Do you live in a leasehold property, or are you thinking of buying a leasehold property?
If you purchase or live in a freehold property, you own both the building and the land the building stands on.
Buying a leasehold property means that you only own the building and own it for a certain amount of time, depending on how long the lease is. A leasehold property can still be a good investment, but it is helpful to take note of the following.
Leasehold properties are usually flats, with each flat taking responsibility for a proportion of the upkeep of the whole building. The service charge will include costs for the maintenance of communal areas, the building insurance, and other items.
There will also be a ground rent charge to the freeholder, which is a contractual payment for occupying the land they own.
Leasehold properties will usually have a management company that undertakes work such as the maintenance of the whole building. This is typically projects such as painting the exterior, building repairs and an annual ongoing plan for projects to keep the property in good order.
It is always wise to find out, before buying, who your management company are, how long they have been managing the property, and whether they are active. You want to make sure the management company does any work properly and maintains communal areas well.
Have a close look at communal areas. Are they clean, lit well? Are parking spaces clearly marked? Does the rubbish area smell, and generally, are the communal areas well maintained?
Management companies can be changed, of course. This would involve working with other leaseholders in the building who generally have their own small committee. If you are already part of a group of leaseholders looking at changing your management company, please take a look at what we offer on our pricing page and get in touch.
Are you happy with the terms of the lease?
With leasehold properties, the terms of the lease are incredibly important.
- How long is your lease? If it is too short, it could be costly to extend it.
- Could you rent out the property if you need to, or do you have to pay a fee each time the tenant changes?
- What covenants are there? An example might include no parking for commercial vehicles.
- Check the Terms for other restrictions and understand where your boundaries are, your parking space, and any shared access.
Having said this, buying a flat for an investment, or living in one yourself, can be a great opportunity. However, knowing what to look for and what to avoid any pitfalls is helpful.
Contact us for more information on any of the above.