Things to Consider When Buying a Leasehold - Property Management

Posted by Greenslade Taylor Hunt on 21st May 2021 -

Buying a leasehold property can seem like a minefield, but Chris Holt, Manager of our Property Management Department, has put together a helpful list of key points to consider:

 

1.      Fully review the Lease

The lease is a legally binding written contract that transfers possession of a flat for an agreed fixed period of time. The lease will set out the detailed terms on which you are entitled to live in the property, including your rights and responsibilities as a leaseholder. Make sure you understand these as you may be responsible for things such as the replacement of windows, and have restrictions like not being allowed a pet in the property. Take advice if you are unsure of any terms or covenants.

 

2.      How much is the service charge?

Service charges are the contribution by the property owners (leaseholders) towards the maintenance of the shared areas and amenities. These can vary hugely depending on how big the communal areas are and the type of shared amenities. Be mindful of the realistic costs of providing these services and maintaining the property to an adequate state.

 

3.      Are there any major works anticipated?

Major works can include things such as external redecoration or a roof replacement, and these should be anticipated by the management company or managing agent of the block. You need to ask your surveyor to see if they can foresee any work that might come up. Following a Section 20 process it will be your responsibility under the lease to contribute towards these works, so it is a good idea to check.

 

4.      Is there a reserve or sinking fund?

Every leasehold block or estate should have some form of property maintenance schedule detailing what the likely costs will be to maintain the property and its constituent parts over a period of time. This should result in an additional payment to the service charge, which goes into the reserve / sinking fund, so that when a large expenditure does come up you don't have to find thousands of pounds. These funds are often built up to offset anticipated major works.

 

5.      Cladding and fire safety

Cladding and fire safety has become a very serious issue since the tragic events at Grenfell Tower. Lenders are starting to refuse to provide mortgages on properties without a fire safety certification for the external wall surface. You'll need to ensure the building has an EWS1 certificate if it needs one. Make sure you are provided with the Fire Risk Assessment and take the time to review it. Major works can lead from the recommendations detailed in the reports.

 

If you already own a leasehold property and have questions regarding the management of your block or estate, our leading team of qualified managing agents are ready to help and give advice. We can offer property and estate visits, as well as competitive fees and expert knowledge. We work alongside our extensive Commercial, New Homes, Development Land & Planning, and Survey & Valuation departments to offer a comprehensive service tailored to you.