Buying a Flat With Leasehold

Flat With Leasehold

A leasehold property is one where the buyer has a lease to a flat rather than a freehold. It is a common feature of many apartments and even houses in larger buildings, especially those purchased through shared ownership schemes.

There are a number of issues to consider when buying a flat with Leasehold Service Startup, including the length of the lease. You will want to understand how the length of the lease might affect getting a mortgage and your property’s resale value. You should also ask your solicitor to check the lease to clarify the parts of the building you will be responsible for and the likely costs involved.

You should also consider whether the building has been properly managed and maintained over the years, with service charges and ground rents being paid by all the flat-owners. It is important to see three years’ service charge accounts and note any trends in the amount of contributions that owners are required to pay.

Buying a Flat With Leasehold

The identity of the landlord isn’t always made clear when you view a leasehold property, but it is usually an individual or company. This could be a private or public sector company, the local authority, a housing association or an Resident Freehold Company (RFC).

If you buy a leasehold flat you will need to ensure that the lease is up-to-date and clearly sets out the rights of the current residents. It should specify any restrictions, such as age requirements or retirement schemes. It should also contain a list of covenants which set out basic rules and obligations which must be adhered to by all flat-owners. These are enforceable in law and, if breached, can lead to the forfeiture of the lease and the repossession of the flat.

You will also need to ensure that the lease is properly registered with the Land Registry. A valid registration is a key part of the purchase process as it makes it easier for the new owner to get a mortgage and protects them against the risk of legal action should they decide to sell in the future.

Buying a flat with a leasehold is more common than you might think and is often the preferred way to own an apartment, particularly in London where it’s relatively easy to find good quality flats. But you need to be aware that it is not for everyone, so you should have a solicitor check the lease carefully to ensure it is up to date and explains the terms of your ownership well.

You should also ask your solicitor to check that the property has a reserve fund. A reserve fund is a pot of money that is set aside by the freeholder to cover unexpected expenditure or for general maintenance and repair work. The lease should state whether this is financed by annual service charges, a lump sum at the time of re-sale or a combination of both.