Pitfalls of buying a leasehold flat

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Pitfalls of buying a leasehold flat

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snowball
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Joined: 28 Oct 2004
Posts: 6246
Location: swindon

Posted: Fri Sep 07, 12 8:02 pm Post subject: Pitfalls of buying a leasehold flat
Are there any? WE have figured out that we are not going to use the vendors' estate agent linked solicitors no matter how nice and helpful they want to be. Obviously we need to see the lease agreement and service charges in writing. Is there anything else we can demand that may make reference to future maintenance costs or anything like that?

jamanda
Downsizer Moderator

Joined: 22 Oct 2006
Posts: 35057
Location: Devon

Posted: Fri Sep 07, 12 8:05 pm Post subject:
Our first flat was leasehold - no issues at all.

microbiz

Joined: 05 Sep 2012
Posts: 9

Posted: Fri Sep 07, 12 8:12 pm Post subject:
Both my sister and daughter have had probs with residents(or sub-let tenants?) in flat above. Overflowing their bath and flooding ceiling, and boiler sprung leak - ditto. A lot depends on which floor you're on and how lucky you are with neighbours and landlord.

T.G

Joined: 13 Sep 2009
Posts: 7280
Location: Somewhere you're not

Posted: Fri Sep 07, 12 8:35 pm Post subject:
Just make sure the lease has plenty of time left on it, you can renegotiate and purchase a longer lease but this can take time; so allow for this in the time on the lease for sale.

Katieowl

Joined: 01 Jun 2006
Posts: 4317
Location: West Wales

Posted: Fri Sep 07, 12 8:35 pm Post subject:
Yes ask if there is any major work planned that you have to contribute towards! Also check the length of the lease against how long you want to stay there for...there is a figure beneath which it's difficult to sell without extending it. Some building societies won't give a mortgage if they don't think the lease is long enough. Kate

Bebo

Joined: 21 May 2007
Posts: 12590
Location: East Sussex

Posted: Fri Sep 07, 12 10:19 pm Post subject:
There is usually a service charge or charge for maintenance of communal facilities. So if the roof looks like it's had it be aware, as you may end up paying a proportion of the cost of replacement.

Jb

Joined: 08 Jun 2005
Posts: 7761
Location: 91� N

Posted: Fri Sep 07, 12 10:26 pm Post subject:
The very fact that you are asking the question should indicate one of the drawbacks. Any potential buyer in future will ask themselves the same question so if and when you want to sell it will be less attractive to any potential buyer. It doesn't matter whether the reluctance is irrational or not, it is real and could be a problem.

Bebo

Joined: 21 May 2007
Posts: 12590
Location: East Sussex

Posted: Fri Sep 07, 12 10:29 pm Post subject:
Length of the lease is also an issue when it comes to resale. If you're buying with a 200 year lease then no worries. If its an 80 year one and you intend to stay there for a while then it might be more of an issue.

RichardW

Joined: 24 Aug 2006
Posts: 8443
Location: Llyn Peninsular North Wales

Posted: Sat Sep 08, 12 6:54 am Post subject:
If I remember right when we had a "price realignment" in the late 80's early 90's (might have been a bit later) the first & worst hit were the leasehold flats with most owners going in to deep negative equity.

dpack

Joined: 02 Jul 2005
Posts: 46247
Location: yes

Posted: Sat Sep 08, 12 7:07 am Post subject:
as above and any disputes may require a good lawyer as the lease contracts are often open to interpretation the word bargepole can be inserted in a suitable sentance

joanne

Joined: 28 Oct 2004
Posts: 7100
Location: Morecambe, Lancashire

Posted: Sat Sep 08, 12 7:46 am Post subject: Re: Pitfalls of buying a leasehold flat

Snowball wrote:

Are there any?
WE have figured out that we are not going to use the vendors' estate agent linked solicitors no matter how nice and helpful they want to be.
Obviously we need to see the lease agreement and service charges in writing. Is there anything else we can demand that may make reference to future maintenance costs or anything like that?

