When you opt to buy a flat over a house, you are likely to incur service charge fees which can add up to thousands of pounds and a whole host of other problems if you don’t check out the leasehold agreement, freeholder finances and your neighbours!
Follow our top 10 tips for extra checks to make when thinking of purchasing a flat (or leasehold property) as your new home:-
1. Can you secure a mortgage on the flat?
Not all lenders will lend on flats. To have access to a wide range of mortgages, the flat needs to be on the ground to fourth floor, but you will be restricted to certain mortgage lenders above that level. Some lenders won’t lend on properties above shops, others won’t lend on flats that have been converted. Finally, you will need the lease to be seventy years or more.
2. Check out the neighbours!
Who is living above, below and to the side? Are they noisy? Can you hear them during the day/evening time? Check the comings and goings late at night by visiting the area and seeing if it’s quiet or turns into a nightmare place to live.
3. What access to parking do you have?
Is the parking for cars a ‘free for all’ or do you have an allocated space? If it’s the latter, is it near your flat? Is it well lit at night? What happens if someone else is in it? Who can you complain to?
4. Who is the freeholder or company that looks after the lease?
Is it an individual, a private company or a Housing Association? How long have they owned the property? Are they in it purely for profit? How secure are their finances? Do they have any money saved for major works?
5. Are there major works to be done?
Just like you would with a house, you’d hope that anyone buying a property would engage a surveyor to make sure the home is in good order. However, most people try to falsely save money on surveying fees. But your legal company and even a surveyor should look through the lease agreement for you and advise what happens financially when major works need to be carried out.
6. Lease Terms
Check the terms of the lease carefully. How many years are left? Ideally you need 70+ years to secure a good mortgage rate. Also check for any works required which you will be billed for eg refurbishing windows. Your service charge doesn’t always cover ‘one off’ repairs/maintenance.
7. What are the leasehold restrictions?
All leasehold agreements normally have some restrictions on the way you live. For example, no pets; no subletting rooms/the flat, but it can be equally restrictive in that you can’t run a business from the flat or fit laminate/wooden flooring. Make sure your legal company highlights all restrictions within the lease.
8. What are the past, current and future ground rent and service charges?
Make sure that your legal company checks out the charges carefully as you don’t want to buy the flat only to be told you now owe ?5,000 for repairs that need carrying out. You also don’t want to buy if the service charges and ground rent are going up substantially year after year.
9. Are the walls/floors insulated?
New flats have to meet strict sound proofing regulations between floors and walls and it’s good to find out how well insulated from a sound perspective the flat is versus the neighbours.
10. Where’s the stop cock?
Believe it or not, not all flats have their own stop cock! That’s worrying if you are on a floor below all the other flats! It’s also good to know whether you need to fit one in the flat prior to buying so you can negotiate the cost off the fee.
For more information on buying a leasehold home, check out our section on flats, and take a look at our eBook and factsheets. Do you have a property question you want an unbiased and independent answer to? Call us on 0845 838 1763.
I have been a consultant to the property sector for a number of years and been renovating properties for over 20 years. I have also written a number of books, including four for Which? - Buy, Sell, Move House, Renting and Letting, Develop your Property and the Property Investment Handbook.
I am currently one of the top property experts in the UK and regularly quoted in the press including the Telegraph, Independent, Times, Daily Mail and Express as well as featured on a number of local BBC Radio stations.
Contact me at Designs on Property on 0845 838 1763 or visit our website and my blog using the links below:-
http://www.designsonproperty.co.uk/
Kate_Faulkner
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Tags: Lease, mortgage, mortgage lender, mortgages