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Leasehold management policy

1.0. Purpose

This policy sets out the broad framework for an efficient, customer-focused service that offers value for money. This policy operates within the wider framework of policies affecting management and service delivery as detailed at the end of this document.

The purpose of this policy is to:

  • provide a clear and transparent leasehold management service to ensure we provide a high level of customer service to our leasehold and freehold
  • comply at all times with legislation, regulatory guidance, codes of practice and good practice in leasehold management
  • ensure we and our customers comply with the contracts between the two parties
  • provide clear guidance to staff to enable them to carry out their roles within leasehold management

  • 2.0. Service delivery and provision of information

    We will deliver services in accordance with the Genesis service standard, our policies and internal procedures. We will provide all customers with a handbook which will include information and guidance on housing management, explaining the lease, service charges, leasehold services and Section 20 consultation.

    Staff responding to leasehold management queries will be sufficiently trained to respond to our customers enquiries in relation to the full range of leasehold matters detailed within this policy.

    Information on performance and other matters will be communicated through resident publications including newsletters as well as via our website at www.genesisha.org.uk .

     

    3.0. Administration charges

    Administration charges will be charged where they are provided for within the lease.

    We will also charge administration charges for services we provide the leaseholder that are not specified in the lease, for example the cost incurred to Genesis due to re-mortgaging. We will notify leaseholders of the estimated costs of services before we provide them.

    We will set administration charges at market rates, complying with the statutory and contractual requirements. The fees we charge will be monitored against the other social housing providers within the G15 group of social landlords and through feedback from the Low Cost Homeownership Group


    4.0. Management fees

    We will charge a management fee for managing the provision of services in accordance with the lease. We have standardised our management fee structure to a tiered system. Charges are now set according to the number of services provided to the leaseholder.


    5.0. Service charges and accounting

    Service charges will be levied in accordance with our Service charge policy, the content of leases and current legislation and regulation. Where we are the superior landlord we will charge for our services in accordance with the lease.

    In cases where we pay service charges to a superior landlord, we will derive the service charges to our customers from these invoices. We seek to establish a good working relationship with superior landlords and their agents in order to protect the interests of our customers and produce a coherent, value for money service.

    Service charge arrears will be dealt with in accordance with our Income collection: leasehold policy.


    6.0. Ground rent

    We will observe the statutory requirements in respect of ground rent demands as provided within the Commonhold and Leasehold Reform Act 2002. A lease for a residential property may specify that the leaseholder is obliged to pay ground rent to the freeholder.

    The amount of ground rent payable, the date(s) it is due, and any provisions to review the amount will be set out in the lease. If a lease does not specify that ground rent is payable, none will be charged. In some leases the amount of ground rent is specified as ‘a peppercorn’, a legal expression that means ‘nil’.

    The due date(s) for ground rent may differ from those for service charges.

    Where the lease provides for ground rent to be increased during the terms of the lease it may either;

    • specify the revised amounts, and when they come into force
    • have a formula by which the new amount is calculated, and the review dates

    For all properties where ground rent is to be collected, ground rent demands will be sent no more than 30 days in advance of the due date. Our ground rent statements will comply with the requirements of the Commonhold & Leasehold Reform Act 2002.

    Ground rent for new leases will be set at the prevailing market rate for the type and size of the subject property in the area, unless we are precluded from doing so by the terms of a contract, or a covenant or restriction on the land. This will ensure that the value of the freehold interest is maximised.


    7.0. Consultation

     

    7.1. Section 20

    We will observe the statutory requirements for consultation under Section 20 of the Landlord and Tenant Act 1985 (as amended). This requires Genesis to consult our customers on:

    • Proposed major repairs or improvements for which they will be required to pay
    • Proposed changes to contracts for long term maintenance services

    The statutory consultation procedure will comply with the regulations set out by the HCA.


    7.2. Service charges

    We will also consult service charge payers in accordance with our Service charge policy.

