way as you must. Your solicitor can advise you about this.
• Your new address, or the managing agency’s details (if applicable). This is so that we can make sure that you receive invoices, Section 20 notices or other information you need to have.
• A contact telephone number and email in case of an emergency, for example, if there was water leaking from or into your property and we needed emergency access, we may not be able to contact you, and we would have to force entry. If this happened, you would have to pay for any damage.

If you do not tell us that you are subletting, you will be breaking the terms of your lease, and we will continue to send information about your service charges to your old address. It will also make it difficult for us to manage your property properly.

Remember, whatever the terms of your agreement with your tenant(s), you are still the leaseholder and are still legally responsible for all charges being paid, and for the terms of the lease being adhered to. Please also remember to inform us should you change your correspondence address or managing agent.

Your responsibilities as a landlord

When you let your home, you effectively become a landlord to your tenant. As a landlord you will have certain responsibilities to your tenants and your property. These responsibilities do not replace your responsibilities in your lease but act as additional duties/obligations.

You must:

• Keep your property safe and free from health hazards.
• Provide an EPC (Energy Performance Certificate) for the property.
• Check your tenant has the right to rent your property.
• Check if your local authority requires the property to be licensed. 
• Protect your tenant’s deposit in a government approved scheme.
• Make sure all electric and gas equipment are installed safely, serviced, and certified by a registered engineer.
• Install and test all smoke alarms and carbon monoxide alarms.
• Pay income tax on your rental income.
• Pay Class 2 National Insurance if renting your property counts as running a business.
• Inform your landlord and your mortgage lender when the property is no longer your main residence.
• Continue making payments if you still have a mortgage.

The lease does not stop you from subletting your property to other people. However, it doesn’t allow you to let your property out on short-term let such as Airbnb or a holiday let, or to multiple households.

If we find out you are using your home for short term lets, we will take legal action against you as you are in breach of your lease.

If you rent or are intending to rent out your property, you may want to consider landlord insurance. It is not compulsory, but it might be worth looking into for additional coverage. This type of insurance does not replace your contents or building insurance but works alongside them. It covers items most of which are included within both insurance types but also covers incidences and items which would impact you as a landlord.

There are many other coverage items to choose from but the more items you choose, the more it will cost. It is a good idea to compare your landlord insurance alongside your contents insurance and our building insurance policy to ensure you are not paying twice to cover the same item.