FLATS SOLD UNDER 'RIGHT TO BUY'

The Section 125 Notice

When the Council sells a lease under the Right to Buy rules, it provides the new leaseholder with a notice called a Section 125 Notice. This Notice gives the Council's estimate of what it expects to spend on major repairs, improvements and decorations over the next five years and what the new leaseholder can expect to be charged. The Notice is intended to help new leaseholders budget for the costs of becoming a leaseholder.

During this five-year period, the Council cannot charge the leaseholder more than the amounts it has estimated in the Notice plus an allowance for inflation. The five-year period runs to the end of the fifth financial year since the lease was sold - that is up to the end of the March following the fifth anniversary of the date the lease was granted. The estimates given by the Council for the costs of work will vary over time.

Because leaseholders in the same block may have bought their homes at different times, it is quite possible that they will have Notices that quote different cost limits. The maximum limits given in a Section 125 Notice will apply to the next leaseholder if the property is resold within the five-year period.

Once the five-year period has ended, a 'new' leaseholder is liable to contribute for the cost of works in the same way as other leaseholders. Also, if works that the Council expects to carry out are delayed until after the five-year period has ended the limits in the Notice no longer apply.

There are no general limits to the costs that can be charged to other leaseholders. They are liable in full for their share of the costs of any works that are carried out.

"Representing residential leaseholders of Norwich City Council - be Lease-Aware"