     

    7.3. Deed of variation

    We manage leasehold properties occupied under a variety of different leases. On occasions it may be desirable to seek to amend leases:-

    • To reduce the number in use
    • To provide a uniform format
    • To enable services available to some leaseholders to be provided to others

    The terms of leases will only be varied following consultation and with agreement of the leaseholders involved and, where appropriate, their mortgagees, and where there is provision within the lease to do so.


    8.0. Customer involvement

    We will provide our leasehold customers with opportunities for involvement and consultation via a number of Genesis customer forums. We also encourage and support residents’ associations.


    9.0. Pre-assignment enquiries

    Genesis will provide a pre-assignment enquiry pack to all customers planning on assigning the lease of their property. This information will also be provided to potential purchasers before contracts are exchanged.

    Where the freehold is owned by the customer, and there is a covenant in the freehold transfer for them to pay service charges, the customer will be required to make similar pre-assignment enquiries.

    The pre-assignment pack will include:

    • Current balance on major works and service charge accounts
    • Past and present service charge accounts
    • Buildings insurance schedule and policy cover
    • Section 20 consultation and planned maintenance works
    • Requirements for assigning the lease
    • Health and Safety reports

    10.0. Leasehold Retirement Schemes

    Retirement housing is solely for occupation by people over a set age, as set out in the lease for the property. Typically, retirement leases will have clauses limiting the age, category of persons and restricting who the property can be sold or sublet to.

    The lease may also provide for a resident warden system/caretaker or house manager’s flat which may incur a charge to the leaseholder. They may also often contain exit fee clauses which apply at the time of sale or subletting.


    11.0. Adding and transferring a lease

    Leaseholders are able to add another party to their lease, in order to share the legal title of the property. In cases where the property is not owned outright, the prospective leaseholder applicant must meet HCA guidelines on home ownership.

    The original leaseholders remain fully liable for any outgoings and all breaches of covenant etc. until the new leaseholder has been formally added to the lease. Correspondence should not be addressed to the prospective leaseholder until the legal transaction has been completed.

    At application, the existing leaseholder should be aware that, by adding someone to the lease it may be difficult to have them removed at a later date, and that the person ‘added’ will have legal rights to a share of the property on re-sale, divorce or possibly death. We will recommend that leaseholders seek legal advice on the consequences of adding someone to the lease.

    Genesis, in principle does not object to the addition of a leaseholder, provided that they are fully aware that they will become jointly and severally liable for all covenants under the lease, and that they are financially able to meet any outgoings.

    Joint leaseholders can also request the transfer of the interest in the property into a sole name. In order to consider the request Genesis must be provided with the following information:-

    • Consent in writing from the person whose name is to be removed from the lease
    • Confirmation in writing from the mortgagee that they consent to the transfer
    • Confirmation from the person whose name will remain on the lease that they understand they will be solely liable for the covenants under the shared ownership lease
    • Confirmation from the current lessees that they will clear any arrears of rent and service charge prior to completion of the transaction.

    All leaseholders are responsible for the rent and service charge payments up until completion of the transfer and the payment of any arrears.

    Genesis will consent to the transfer of lease only once the above requirements have been met. The leaseholder’s solicitors must send a Notice of Transfer and the appropriate fee (contained within the lease) to Genesis.

    On receipt of a Notice of Transfer, Genesis will confirm the transfer completion in writing and update our records to confirm the change of lease.

    Genesis will not object to any re-mortgaging of the property, provided that the remaining leaseholder can afford the additional mortgage payments. The leaseholder’s solicitor must confirm that the additional mortgage funds are solely for the purpose of purchasing the joint leaseholder’s share of the property.

    If either party has already moved out of the premises without providing a forwarding address, then the remaining leaseholder must seek legal advice. A lease transfer cannot take place without a court order, unless both parties agree.

     

    12.0. Lease Extension

    Lease extension is provided for in the Leasehold Reform, Housing and Urban Development Act 1993 (as amended). Technically it is not an extension, but the issue of a new lease for 90 years, plus the balance of the old lease. A Lease is known as being "short" if it has less than 80 years remaining.

