What you need to watch out for when buying a flat
Unlike in the past when many were high-rise or ex-local authority, since the millennium we’ve seen some pretty smart-looking flats available, in prime locations, offering contemporary living spaces with all your amenities close at hand or even on site.
But buying a flat needs more work than buying a house as you typically do so under a leasehold agreement which means you have the “right to live there” for anything up to around 999 years, depending on the agreement. This is the critical first thing to know when flat hunting, especially before you put in an offer: how much time is left on the lease? Most mortgage lenders require the lease to have at least 80 years left to run; anything less may mean you or a future purchaser may not be able to secure mortgage finance and the property’s value could be seriously affected as only cash buyers could purchase.
Leasehold also means you own everything “within the walls” of your flat, while a freeholder – which can be a company or an individual – owns the communal and outdoor areas. Because of this, buying a flat can take several weeks longer than purchasing a house as it involves a lot more paperwork for the legal company so it may cost £100-£200 more than the legals would if buying a freehold house. Because of the specialist nature of leasehold, make sure you choose a legal company which specialises in leasehold law, you can find them through an organisation called the Association of Leasehold Enfranchisement Practitioners.
First impressions matter so once you have an idea of the leasehold length, when you view the property, take a good look at the entrance hall and communal areas. How well (or not) these are maintained could tell you whether the freeholder and neighbours care.
One advantage of leasehold is that maintenance costs are shared and the freeholder does the work. They will charge you ‘your share’ either as a lump sum or through a service charge. Some service charges may just cover current running costs and repairs, meaning you have to fork out thousands for major renovations such as a new roof. Others may include a charge for a ‘sinking fund’ which tries to cover major repairs overtime, so that new buyers don’t have to bear all of the burden of repair costs, this is critical to check.
However if the freeholder or management company get their sums or timing wrong, you are likely still to be liable for overspends. Check before you make an offer if there are any bills outstanding or work planned so you can factor this into your budget and offer. Also find out about any other costs you will be liable for and if you have the option to challenge them and how easy/difficult this might be. There is no substitute for talking to neighbours who have lived there for a long time and know what the freeholder, the management company and the people living there are like – so don’t be frightened to chat to them!
On top of the monthly service charge, the other leasehold charge you’ll be expected to pay is ground rent, for the property your flat sits on. Check out the ground rent and service charges for the past five years and ask what they will be for the next three or more years, too and by how much they can rise by. A good leasehold legal company will do this work proactively for you.
Check too whether there are any restrictions on the property’s usage. Are you allowed to run a business? Could you rent out a room or even the whole flat if necessary? These may not be important issues to you now, but ‘life can get in the way’ of our property plans and you don’t want to buy something tough to sell in the future.
Finally, check out noise levels and, while viewing the flat and see how good the sound insulation is and go at different times during the day. Can you hear the neighbours above, below and either side? The quiet old lady next door may not be a secret heavy metal fan, but she may need to have her television on at full blast so that she - and, in turn, her neighbours – can hear it.
For more help on how to buy a flat and the things to consider when buying leasehold, visit www.propertychecklists.co.uk