10 Things to Consider When Buying a Leasehold Flat

When buying a leasehold property, leaseholders need to be confident that they are aware of what is and what is not included in their lease and understand any changes they may face during the lifespan of their lease.

We have tried to think of everything you need to consider and we’ve picked the brains of a friendly Mortgage Broker Rachel Rowley at Five valley Mortgages

1. Check the lease

The lease is king and you need to check for any restrictions, as the lease will have been written and it’s in place to maintain the look and feel of the property and its grounds. The obvious one is pets, but check whether there are any details about vehicles, parking, whether you’re allowed to Airbnb your property, or sub let etc. Lots of leases don’t like mobile homes or caravans.

So essentially, check for anything out of the ordinary.

2. Are you a happy sharer?

Are you happy with communal living, the communal shared space, whether it’s inside or outside or both - are you happy sharing? If you are used to having wild, noisy barbecues then you’ll need to seek, not permission, but get the other leaseholders on side.

3. How are you at following rules?

Some management companies can be very pedantic about rules - where you put your bin or how you do your recycling. If you’re ok with this then great - if you’re a bit of a rebel and like to dance to your own tune, then this is something to consider.

4. Service Charge Budget

As a prospective buyer - before you make the exciting offer, do you know how much extra you’ll have to pay a month? The service charge isn’t a choice - it’s a regular payment you are legally committed to pay.

Also check where the property is in its cycle of works, and what’s in the service charge sinking fund. It may be time for the ten year exterior painting that’s detailed in the lease - so is there enough money to pay for it? Or are you going to be landed with an expensive bill you haven’t budget for?

5. How Considerate & Tolerant Are You?

I know it sounds like a weird question to raise, and it’s similar to the sharing question - but how tolerant are you to other people’s noise? How much noise do you and your family make? If you have little ones and you’re considering buying somewhere that has a lot of older residents - how tolerant will they be to the noise that children make?

Or is anyone an avid musician? How will hours of musical practice go down with the other residents?

6. Remember you are legally a tenant

Leasehold is a very long tenancy during which you must maintain and repair the property at your expense without compensation by the landlord at the end of the tenancy. That statement tends to put a leasehold purchase into perspective as many people assume that they will own the property outright and live in it as they see fit.

7. Check the length of the Lease

Generally speaking, the shorter the term of the lease, the more you will need to pay to the landlord should you wish to have it extended. Lease terms approaching 80 years are less marketable than longer terms because ‘marriage value’ is payable when the term falls below 80 years, which increases the cost dramatically. Also, a good mortgage broker will know which lenders are more sympathetic to applications with shorter leaves.

8. Check the ground rent

Ground rents vary from lease to lease and it is very important you check what it currently is and whether it could be increased in the future. Onerous ground rent provisions in the lease can prove extremely problematic and prevent you from securing a mortgage.

9. Cladding

Cladding has become a very serious issue since the tragic events of Grenfell Tower. Lenders are refusing to provide mortgages on properties without a fire safety certification for the external wall surface. Although government funding is available, it is very limited and the cost of making an external wall surface safe and having a ‘waking watch’ on buildings is commonly passed on by landlords to leaseholders through the service charges. Many leaseholders are finding themselves unable to pay the charges or sell their property. Make sure the building has an EWS1 certificate if it needs one.

10. Don’t skimp on legal fees

Always employ the services of a conveyancer who specialises in leasehold and can advise you on the lease. If you don’t use a specialist, it might prove very costly for you in the long-term should something be overlooked!

Here’s a great article we found in Which, Six things you should check before buying a leasehold property

These are intended to give you a “heads up” ten things to consider before you buy a leasehold property.

Don’t let it put you off though, we manage hundreds of leasehold properties and have hundreds of happy leaseholders. We’re simply suggesting you go into this with your eyes wide open.