    Genesis will take the opportunity to determine new lease terms if an extension application is made.


    12.1. Statutory Lease Extension

    The Housing Urban Development and Leasehold Reform Act 1993 (as amended) gives a leaseholder the right to purchase a new lease for a term of 90 years, plus the present unexpired term, all at a peppercorn rent (that is, ground rent free). This is subject to some conditions.

    The main conditions are that:

    • The customer is a qualifying leaseholder (named on the lease)
    • The customer has a ‘long lease’(over 80 years remaining) on the property; and
    • The customer has owned the property for at least two years.

    12.2. Discretionary Lease Extension

    If the leaseholder does not qualify under the statutory terms Genesis can offer a discretionary lease extension based on the same terms and conditions. Genesis is under no obligation to offer this.

     

    12.3. Exceptions from the right to extend a new lease

    A leaseholder will not be able to exercise the right to a new lease if:

    • they have a business lease
    • the landlord is a charitable housing trust and the flat is provided by the charity as part of its charitable work
    • the building is within the precinct boundary of a cathedral
    • the building is built on certain land held by the National Trust
    • the building is owned by the Crown, except where the immediate landlord is not the Crown

    13.0. Collective enfranchisement – purchasing the freehold

    The Leasehold Reform Housing and Urban Development Act 1993 (as amended by the Commonhold and Leasehold Reform Act 2002) give customers the right, upon qualification, to compel the sale of the freehold of the building or part of the building. Where there is any intervening interest, like a Headlease, this must generally be acquired as part of the purchase by the tenants.

    The qualifying conditions that must be met to proceed with the process are:

    • There must be at least two flats in the building
    • At least two thirds of the flats must be leasehold properties
    • More than 75% of the total floor area of the building must be residential.

    14.0. Right to manage

    The Commonhold and Leasehold Reform Act 2002 provides a right for leaseholders (of flats, not houses) to force the transfer of the landlord’s management function to a company set up by them. The right empowers leaseholders to take responsibility for the management of their block.

    To qualify for the Right to Manage (RTM), the building must meet certain criteria and a minimum number of leaseholders must be in agreement to form the company in order to make an application:

    • The building must be self-contained
    • The building must contain at least two flats
    • At least two-thirds of the flats must be let to ‘qualifying tenants’ A ‘qualifying tenant ‘is a leaseholder who owns 100% of the lease [not shared ownership] whose lease was originally granted for an original term of more than 21 years
    • There is no requirement for any past or present residence in the flats, or any limit on the number of flats which can be owned by one person. Where leaseholders consider taking over the management of the building by forming an RTM company; all qualifying tenants must be invited to participate.

    Genesis endeavours to provide an excellent management service to its customers; both in standard of service and value for money. By doing so, it is anticipated that challenges by leaseholders under the RTM, will be held to a minimum.


    15.0. Re-mortgaging

    Any shared owner leaseholder wishing to re-mortgage their home must request our approval in accordance with their lease. We may refuse an application if the proposed lender is not recognised as an approved lender or if there are restrictions on the scheme, or if they have insufficient equity to secure the proposed advance.

    Where a shared owner wishes to re-mortgage to release equity, we will consider each case before approving the request. Any mortgage needs to meet with the HCA guidelines on affordability and must not include additional borrowing or fees in excess of £1000 without approval from the Head of Service and the Leasehold Services Manager

    In cases where the leaseholder owns 100% of their property we will not be involved in the re-mortgaging transaction unless consent is required under the terms of the Lease.


    16.0. Further Advances and Postponement of Charges

    Genesis has no influence over a Right-to-Acquire leaseholders ability to refinance to release equity from their lease, unless our charge to secure the repayment of discount charge is affected.

    When Genesis has a charge against the property in respect of the repayment of Right-to-Acquire discount it will not agree to postpone this charge in favour of any additional borrowing. For further information regarding Right to buy or Right to acquire, please refer to the Right to buy and Right to acquire policy.


    17.0. Sale of loft space

    Lofts and loft space remains the property of the landlord under the terms of the lease and should not be used by any leaseholder, for any purpose whatsoever including the storage of goods.

