Buying leasehold property: how to avoid the pitfalls

Have you ever read a lease? If you haven’t, you’re not alone. Every year thousands of people buy leasehold flats without having much idea of what they’re letting themselves in for.

In many parts of England and Wales, if you want to buy a flat, often the only option is to buy one that’s leasehold. If you own a leasehold flat you don’t own the building or the land it sits on, instead, you buy the right to live in it for a fixed period of time (the length of the lease). The length of the lease typically varies between 99 and 999 years.

The Law Commission recently proposed changes to the leasehold system, which should make it easier for leaseholders to buy the freehold or extend the leases of their homes. You can read more about their recommendations here.

As a leaseholder:

You are responsible for and can make decisions about whatever is within the four walls of your flat, but the landlord (otherwise called the ‘freeholder’) is usually responsible for maintaining the fabric of the building (the external walls, communal areas, the roof etc).The freeholder can be an individual, a company or the block of flats can be owned collectively by the leaseholders who live there.The leaseholders normally have to pay the costs of any maintenance and repairs. It’s worth checking out your lease as this will tell you how often the building will be repainted etc.  If something is in the lease, you’re contractually obliged to do it so don’t ignore what’s written there.You will have to insure the contents of your flat, but the freeholder will normally insure the building for you. Some insurance brokers pay the freeholders a commission which can inflate the level of the insurance premium.You will have to pay a ground rent. This is often only £100 a year or less, but you’re legally obliged to pay it and – if you don’t – you’ll be in breach of your lease.

Some landlords manage leasehold property directly themselves, others employ a firm of managing agents to do it for them. If the flat owners don’t think the managing agents are up to the job, they have the right to take over the management of their block of flats through Right to Manage. Find out how this scheme works here. If the flat owners own the freehold collectively, they can choose who manages it.

Author: wpadmin

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