Residential Property

Property Law: "Do you know"

Welcome to our ‘Do You Know’ section, specifically tailored for Property and Conveyancing Law.

As you navigate the complexities of buying or renting a home, whether your a property owner, landlord or renter, you’ll find that law often intersects with life in ways you might not expect.

Our ‘Do You Know’ section is your source for clear, concise insights into the world of property law and conveyancing. We aim to demystify the legal jargon and shed light on those easily overlooked aspects of buying, renting and selling property.

In this ‘Do You Know’ series, we’ll uncover hidden property defects, tricky leasehold clauses, and surprising impacts of things like energy bills on your mortgage eligibility.

Our goal is to give you bite-sized knowledge that empowers you during your property journey. Think of it as your roadmap to a smoother and more informed property transaction.

Buying a house is an exciting but stressful experience. It's easy to get swept up in the emotion and overlook the less glamorous aspects of a property's condition. However, hidden defects can turn your dream purchase into a financial nightmare.

What are property defects?

Property defects are flaws, problems, or damage within a property. These can range in severity and how obvious they are:

  • Major structural defects: Issues like subsidence (where the ground under the foundations moves), unstable walls, or severe roof problems. These can be extremely expensive to fix and could even impact the safety of the building.
  • Hidden Damage: Damp, woodworm, or rot often hide behind walls or under floors. These problems can spread and worsen over time, requiring extensive treatment.
  • Faulty Systems: Faulty electrics pose a fire hazard, while dodgy plumbing can cause leaks, water damage, and mould.
  • Non-compliant Alterations: Previous owners may have carried out renovations that don't conform to building regulations, such as removing load-bearing walls or making unsafe electrical changes. You could be forced to rectify these issues at your own expense.

Seller's Responsibilities

Sellers are legally obliged to disclose any known defects through the Property Information Form (TA6). However, issues might be concealed, or the seller may genuinely be unaware, especially if they haven't lived in the property for long.

"Caveat Emptor" – Buyer Beware

The legal principle of 'caveat emptor' means the responsibility for uncovering potential defects falls primarily on the buyer.  This is why investing in inspections and thorough due diligence is crucial.

Protecting Yourself

Here's how to minimize your risk of unpleasant surprises:

  • Commission a Survey: Don't just rely on a basic mortgage valuation. Choose a survey appropriate for the property's type and condition. Options range from a Condition Report (least detailed) to a full
  • Building Survey (most detailed): A surveyor will highlight potential defects and provide advice.
  • Ask Detailed Questions: Enquire about renovations, repairs, any known issues and obtain guarantees or certificates for recent work. Don't hesitate to ask the seller or estate agent directly.
  • Review Paperwork Thoroughly: The Property Information Form and any accompanying documents (like title deeds) may mention issues, easements, or covenants that could reveal potential problems.
  • Engage a Property Solicitor: An experienced solicitor, such as from Foys, will review paperwork, flag concerns, help interpret the survey report, and negotiate with the seller if issues need resolving.

What if I Discover Problems After Moving In?

If you find defects the seller should have disclosed, you could potentially take legal action for misrepresentation. Here's where things get complicated:

  • Proving Misrepresentation: You'll need evidence the seller knowingly concealed the defect. This is easier if the issue is clearly apparent in photos from the listing, but harder for well-hidden problems.
  • Time Limits: There are time restrictions on such claims, so seeking legal advice promptly is essential.

Key Takeaway

The thrill of buying a home shouldn't blind you to its potential issues.  Careful investigation beforehand can save you considerable financial strain and heartache.  Remember, it's better to walk away from a problematic property than get trapped in an expensive nightmare.

With energy prices soaring, those rising bills are hitting your wallet hard. But the impact could extend beyond your monthly budget – your energy usage could also affect your ability to secure a mortgage and the amount you can borrow.

How Energy Bills Factor into Mortgage Calculations

Mortgage lenders use a detailed 'affordability assessment' to decide if you can realistically afford to repay your loan each month. Here's how energy costs come into play:

  • Essential Outgoings: Lenders closely examine your regular spending, including household bills like energy. They want to be sure you can manage these costs alongside mortgage repayments, even if interest rates go up.
  • The Stress Test: Lenders will often "stress test" your application. This means calculating whether you could still afford your mortgage if energy prices (and other living costs) rise significantly.
  • Disposable Income Impact: High energy bills eat into your disposable income – the amount left over after essential spending. Lenders prefer borrowers with more breathing room in their budget to handle unexpected costs.

