Things to know before you buy a flat

Estate agents must tell you anything important that may affect your decision to buy.

• There are two main ways of owning property in England and Wales: freehold and leasehold.
• Freehold means that you own the land and the building that sits on it. This is usual for most houses, but some houses may be leasehold.
• Leasehold means that you own the flat or house, but not the land that it sits on, for a given number of years (for example, 99, 125 or 999 years) under an agreement or contract called a lease.
• The lease is the written agreement that gives you the right to live in and use the property and share the use of other areas of the building or estate. The same lease is passed on every time the flat is sold, so the length of the lease keeps reducing. You should be aware that if the lease has less than 80 years remaining, you will generally have to pay a premium to extend it, the amount of which increases as the lease reduces in years. Most mortgage companies will only lend on a lease that has more than 80 years remaining. Get professional advice.
• Service charge is the payment, usually made in advance, for your share of all the costs of maintaining and insuring the building. The charge can vary year by year depending on the services provided and what the managing agent spent on the building. It is important to know your service charge as this will be an ongoing commitment every year.
• Reserve or sinking fund is ane, such asor theaThe fund spreads
• Managing agent is often appointed in blocks of flats to arrange services, repairs, maintenance, improvements or insurance and to deal with any other aspect of management. Agents are usually hired by the landlord, or a resident management company that gives the leaseholder some control.

Check out our E-Learning platform for more information on residential leases

Module 1: Introduction to Residential Leases

Click here to learn more

Disclaimer

This information is general in nature and should not be relied on in relation to any particular property purchase. It only applies to properties in England and Wales.

You should always take advice from a solicitor or conveyancer before you make a deposit or commit to buying any type of property.