I wouldn't worry too much about the fact that the estate agents have a linked solicitors - this is quite common and is just a way of getting work passed to them, it's a very tough market for conveyancers out there at the moment and they are having to work much harder and more competitively than they've ever done, especially with the introduction of what is commonly known as 'Tesco Law' which opens up the market to 'other' providers. There are alot of solicitors merging or going under at the moment as their bread and butter work ie conveyancing is disappearing

Under the rules in the SRA Handbook that came into force last October each solicitor performing conveyancing services has to be seen to be conforming to the code of conduct which requires them to comply with the following

�provide a proper standard of service to your clients� by �taking into account the individual needs and circumstances of each client.�

and ensure that clients are in a position to make informed decisions about the services they need, how their matter will be handled and the options available to them.

They also have to have systems in place to monitor risk and ensure that all 3rd party search providers are accredited by the Council of Property Search Organisations (CoPSO).

Any good solicitor should perform a number of searches based on the postcode, these will include

1) A drainage and water search to identify where the drainage is, who is responsible etc,

2) A local council search using either a personal search company if your lender allows them (they are often cheaper) or an official search by going straight to the council. Depending on the area and the property you are buying they may look at roads and surrounding areas for any applications for development and there are numerous other additional questions such as common land, pipe lines, houses in multiple occupation, noise abatement etc

3) Any local hazards such as flooding, radon, coal, limestone, brine (mainly Cheshire), ball clay, china clay and if the High Speed 2 proposed rail route is within 5000 metres - this is usually covered by a residential environmental search from either Groundsure or Landmark, although there are specific extra searches needed for coal mining areas and areas where china clay is mined

4) A Land Registry search to establish title and any covenants held on the property, if its already registered with the Land Registry (ie previously sold after about 1990), the results should be pretty instant although they are a right royal pain in the backside and if there are big lease documents they haven't always scanned them in so there is a delay

For a flat that has a leasehold (pretty common), there will be 2 searches needed at the land registry, the lease documents and the freehold documents, this should reveal most of the issues you are worrying about

You also need another Land Registry product when you are about to complete to prevent someone else coming in and placing a charge on the property before you - For freehold or standalone properties its known as as OS1 - Official Search with Priority and for Flats or sometimes new builds it's known as an OS2 - Official Search of Part with Priority

Beyond that, is up to your individual solicitor and the needs of the property, there can be a Chancel search done if you are in a village or area where there is likely to be a Chancel Repair liability for the local church or transport searches for cities to see how near the trams or underground run.

Hope that helps

BTW, I only know all this because I work for a company that provides all these searches as a 'one stop shop' - We don't do the searches ourselves, we just provide the technology to do it all from one place and not have to go to each supplier individually and over time the conveyancing requirements tend to sink in

snowball
Downsizer Moderator

Joined: 28 Oct 2004
Posts: 6246
Location: swindon

Posted: Sat Sep 08, 12 8:37 am Post subject:
Thank you all very muchly.

WandaBlue

Joined: 03 Feb 2011
Posts: 40
Location: Sanday, Orkney

Posted: Sat Sep 08, 12 10:34 am Post subject:

Are you buying a new lease from the Landlord or an existing lease from the current tenants? This will make a difference to what LR search your solicitor applies for. If it's the former it'll be an OS2 but if the latter it will only be an OS1. Also if it's a new lease your solicitor will need to make sure it contains a suitable plan and this plan will also be attached to the OS2. If the plan is not up to standard both applications would be rejected by LR. As an ex-LR employee I would never buy leasehold.
I have also had to deal with a lot of problems from solicitors who don't actually know a lot about conveyancing over the years. It's one of their best earners but very few of them seem to really understand what they're doing. One solicitor once said to a colleague of mine 'I should have stuck with litigation, it was easier'! Thankfully leases are a bit more straightforward these days but they were never my favourite thing to deal with.

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