The Flat Buyer’s Guide
Earlier this month “UK Finance” reported that 2018 saw a 12 year high in the number of first time buyers. Part of this rise will be as a result of the government’s ‘Help to Buy’ scheme and it is leasehold properties that most first time buyers will be purchasing. Typically flats are owned in this way,however sometimes you can buy a leasehold new build house, although this looks set to change in the future.
Leasehold means that you have a lease (a legal document) with the freeholder/landlord. Purchasers of leasehold property therefore need to check the lease as well as all the other sales documents as it will include additional binding obligations. First time buyers should specifically be on the look out for:
- The length of the lease – the longer the better and ideally over 80 years.
- Whether permission is needed to make alterations to the property.
- Other rights and obligations under the lease; together with the landlord’s obligations.
- The payment of ground rent and whether this can be increased and if so, when.
- Whether the freehold can be purchased in the future.
- What the repair obligations/limitations are.
- Whether there is anything sinister in the lease that could potentially affect the re-sale value.
A leasehold purchase is therefore more complex than buying a freehold property, there are more documents and obligations to understand and get to grips with.
There have been recent reports that the terms of leases are not being explained, or fully understood by buyers prior to a purchase. A number of buyers are only discovering the terms of the lease once they have completed, by which time it is usually too late.
The wording of leases is usually very technical, it is therefore important that, for first time buyers in particular, the best legal advice on the contents of the lease and accompanying documents is given at the very start of their journey in buying a leasehold property.
Nevertheless, purchasing a leasehold flat or house should not be a concern, as long you are fully informed of your rights and obligations and similar to any conveyancing transaction you should seek the appropriate advice when purchasing. If in doubt ask!
Alternatively please contact our Residential Property team.