You’ve been scouting out locations, scouring property listings and starting to dream about moving into a new flat or apartment. The process of buying a flat usually involves a few steps that are different when compared with buying a house though, so you might not be fully clued up. Whether you’re after some information on things you’ve heard about already, or you want to know some of the questions to ask when buying a flat, our handy flat buying guide is here to help.
Leasehold vs freehold
While this is something to look out for with buying a house, it’s a much more common theme when it comes to flats, with over four million leasehold flats in England and Wales. Whereas freehold properties mean you own both your home and the land it’s built on for an unlimited amount of time, leaseholds are more complicated.
There will be a freeholder who effectively owns the land which you then acquire a lease to live on. The lease period could be as much as 999 years, but if it’s lower than 80 then this can be a concern. Freeholders can charge large amounts to extend leases, so you’ll need to check the amount of time left on the lease of the property you’re interested in, and how much it costs to extend.
The lease means you enter into a contract that determines things like responsibility for various maintenance issues, the fees payable to the leaseholder, permission to make changes to your property, and any restrictions on things such as pets and subletting. You can learn more about the difference between the two terms by reading our detailed leasehold vs freehold guide.
Can a flat be freehold?
In short, yes. Some flats go to market as freehold, although truly freehold flats are rare and the majority of mortgage lenders won’t lend on them, as an alternative it’s possible to buy a share of the freehold if you purchase a leasehold property. The cost of doing this depends on the length left on the lease, and can add substantial value to your property by going ahead. It also allows you to extend the lease to 999 years free of charge, with only legal fees to pay, and gives you more control over your property.
Is it ok to buy a leasehold flat?
Although freehold properties are usually more desirable, buying a leasehold flat can still be a perfectly good option. There’s no right answer if you’re wondering how long should a lease be when buying a flat, but if it lasts for hundreds of years with agreeable terms attached to it, choosing a leasehold property remains a completely viable option. You should pay particular attention to anything approaching 80 years, as leases for less than this can become much more expensive to renew.
What is right to manage?
Buying the leasehold on a property can be expensive, but there’s another option called ‘right to manage’. You can apply for this for free alongside the other leaseholders, allowing you to gain more control over your building. You still have to pay ground rent to the freeholder, but you can control service charges, maintenance costs, buildings insurance etc.
Quite simply, ground rent is the regular payment a leaseholder makes to a freeholder for the privilege of having a property on their land. It may be as little as £1 a year, but can be much more than this, and payable either annually, twice a year or quarterly. It can be fixed or escalating, which makes it one of the most crucial things to look out for when buying a flat. You don’t want to get stuck with ground rent that increases by huge amounts as this can become very expensive, and cause you a headache if you want to sell your home.
Paying service charges
Service charges can cover everything from simple maintenance to gardening tasks, concierge services and swimming pool upkeep. They can vary significantly between different buildings, and are typically between £3,000 to £20,000 per annum. This is obviously a key consideration to make before going ahead with buying a flat, while it’s also worth checking if there’s a sinking fund on the building you’re interested in. This is a reserve fund that’s been collected to cover any planned or unexpected works.
Other leaseholder obligations
As part of your contract with the freeholder, you may have to fulfil certain other requirements as a leaseholder. This can include things such as behaving in a neighbourly manner, properly maintaining the inside of your flat, requesting your freeholder’s consent where appropriate for things like pets, sublets and renovations, and promptly paying a share of maintenance costs should they arise.
What to know before buying a flat
Like with any property purchase, there are lots of things to consider before you buy a flat. You may have to question the practicality of being on a high floor, whether you need a large lift for a pushchair, what communal spaces there are and the refurbishments you’re allowed to make to your home. With all of the information on things like leases, service charges and ground rent, you’ll be in the best position possible to make a great decision on any flat you’re interested in.
Disclaimer: This article is for informal and general advice regarding information on buying a flat.