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If you’re considering buying a flat with a short lease, it’s important you know what you’re dealing with and what implications it may have. We’ve put together a simple guide to help you get to grips with short leases, including how this may affect you getting a mortgage and what’s involved in applying for a new lease.

A short lease is normally found when the property / flat you are purchasing is sitting on someone else’s land (the freeholder). The short lease refers to the short period of time left to use to home and the length of this can vary, but in essence, the shorter the lease period, the less the property is worth. Most residential leases used to be around 99 years long but many modern flats carry a lease of 125 years or more, as do ex-local authority flats.

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As of 1st April 2016, there will be new stamp duty charges introduced, whereby an additional 3% will be added to each stamp duty rate band on purchases of second properties. These charges are to be introduced by the government as a way of freeing up the housing market for buyers by increasing the cost of buying second homes (i.e. landlords buying for buy-to-lets) by thousands of pounds.

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Veteran war reporter, Max Hastings, has told of his shock when he and his wife Penny found out that her house in West London had been sold for £1.3m despite not being for sale!

The house is question was kept by Penny as part of her children’s future inheritance and for over two years had been let out to tenants with no intention of being sold. But the solicitor who had contacted them was stipulating that a woman had come to him as she had bought the property, received the keys, received planning permission for alterations, changed the utilities to her name and had even employed builders to fit a new kitchen.

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There are many reasons why you might want to obtain copies of the title documents relating to a property. Perhaps you are trying to resolve a boundary dispute, or you need to understand what covenants might bind the land. Maybe you want to check for rights affecting it or you might be considering buying it.

It’s relatively easy to buy copies of documents but it can be harder to understand what you’re looking at once you do! That’s where the latest edition to our suite of services, the Title Report, comes in. As well as establishing what documents of title the Land Registry holds for the property you’re interested in and providing them our report cuts through the “legalese” and explains the key points in plain English. We cover the following:

Legal Ownership and Purchase Details

We will tell you who the registered legal owners of the property are, when they bought it and if after 2000, how much they paid as well as the owner’s “address for service”. This is the address that the owner has given to Land Registry as a correspondence address and can be useful if the owner doesn’t live at the property (for example because it is rented out).

Boundaries

The Land Registry filed plan (often referred to as the title plan) shows the general boundary only. It gives a good indication as to the true position of the legal boundary but is not definitive and cannot be relied upon absolutely. Sometimes the deeds will, either by reference to other plans or in the description of the land, give a more definitive answer and sometimes they will not. We explain wht evidence there is of the legal boundary and what assumptions you should make if there is no evidence.

As well as the position of the boundary, the responsibility for maintaining it is an issue that affects many people and can lead to disputes. Again, if the deeds clearly indicate who is responsible we’ll explain it to you and if they don’t, we’ll tell you that too.

Covenants

A covenant is an obligation to perform some action, or refrain from performing some action, on land. Covenants exist in addition to the normal planning and other laws and are usually imposed by the original land owner when a property is built. They exist for the benefit of neighbouring land and relate to such things as what development activity can be carried out on the land, responsibility for maintaining boundary features etc.

Understanding the covenants is important because they can affect your use and enjoyment of the property. Failure to to comply with a covenant can lead to the beneficiary taking legal action, including seeking an award for compensation or an injunction preventing the breach from continuing.

We try to explain what the particular covenants mean and where possible, who might be able to enforce them.

Rights / Easements

It may be that the property enjoys rights over the land of another, for example rights of way or to use the services which cross other land and serve the property. Legal easements attach to the land and are automatically transferred to the purchaser when the property is sold. Understanding what rights come with the land is important not only so that you know what rights you can exercise but also what rights you can’t. To properly appreciate the title you are buying you need to know what rights you do have then study the land and work out if there are any rights you might need but don’t have.

Our title report details the rights as well as any that others have over your land. You need to know about these two as they may restrict what you can do with the property (because you cannot legally interfere with a legal easement).