The Impact of Rising Costs

As energy costs escalate, here's how they might affect your mortgage application:

  • Smaller Mortgages: Lenders may reduce the amount they're willing to offer, factoring in a larger chunk of your income going to energy bills.
  • Higher Interest Rates: Some lenders may offer you a mortgage but at a higher interest rate to offset the perceived risk of rising energy costs impacting your ability to repay.
  • Rejection: If a lender thinks your budget is already too stretched due to energy costs, they might refuse your application entirely.

What Can You Do?

While the energy market is out of your control, there are proactive steps you can take:

  • Maximise Energy Efficiency: This is crucial, regardless of mortgage applications.
  • Home Improvements: If you're buying, factor the property's Energy Performance Certificate (EPC) rating into your decision. Improvements like insulation, double-glazing, or a new boiler can dramatically reduce your energy usage over time.
  • Lifestyle Changes: Even small actions like draught-proofing and turning appliances off at the plug can all make a difference when added up over time.
  • Demonstrate Savvy Spending: Lenders want to see your financially responsible. Track your budget for a few months to show you've actively adjusted your spending to absorb rising energy costs. Cutbacks on non-essentials will show a lender you can tighten your belt if needed.
  • Shop Around for Lenders: Mortgage criteria vary. Some lenders may be more flexible about energy costs than others. A mortgage broker can help you find the best fit for your situation.
  • Boost Your Overall Picture: A strong application in other areas can compensate. Work on improving your credit score, maximising your deposit, and reducing existing debts to present a better case to lenders.

Key Takeaway

Being aware of how energy costs factor into mortgage applications gives you the power to act. While there are no guarantees, focusing on energy efficiency and improving your overall financial health will maximize your chances of securing the mortgage you need.

Imagine a situation where you are unable to communicate your medical wishes due to illness or injury. Who would make decisions about your life-sustaining treatments? In the absence of clear instructions, your loved ones may face difficult choices, potentially leading to confusion, conflict, and emotional distress. This is where living wills come into play.

What is a leasehold?

Let's clarify the basics:

  • Freehold: You own the property and the land it sits on outright, with full control and responsibility.
  • Leasehold: You have the right to live in the property for a set number of years (the lease term). You own the 'bricks and mortar', but the land and building itself belong to the freeholder.

Why Leases Can Be Tricky

Not every lease is the same. Here's where the potential for problems arises:

  • Lease Length: The Problem of Diminishing Value: Leases often start with long terms (99 or 125 years are common), but they get shorter with each passing year. This has financial implications:
  • Selling: Properties with leases under 80 years become increasingly hard to sell. This also reduces their value.
  • Mortgages: Many lenders won't offer mortgages on leases under 80 years, and those that do often come with less favourable terms.
  • Ground Rent: The Annual Sting: You must pay an annual ground rent to the freeholder. This can be a fixed amount, but be wary of these:
  • Doubling Clauses: Some leases contain clauses where the ground rent doubles every 10 or 25 years, leading to spiraling costs over time. In extreme cases, this can make the flat unsellable.
  • Review Clauses: Even without doubling clauses, expect ground rent to increase over the lease term.
  • Service Charges: Who Pays for What? As a leaseholder, you'll be expected to contribute to the cost of maintaining the building and communal areas. Here's where things can go wrong:
  • Inflated Charges: Some freeholders or their managing agents inflate service charges for repairs and maintenance, potentially for their own profit.
  • Major Works: Leaseholders can be hit with huge bills for major works like roof replacements or new lifts.
  • Restrictions: Your Home, Their Rules: Leases often contain restrictive clauses that may surprise you, such as:
  • Pets: Some leases forbid pets entirely, or certain types of pet.
  • Alterations: You might need the freeholder's permission to make changes to your flat and they can charge hefty fees for this consent.
  • Subletting: Your right to rent out your flat might be restricted.

What to Do Before You Buy

  • The Lease is Key: Have your solicitor examine the lease meticulously. They'll identify potential red flags and help you understand the long-term costs and potential restrictions.
  • Lease Extensions: A Potential Cost: If the lease is short, you may need to extend it. This process can be complex and expensive. Your solicitor can advise you on your rights and the likely costs involved.
  • Service Charge Scrutiny: Look at the history of service charges and what they cover. Ask about any planned major works and how they will be funded. Check for a 'reserve fund' or 'sinking fund', showing the freeholder is responsibly saving for future repairs.
  • Reputation Matters: Research the freeholder or managing agent. Look for online reviews or forums where the landlord's track record is discussed.

Key Takeaway

Leasehold ownership has its place, but it's crucial to go into it with eyes wide open. Thorough due diligence and good legal advice can help you avoid properties with costly or restrictive lease terms.