Seven Things You Must Know When Buying A Flat
Buying a freehold interest i.e. a house is normally a more straightforward arrangement than buying a leasehold interest. A flat is normally situated in a building which is owned by a head landlord and you may be one of several leaseholders.
Lease duration
You will own the flat only for the remainder of the lease which will vary from 99 to 999 years. It is also worth noting that the fewer years remaining on the lease the more difficult it will be to obtain mortgage finance - furthermore in the current economic climate, mortgage companies are gradually tightening their lending criteria. It's now not uncommon for lenders to simply refuse a mortgage on any flat with less than 70 years left on the lease.
Lease extension
Every owner of a residential flat or apartment with what is referred to as a "long lease" [ie a lease which was originally granted for over 21 years] can compel their landlord to grant them a 90 year lease extension i.e. they can extend their lease for 90 years beyond its current term. Anybody wishing to exercise this lease extension right will need to pay compensation to the landlord and their own and the landlords legal costs - but extending a lease in this way almost always increases the value of the flat by more than these costs - often much more so. Given that the alternative is to let the lease eventually run out and hand the flat back to the landlord, extending a lease in this way is simply common sense. To find out more about extending a lease, make sure you consult a specialist lease extension solicitor - as this is a very complex and highly specialist area of law.
Building Management
The landlord will either be resident and part of the management company of the building or block or non-resident with a professional management company in place.
Legal obligations
Your responsibilities and obligations will be governed by the terms of the lease - so make sure you read your leasehold documentation carefully and get a specialist property solicitor to explain anything to you which you don't understand.
Charges
Service charges are levied to cover the maintenance of the whole building and are often subject to adjustment when the actual expenditure for the year has been calculated -which is the case, even if you have paid in advance. You also need to be aware that under your lease, it's likely that round rent will also be payable to the landlord.
Insurances
The building will normally be insured by the landlord but you should also arrange contents insurance in the normal way.
Alterations
You are strongly advised to seek advice from your Property Solicitor if the flat appears to have been altered or extended since the date of the original lease. They will check if this took place in the recent past and that the necessary consent was obtained from the Local Authority in addition to any consents required under the lease.
Any internal alterations you plan to carry out will also require any consents under the lease in addition to that of your mortgage company, Building Regulations and Conservation Area consent if the building is listed or in a conservation area. Any external alterations or extensions to a flat will generally be impossible or impracticable.
Leasehold property involves complicated and often lengthy documents and lease extension is a highly complex area of the law. Sure that you get proper legal advice from a specialist property solicitor to ensure professional legal and valuation advice is sought from the outset.
by: Tim Bishop
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