Duchy Leasehold Properties
DUCHY OF CORNWALL DARTMOOR ESTATE
LEASEHOLD GUIDANCE NOTES
This note is intended for the general guidance of tenants (lessees) and potential tenants of Duchy of Cornwall residential properties. It is no substitute for appropriate legal advice.
1. It is not usually possible to obtain a mortgage on a leasehold property of the type offered by the Duchy of Cornwall on Dartmoor.
2. Duchy leaseholds usually have a fixed initial term, i.e. they expire on a certain date. However, a number of Acts of Parliament may protect the lease at the end of the fixed term and the terms of the original agreement will usually continue as a protected annual tenancy.
3. Duchy residential leaseholds are usually assignable (transferable) during the fixed term and as protected annual tenancies.
4. In many cases, the terms of the lease will continue after the expiry of the fixed term and it is not necessary to seek the grant of a new lease on the expiry of the fixed term. In most cases there is no ‘right’ for the tenant to be issued with a new lease on the expiry of the fixed term.
5. If, however, the tenant wishes to secure another fixed term lease, provided the terms of the lease have been complied with, the Duchy is presently issuing new Assured tenancies (leases) for a term of not more than 20 years.
6. The terms of the new lease will need to be negotiated with the Duchy. The rent payable will usually be reassessed and the treatment of any past improvements carried out at the tenant’s expense, in accordance with the requirements of the lease, will have to be agreed.
7. The Duchy is of the opinion that, as there is no obligation to grant a new agreement and, indeed, on the basis that, in many cases, property values increase with the benefit of a new lease, it is appropriate for the Duchy to request a renewal fee, which is reflective of a proportion of the increase in value and the time taken by the Duchy to negotiate and provide such a lease. At the time of writing this is reflected in a single fee of £5,000 (no VAT on residential transactions) plus legal costs detailed at paragraph 8 of this note.
8. Where a new agreement is negotiated leading to the payment of the before- mentioned costs, the lessee would be expected to bear their legal costs, and those of the Duchy.
9. The lease agreement will usually set out the obligations with which a tenant is obliged to comply. Duchy leases usually require the lessee to maintain and insure the property and an annual rent is charged which is usually reviewed periodically.
10. Should a lessee wish to assign their leasehold interest they may place the property on the market in the usual way. Once a purchaser has been identified, the lessee or their solicitor should contact the Duchy of Cornwall in writing to request a licence to assign. The Duchy will carry out an inspection of the property in order to determine an appropriate figure to reflect the annual liability that the purchaser will incur in relation to repairs, insurance and rent. The prospective purchaser will then be asked to provide the Duchy with a banker’s reference to demonstrate that they are able to meet these costs.
It is recommended that prospective purchasers obtain a full building survey of the property prior to purchase in order to satisfy themselves of its condition and the extent of liability that they will be accepting, should they proceed with the purchase.
11. It is strongly advised that lessees (or prospective lessees) obtain appropriate independent legal advice on the implications of the terms of the lease agreement and of any relevant Statutes.
THIS GUIDANCE NOTE IS ISSUED FOR THE GUIDANCE OF EXISTING AND INTENDED LESSEES OF THE DUCHY OF CORNWALL. WHILST EVERY CARE HAS BEEN EXERCISED IN THE PREPARATION OF THIS NOTE, IT IS INEVITABLY ONLY A SUMMARY OF THE POSITION. THE DUCHY OF CORNWALL ACCEPTS NO RESPONSIBILITY FOR ANY OMMISSIONS OR ERRORS.