Restrictions on Title

A restriction is not to be confused with a restriction covenant. It is in fact an entry on the register of title which is intended to prevent a change of ownership and/or a mortgage or financial charge being registered until certain conditions are satisfied. This can involve serving a notice, paying off a debt, obtaining a consent or entering into a deed of covenant, amongst other things. Sometimes the restriction is intended to prevent the registered proprietor from selling at all (a bankruptcy restriction where there is a sole proprietor for example).

Understanding any restrictions on the title is therefore essential for a purchaser as, if you can’t satisfy the conditions to comply with or remove them, you cannot be registered as the owner. If you are not registered as the owner you can never sell or mortgage the property or leave it to a relative when you die.

Our report picks out any restrictions that are registered, explains what effect they have and either what must be done to comply with or remove them, or if the information isn’t contained in the title then where best to make enquiries.

Mortgages and Financial Charges

Mortgages, financial charges and other debts secured against the property need to be repaid from the proceeds (or other funds of the seller) when the property is sold. If they are not and they remain on the title after registration then the creditors may enforce their security powers against you. They means they can repossess and sell the property to cover the debt they are owed. It is essential therefore that these are identified and steps are taken to ensure they are dealt with by the seller.

Leases

If the property leasehold then you will need to read and understand the lease in order to fully appreciate the title you are buying and all the legal rights and obligations that go with it. It can be a long and complex document. Our report cuts out the “filler” text and takes you through the key points which you need to understand.

Of course, you don’t have to purchase a title report but be warned, purchasing legal title documents without an explanation as to what they mean can be a waste of money or worse, dangerous.

You can see our sample Freehold Title Report here

You can see our sample Leasehold Title Report here

Order our Land Registry Title Reports here

The Land Registry is the Government Department responsible for maintaining records relating to land in England and Wales. Founded in 1862, its principle duty is to maintain a register of the ownership of and interests affecting land in England ad Wales. Where land is registered with the Land Registry (and around 80% is) it guarantees title to the land and this state backed guarantee is the cornerstone of the modern property market. It means that buyers can buy land and know it will not be affected by any adverse interests save for any they already know about before their purchase.

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11 Feb2013

Claiming Adverse Possession of Land

Author: admin

Land is a vital commodity. So much so that a whole branch of the law has grown up around the subject and it even has its own central registry. It is nonetheless possible for land to be “lost”. A strip of land might be mistakenly left over after the sale of several plots with the owner not realising he has not disposed of it or a land owner might without his descendants (if he has any) knowing that he owned a particular piece of land. It was long since decided that land is too valuable to be allowed to go to waste and so the doctrine of adverse possession grew up to combat the risk.

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Thanks to the Land Registration Act 2002 and its predecessor the Land Registration Act 1925 it is now compulsory when land in England and Wales changes hands or is mortgaged to register the land with the Land Registry, the government department responsible for maintaining records of land ownership and interests in land. If the land is already registered as a result of a previous transaction, the change of ownership (or new interest created) must be registered in order for it to have legal effect.

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Before I go any further, I should make clear that the purpose of this article is explain how home rights (the right of a spouse or civil partner to occupy the matrimonial/partnership home) are protected at Land Registry. It is by no means a general commentary on the rights of a spouse or civil partner on the breakdown of the relationship. It is not intended to be professional legal advice and should not be treated as such. If you need advice following the breakdown of a relationship then you should seek the advice of a solicitor specialising in family law.

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06 Nov2012

Land Registry Fees

Author: admin

The Land Registry is the Government department which is responsible for recording the ownership of and interests affecting land in England & Wales. It provides a number of services including processing applications to register land or to register a change of ownership of land and interests affecting land, such as mortgages, rights and covenants.

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The term “lease” comes up a lot in conveyancing but there is often confusion as to what exactly it is, and what it will contain. A lease is essentially an agreement whereby one party agrees to lend something to another party in return for some form of payment. It can relate to anything – a car, machinery, a television. In conveyancing transactions, the lease will be of land.

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