Buying a leasehold flat questions
Below are seven questions we are often asked by people who are buying a flat. If you have a different question drop us a line and we will be pleased to assist.
Do I still need an independent survey for a flat?
You don’t have to have an independent survey but we think having one is a good idea. The buyer needs to satisfy themselves of the condition of the property that they are purchasing. In the case of a flat it is not only the flat you are buying, you also need to be satisfied with the condition of the building as a whole because you will be responsible for paying a proportion of the cost of repairing and maintaining it.
Who is responsible for the roof?
Usually the landlord or managing company is responsible for the roof but there may be occasions, e.g. a small maisonette, where the owner of the top floor is responsible for the roof and the owner of the ground floor is responsible for the foundations.
Even if you are buying a flat on the ground floor, you will normally still have to contribute towards the cost of a new roof should one be required. One of the forms which we will ask the seller to arrange for the landlord or managing agent to complete will ask whether any major items of expenditure are anticipated. So if the landlord or managing agent is already aware that the roof needs to be replaced they should provide that information to you so that you have some idea of the cost. Of course, if they were not aware that the roof needed replacement they could still find a few months later that there is a very big bill because it is discovered that major work is required.
Would you expect a surveyor to spot that there is a problem with a roof?
It is usually harder to check the roof of a flat than an average house because they are often part of a big building. Surveyors can inspect in a number of ways. Sometimes they can get onto the roof through a hatch. On other occasions they will use binoculars from the ground, a very long pole with a camera on the top of it or a drone.
The roof is just one example of an external problem that can be revealed in a survey. If the outside of a building needs repainting, scaffolding is probably going to be required and pushes up the costs. If exterior painting forms part of the service charge you would have to pay your share of the overall cost even if you could paint the outside of your flat yourself because you are on the ground floor.
There is a roof space above my flat and I have access. Can I use that space?
It would depend on the terms of your lease. If it is part of what in the lease are called the “demised premises”, the premises which you have the right to occupy, then you will have the right to use it in the same way as the remainder of your flat. It is possible that you may have limited rights to use the roof space e.g. for storage. If this is so it will be set out in the lease. If ownership of the space is retained by the freeholder you are unlikely to have the right to use it.
What other outgoings will there be if I buy a leasehold flat as opposed to a freehold house?
The two things you will need to budget for are ground rent and service charge.
Ground rent is payable to the landlord, the person who owns the freehold of the building to whom ultimately the building will return when the lease expires. The ground rent will be fixed when the lease is first granted but there are usually provisions for it to be increased. Sometimes it is increased by a fixed amount, so for example, for the first 33 years it might be £50, the next 33 it is £100 and the next 33 ground rent is £200. It may also increase in other ways and could do so on a more regular basis. Your solicitor will advise you on this.
Newer leases often have a provision whereby the ground rent is increased every 10 years and it might increase by Retail Price Index (RPI). When there is high inflation the ground rent will increase by quite a lot. Ground rent might also be linked to the Consumer Price Index, usually a smaller increase than RPI. The increase might alternatively be fixed according to some other formula, which can sometimes produce a distorted result. We acted for some clients in Dorset, for example, and the ground rent was linked to farm workers wages.
If the increase is not predetermined you need to give very serious consideration to the effect it might have.
You will normally be asked to pay a percentage of the cost of maintaining and insuring the building and this is called a service charge. The percentage might be based on the number of flats, so if there are 15 flats you pay one fifteenth. It may also be adjusted so that if some flats are bigger than others, the owners of the larger flats pay a greater percentage.
Your service charge will be payable to the landlord if they maintain the building or to a management company. There will usually be a provision enabling the landlord or company to charge a percentage on top for their fees to carry out the management. So you might see a provision allowing the management company to charge 15% of whatever the service charge is, for example.
Big old properties are usually much more expensive to maintain and the more facilities available to you the higher the service charge is likely to be. New blocks in London with a concierge and gym will attract a greater service charge, for example.
Are there any rules relating to my use of the flat?
There will usually be a number of restrictions which are imposed on the lease. These may prohibit the keeping of pets, playing of loud music after 11pm, a requirement that all the floors be carpeted so as to deaden noise, or state that you cannot hang washing out of the windows, for example. There may also be provision for the landlord to make other rules for the general benefit of the block.
There could be additional restrictions on who can occupy the flat which are over and above the usual planning and building regulations. For example, you may not be able to sub-let your flat to a residential tenant or allow it to be used for holiday lets. The flat might be restricted to being used by only one family so you can't fill it with students. You are also likely to be restricted in terms of any alterations you can make to the flat.
What rights do I have to extend my lease?
Your property goes back to the landlord if your lease runs out.
Once you have owned the lease for two years you have a statutory right to apply for an extension. You are entitled to an additional 90 years to be added to the unexpired term and ground rent at that stage would become a peppercorn (in other words it would cease). The landlord is entitled to a premium to reflect his or her loss of you having the extension. In addition, you would have to pay your landlord's legal and surveyors fees as well as your own.
You will hopefully be able to agree a figure for the cost of your lease extension with your landlord and there are various online calculators which will give you an idea of what you will have to pay. It would also be a good idea to check one of these websites if you are searching for a property and considering entering into a short lease.
The cost of extending a lease increases quite considerably once it has less than 80 years left to run because the calculation takes into account what is known as the marriage value, the amount by which the value of the house or flat will increase once the lease has been extended. Any property owner with an unexpired term of just above 80 years should act without delay to avoid paying a marriage value.
If you are buying a flat you can ask the seller to make the lease extension application and transfer the benefit to you. It is a matter of negotiation between you and the seller as to who pays the legal costs and the premium that has to be paid to the freeholder.
If you own a flat already and have decided you would like to extend your lease see our advice for people who would like greater control over their leasehold property. This page explains Right to Manage and Right to Enfranchise which could be of interest to you.