    There is no right to purchase loft and loft space. Leaseholders who have sole access to a loft can apply to buy the loft space, however Genesis is under no obligation to sell.

    A loft or loft space will not be sold to a leaseholder where the whole or part of the loft space is located above any other property except their own. Applications to purchase loft space will be managed in line with a request for alterations or improvements as set out in section 18 below.


    18.0. Alterations and improvements

    Under the terms of the lease the leaseholder will require Genesis’ permission to carry out any alterations or improvements affecting:-

    • Genesis’ fixtures and fittings (including the removal of fitted cupboards); or
    • the exterior of the building; or
    • the structure of the building (including the removal of internal walls).

    Leaseholders wishing to carry out alterations or improvement works to their home must apply for Genesis’ consent as required by the lease agreement and provide details of the proposed works. Consent may be granted subject to conditions, such as obtaining planning permission where this is required. We will not withhold consent unreasonably. If consent is refused the reason for the refusal will be put in writing to the leaseholder.

    If the proposals include structural alterations (within or outside of the demise) that will add significant value to the property it is likely that a premium will be requested in accordance with the lease. The premium we charge will be determined either by an assessment by a RICS qualified surveyor or a fixed amount we deem fair and reasonable. The premium will need to be agreed by both parties before consent can be granted and a deed entered into with the leaseholder.

    The leaseholder will be required to pay any administrative charges as well as Genesis’ legal costs, whether or not the matter proceeds and alteration or improvements take place. The costs will be published on our website.

    Upon approval of plans to complete alterations or improvements to the property Genesis will appoint a surveyor to carry out a limited number of inspections to check that the work being undertaken is in accordance with the consent. If works are found to be different to the proposed plans and consent, Genesis will instruct the leaseholder to comply with the licence and return the property to its original state.

    We will keep a record of maintenance work that falls under the responsibility of Genesis according to individual leases. We will fulfil our maintenance responsibilities effectively and in accordance with the provisions of each lease. Staff responsible for tendering and contracting will be made fully aware of the specific legal requirements relating to leaseholder and Genesis maintenance responsibilities.

    Where it is found that alterations have been commenced or completed without obtaining our prior written consent, we reserve the right to take enforcement action and pursue the remedies available to us for breach of the covenants contained in the Lease. In exceptional and isolated cases, consent may be provided retrospectively, subject to requirements and the payment of an increased premium.


    19.0. Subletting


    19.1. Shared owners

    Shared owner leaseholders are not permitted to sublet their home in line with the terms of the lease. In some circumstances Genesis may give permission for a shared owner to sub-let their property.

    Applications will be assessed on a case by case basis following our internal procedures which are in line with HCA guidelines. The decision will made by the jointly by the Leasehold Management team and the relevant Business Manager. If approved the maximum period allowed for subletting will not exceed 12 months.

    We will investigate all reports of unauthorised subletting of shared ownership properties in line with our unauthorised occupant policy and we will take legal action for any breach of the lease.


    19.2. Outright owners

    Customers who own 100% of the equity in the property are permitted to sublet their home unless otherwise stated in the lease. Individual leases may contain clauses on sub-letting. Such clauses may prohibit sub-letting, or they may permit sub-letting with or without the consent of the landlord. Where there is discretion under the terms of the lease, we will not unreasonably withhold consent.

    Genesis must be provided with contact numbers and a forwarding address for the leaseholder for the period that the property is sublet.

    The customer will remain responsible for paying all relevant charges for the property. If any person or tenant who is given permitted use of the property causes any form of nuisance, including damage to other properties or communal areas, then the leaseholder will be held responsible.

    Failure to deal with tenants or persons responsible for such behaviour will lead to legal action being taken by Genesis for breach of the lease, which could result in the leaseholder losing their home.

    19.3 Holiday and Short letting

    Deregulation Act 2015 has made further provision on how the use of accommodation for the short-term use of London will be administered. The changes do not affect any existing clauses in the lease which prohibit sub-letting for instance, Shared Owners.

