Purchasing a leasehold property often involves lengthy legal procedures that may be unfamiliar, especially for first time buyers.  Several post completion fees arise after the purchase has been completed, typically requiring payments to the freeholder or the management company (or their managing agent). This article explores the usual post completion fees associated with buying a leasehold property.

Notice of Assignment and Charge Fee

Most leases specify that the assignee (i.e., the buyer) must serve a Notice of Assignment to the freeholder and/or the management company to formally inform them that the lease has been transferred and that the buyer has become the new tenant. This ensures that the freeholder and/or management company is aware of the change in ownership.  Sometimes, the freeholder and management company have separate managing agents, requiring the buyer to serve the Notice of Assignment to each party separately.

If the buyer purchases the property with a mortgage, a Notice of Charge may also be required to notify the freeholder and/or management company of the lender’s interest in the property.

The fees usually cost between £50 – £300 + VAT.

Deed of Covenant Fees

Some leases require the buyer to enter into a Deed of Covenant, pledging to comply with the covenants and conditions set out in the lease after completion. This ensures that the new tenant adheres to obligations such as paying service charges, becoming a member of the management company, and following house rules.

The lease may include a standard form for the Deed of Covenant. Sometimes, the freeholder’s managing agent or management company provides a draft deed or must approve the one prepared by the buyer’s solicitor.

A fee is typically charged for drafting or approving this document.  The fees usually cost between £150 – £300 + VAT.

Certificate of Compliance Fees

The leasehold register of the property may include restrictions requiring the freeholder and/or management company’s consent for the transfer. To complete registration at the Land Registry, a Certificate of Compliance is required to lift these restrictions.

The freeholder or management company (or their managing agent/legal representative) will issue the certificate once all lease requirements have been met—such as full payment of service charges and ground rent, and proper service of the Notice of Assignment. Without this certificate, the buyer will be unable to complete title registration with the Land Registry, which can have serious legal and financial consequences.

The freeholder and/or the management company may charge an administrative fee for issuing the certificate of compliance.  It usually costs between £150 – £300 + VAT.

Membership Registration Fees

In some cases, the buyer will be required under the lease to become members of a Residents’ Management Company (RMC) or Freehold Management Company (FMC) upon completion of purchase.  A membership fee may apply typically £50 – £200 + VAT.

Issuance of Share Certificate Fees

If the buyer is required to hold a share in the Residents’ Management Company, the management company’s agent will issue a share certificate after completion.  The leaseholder should keep the original share certificate in safe custody as it will be required when selling the property in the future.  A fee may be charged for issuing the share certificate and usually costs £50 – £150 + VAT.

Conclusion

There are several post completion requirements when buying a leasehold property.   Buyers are advised to work with experienced solicitors to ensure that all necessary steps are taken to satisfy with all these requirements, protecting their investment and ensuring a smooth property transaction.

Lisa’s Law’s highly experienced conveyancing team will be able to proceed your transactions smoothly and effectively. Contact us today to instruct us on your behalf as part of your leasehold purchase.

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James Cook

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