Property in the UK is either freehold or leasehold. If you buy a flat or a maisonette, you should buy a leasehold title.
This means you will own the right to live at the property for the term of the lease, which could be anything up to 999 years. Often new flats are given a 99 year lease. If you buy the flat some time after the lease was first created, there will be less time left to run. Once this drops below 80-90 years, it is advisable to think about extending it.
You have the right to ask the landlord to extend the lease for 90 years if you have lived at the property for at least two years. This does come at a cost however, both in legal fees and by way of payment to the landlord.
Service charges
Most leasehold property owners pay regular amounts into a fund shared by all the flat owners to cover joint costs such as buildings insurance and maintenance of the fabric of the building and communal areas. Ideally, excess is paid into a sinking fund which will build up a balance that can be used for expensive items, such as a new roof. Charges can run into several hundred pounds a month. Luxury apartments with, for example, a swimming pool and gym will charge more.
Ground rent
This is the annual payment made to the landlord. It can be anything from a peppercorn to several hundred pounds per annum. You should make sure you carefully check the lease when you buy a property, as some leases state that the ground rent will increase steeply over time.
Restrictions
The lease is likely to include restrictions on your behaviour while living in the property, such as a prohibition on pets, a requirement of quiet between certain hours and the banning of any sub-letting. Make sure you are aware of all the terms of the lease before you go ahead with any purchase.
Retirement developments
These can have onerous leases, with lengthy rules about selling and sub-letting. There are also likely to be substantial service charges to cover services and facilities such as a warden, 24-hour emergency contact and communal rooms and gardens.
There may also be event fees, ie. one-off payments due on sale or sub-letting of the property.
Professional advice
If you’re considering buying a flat or you want to look into extending your lease, you should speak to an experienced professional who is used to dealing with the often complicated leases and service arrangements. The paperwork on a flat purchase is far more extensive than when buying a house. By engaging a lawyer who understands the system you can be sure of avoiding nasty surprises later on.
To speak to one of our leasehold property specialists, ring us on 0333 305 5189 or email us at lpropertylawyers.co.uk