    As a leaseholder with Genesis, you must ensure that holiday letting and short letting your home for less than 90 days is not in breach of the terms of your lease.


    20.0. Disputes

    Genesis is committed to resolving all leaseholder inquiries in line with this policy and the terms of the individual lease. Where Genesis or the leaseholder is not in agreement with any decision made, either party reserves the right to apply to the First Tier Tribunal for the dispute to be heard.


    20.1. First Tier Tribunal (Property Chamber)

    Leasehold Valuation Tribunals were abolished under The Transfer of Tribunal Functions Order 2013 and their functions were transferred to the newly created First-Tier Tribunal (Property Chamber) with effect from 1st July 2013.

    The First Tier Tribunal is the formal name given to the body appointed to make decisions on various types of dispute relating to residential leasehold properties.

    The First Tier Tribunal is an independent decision making body which is completely unconnected to the parties or any other public agency. Following an application to the First Tier Tribunal by a leaseholder, the tribunal will look at the dispute and can:

    • decide the price to be paid when a leaseholder wants to buy (enfranchise), extend or renew the lease of their home and the value cannot be agreed with the leaseholder
    • vary estate management schemes under the Leasehold Reform, Housing and Urban Development Act 1993
    • adjudicate in disputes about the right of first refusal procedure (which gives
    • leaseholders the right of first refusal to buy the freehold when the landlord wishes to sell it) and the compulsory acquisition of the landlord's interest in blocks of flats decide liability for payment of service charges and can settle disputes about the landlord's choice of insurer
    • decide applications on dispensation of service charge consultation requirements, administration charges, the right to manage, the appointment of managers, the variation of leases and estate charges.

    Leaseholders have the right to refer any of the issues listed below without reference to the landlord. Genesis may look to place longstanding disputes to the First Tier Tribunal, where it has been unable to resolve them.

    Some applications may require the payment of application and hearing fees.


    20.2. Application to First Tier Tribunal to vary the lease

    The Landlord and Tenant Act 1987 (as amended by Section 162, Commonhold and Leasehold Reform Act 2002) makes provision that "any party to a long lease of a flat may make an application to the Leasehold Valuation Tribunal (revised to First Tier Tribunal with affect 1st July 2013) for an order varying the lease in such manner as is specified in the application’.

    Section 35 of the Landlord and Tenant Act 1987 allows such applications to be made on the grounds that the existing terms are defective and the problems relate to at least one of a specific list of issues such as maintenance and upkeep, service charges, insurance and recovery of costs.


    20.3. Application to the First Tier Tribunal to vary the lease for a group of flats

    The other circumstance detailed in the Landlord and Tenant Act 1987 (Section 37) where leases of a group of flats can be varied by a First Tier Tribunal is when, following consultation, more than 75 per cent of leaseholders agree and not more than 10 per cent disagree (or in the case of eight or fewer properties not more than one party disagrees) with the proposal. In addition, consent must be obtained from lenders.

     

    21.0. Breaches of lease

    We will take appropriate action whenever we become aware that a customer is acting in breach of the terms of their lease. Such breaches may include the following;

    • Non-payment of rent, ground rent or service charges
    • Unapproved works
    • Failure to maintain, or damage to, premises
    • Harassment or anti-social behaviour

    We will first serve notice on the leaseholder requiring them to remedy the breach. If the breach continues, further action will be taken, which may include seeking an injunction or, as a last resort, taking further action against the leaseholder for the forfeiture of their lease.


    Related documents

    External

    • Law of Property Act 1925
    • Landlords and Tenant Acts 1985 & 1987
    • Housing Act 1996
    • Common hold and Leasehold Reform Act 2002
    • Leasehold Reform, Housing and Urban Development Act 1993
    • Royal Institute of Chartered Surveyors (RICS) Code of practice
    • Association of Residential Housing Managers (ARHM) Code of practice
    • Association of Residential Managing Agents (ARMA) Code of practice
    • Institute of Residential Property Management (IRPM) Code of Practice
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