Buying a Flat
Shakespeare once wrote “Summer’s Lease Hath All Too Short a Date”.
Admittedly, the Bard was writing about love rather than the more prosaic world of Conveyancing.
But, Leases have an important role in the home buying process, where property is transferred property from one to another for a specified time.
There are approximately 1.8m leasehold properties in England and Wales as well as Scotland and Northern Ireland.
So, how does buying a Lease differ from buying a freehold property, and what do you need to know before buying a flat?
Welcome to Chapter 29 of our Series, your Conveyancing Questions Answered All in One Place: Buying a Flat.
Urban Myth: Flats are the only dwellings governed by Leases.
First, Leases are not just restricted to flats – or Apartments as Developers and Estate Agents prefer to call them – you can buy a house with a Lease.
“First, Leases are not just restricted to flats – or Apartments as Developers and Estate Agents prefer to call them – you can buy a house with a Lease”
Just down the road from us, the town of Yate has most of its houses held under long Leases of 999 years.
There has been recent concern about Developers selling houses with Leases.
But mainly, when people talk about Leases they are referring to flats.
And that’s what we’ll be addressing in this post.
The basics you should know about Leases.
When you buy a flat, you purchase the right to live in the property for a certain amount of time.
There will still be a freehold over-arching your Lease.
You will become a Leaseholder, or Lessee or Tenant of the flat, and the Landlord or Lessor will own the freehold of the property.
You will own the leasehold flat for the remainder of the period stated which can last up to 999 years.
At the end of the period, the Lease will revert to the Landlord or Lessor unless you have applied to extend the Lease.
Leasehold extensions are a separate matter and not appropriate to discuss in this post.
Word of Warning: If you require mortgage finance you will struggle to find a suitable Lender if the number of years remaining on the Lease is fewer than 80 years.
How Are Leases Managed?
Let’s take an example of a building divided into three flats.
The Landlord will either be non-resident or better still, all three of the flat owners who form a management company that is specially formulated to run the maintenance of the whole building or block.
The flat owners can agree to employ managing agents if they so wish.
Usually, for larger blocks of flats, professional management companies will run the management of the building (often when a Developer is selling).
What you should know about Ground Rent and Service Charge.
A lease is similar to a Tenancy, so you must pay rent to the Landlord, which is known as a Ground Rent. The amount of Ground Rent will vary and some will be fixed, while others will increase over the length of the Lease.
“A lease is similar to a Tenancy, so you must pay rent to the Landlord, which is known as a Ground Rent. The amount of Ground Rent will vary and some will be fixed, while others will increase over the length of the Lease”
You will also pay a service charge to cover the maintenance of the whole building and any common parts such as paths, roads and lifts.
Your Conveyancer will make enquires of the Management Company to ascertain the cost of the current service charges and whether any major repairs are planned.
What you should know about access and amenities to the flat
– Access issues are important.
– Does the flat have a right of way over a drive, for example, from the nearest public highway?
– Are there common parts such as alleyways or hallways?
– What are the arrangements for refuse disposal and are dustbin areas clearly defined?
– Are there any garages or parking spaces entitlements? In more modern blocks of flats where space is a premium you may only have the right to a parking space – if one is available and not as a right.
– Are there communal gardens or, for example, does the garden belong to the ground floor flat?
– What about satellite dishes? Is there a communal dish or will you be prevented by a covenant in the Lease from erecting one
What you should know about alterations, extensions, improvement and renovations.
Your Conveyancer will ask the Seller’s Solicitors if the flat has been altered or extended since the date of the original lease. You could also tell your Conveyancer if you think the flat may have had alterations as he or she will not normally visit the property.
Your Conveyancer will also commission a Local Authority Search for confirmation of any approved alterations.
If you wish to make any alterations on to the flat, you must first check the terms of the Lease. You will require consent from your landlord before embarking on any big projects.
External alterations or extensions may be impossible or impracticable, and internal adjustments may need:
– Building Regulations Consent
– Listed or Conservation Area Consent (If the building is in a Conservation area)
– Consent from the freeholder.
– The consent of your mortgage company.
Alterations can be a lot of hassle. You should be sure that you like the property as it is before you commit.
What you should know about Building Insurance.
The Building in which the flat forms a part will be insured by the Landlord, but it’s the leaseholder’s responsibility to purchase contents insurance.
Your share of the insurance premium will be included in your service charge.
You have the right to challenge the amount of insurance is if you believe that you are paying too much. It is the landlord’s responsibility to find an acceptable insurance premium.
“You have the right to challenge the amount of insurance is if you believe that you are paying too much. It is the landlord’s responsibility to find an acceptable insurance premium”
Will my Conveyancer Charge me more for a Lease?
Flat Leases are more complicated than freeholds so you may be charged an extra fee by your Conveyancer.
You can still quantify that fee by agreeing a fixed fee with your Solicitor in advance.
Be very wary of the “estimated” legal fee as your Lease could be very complicated, and as a result, you may be charged hundreds of pounds more.
Flats are not going away and with demand for space at a premium, your first purchase on the housing ladder may well be a flat.
The Conveyancing of a flat is very complex but with the expert help of your Conveyancer you can feel assured that your Lease will not “have all too short a date”