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What to do when buying a flat
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propertyman
Posts: 2,922 Forumite
A few thoughts for the flat buyer.
You will make your own decision about decor, lifestyle, and location, but there is a lot more than that to the price you offer.
What you will read below may have little effect on that, but can very often have a substantial, and even scary, effect on the initial agreed price. A vendor may not agree to a reduction, happy to try again, and, as you will lose money and time and your dreams and plans dashed, you might compromise.
EAs often play on this, encouraging the tough questions to be asked later and “sorted by solicitors” who in turn often only highlight the big issues late in the day. Similarly your survey and valuation and request for information from managing agents or freeholders can take a couple of weeks and important issues come to light late in the process.
As you can see the assumption is that the price is accurate and legally physically and organisationally, all will be well. The problem is that where it isn’t, you are often on the back foot in renegotiation as your move and all the related changes will be planned.
What I outline below runs contrary to established routines but will help you, and not the EA or vendor, so be patient persistent and polite with them.
It is important to try and extract the information needed from the vendor at the negotiation stage, as it is often to hand or available online with better managing agents or freeholders, and not later.
Step I What you can’t See -understand that you are going to need to check, with professional help, the hidden issues of services and utilities, the plumbing boilers and electrics.
Step 2 Revisit - the property and locale several times especially in the evening and weekend; inconsiderate neighbours, not enough parking and people lurking nearby might not be apparent on a Wednesday afternoon.
Step 3 Is “what you see, what you get?”- roof terraces gardens might not be included so ask the vendors or EA to confirm that there is right to use it or own it, a few pots shrubs and a deck chair doesn’t mean that the roof is yours or that space to park doesn’t mean you can.
Step 4 Its never too early to Read the Lease- this is favourite put off by EA’s anxious to sell and have you on the backfoot when issues arise. The lease is available online at the Land Registry and some Vendors might even have a copy.
-Length of the Lease- A flat with 122 years and an identical one next door with 75 years have vastly different sale values, which is often not taken into account by the EA’s “ valuation” for sale. It is essential that the lease, no matter who owns the freehold, is long enough to be a long term investment for you. You are buying the lease of a flat for X years which in theory is handed back at the end and is therefore a valuable long term investment. Postponing that by extending the length means that the landlord ( whether a freeholder or residents group that own the freehold) must be compensated. That makes big difference to your offer and if the lease is offered with an interest in the freehold, there is no guarantee that the extension is “free”.
-Ground Rent - this is a mandatory payment and can vary from a peppercorn a year, to several £000, which, in many modern leases is regularly, and often hugely, increased. Not only is this, for you, a lot for nothing, it can significantly increase the cost of a lease extension.
-Restrictions- Just because you own it doesn’t mean that there are no restrictions on pets, the right to let it out, alterations, or installing the devils floorboards-laminate flooring.
-Who Does What- you are buying a drawer in chest of drawers and in most cases someone else is responsible for the rest and you pay a share for that. Even in small converted houses that does not mean that the work can be done DIY or by hiring a Chum and costs are therefore often higher and out of direct control.
In some cases you are buying a layer of a cake and are responsible for the walls and often a roof or foundation and drains. That may be advantageous,. But can the nice but penniless old lady above afford to maintain the roof, even if she wants to?
-Is there Someone At the Wheel-It is important to understand who and how this takes care of the building and if it is effective as it has a big effect on the service charges and while “ we just sort it out between us” sounds attractive, it can mask problems with agreement and cost sharing, plus dangerous amateurism on wasted money on inexpert work inadequate insurance cover and in appropriate priorities.
Poor planning can lead to surprise bills, huge ones at that, and the friendly cooperative can explode with arguments that linger for years. External freeholders are just as likely to surprise you too. In the former you might well have more input, but the risk is that nothing gets done, while in the latter needed work is normally pushed through, so signs of good coherent management is a must. I
-Service Charge- Service charge information looks at the current and previous years estimated charges, the budget, and the actual charges that are compared to the estimate at year end, in one form or another of accounts, and any difference refunded or billed to you. Remember these are in most cases an estimate which you pay in advance to allow the owner or their agent to arrange for and pay for works, not after the work has been done. You should try to get the current if not at least three years of the budgets and accounts.
-The Survey- it is important to add to your own look round the building and grounds, to specifically ask the surveyor to identify what needs doing, in the future, and how much it might cost. That will affect the service charge, and who does what- something might be a specific flat owner’s responsibility and not a communal one- and how well the building is or will be maintained.
Be wary of informal friendly arrangements as they can explode when the roof has to be done and the chap of the GF refuses to pay. This applies equally to modern new build and old converted piles covered in moss.
-No such thing as share of freehold- you will own the lease of your flat and that is what you will own and borrow on and sell in future. There are two main setups for the building ownership/management
1 a landlord/freeholder or a residents group with joint ownership of the building or via company in which they have a share or are a member of.
2 A tripartite lease where an intermediary takes on all or most of the management of the building and can be a company owned by the residents or a company that owns and manages premises, and historically a person such as a trustee or chartered surveyor
All of these may employ a managing agent acting for them.
There are also right to manage companies, owned by residents, and tribunal appointed managers, where the control has been removed from the freeholder. In social housing, management might be provided by the council a housing association or a tenants management organisation- TMO.
Residents Associations are commonly referred to in error as they are rarely in control and in fact are only advisory and consultative bodies. Their role and control should be verified.
Making The Offer
Let me restate that the initial offer/price might not reflect problems and affect saleability and the price.
The EA and Vendor will insist that this is dealt with later as
a you will be out £1000s time and dreams and likely to compromise
b the Vendor need not agree to any reduction and try their luck with a less astute buyer
Step 1 Make your offer
- subject to Survey
- verification of the SC GR and lease length and
- what you see IS what you get
Step 2 Instruct Your surveyor to inspect immediately even if it means paying again for the mortgage valuation
Step 3 Tell your solicitor not to use their standard procedure and urgently
-obtain a copy of the lease and report on it to you
-immediately seek the managing agent/freeholder enquires( there will be a fee) assuming you only have some of it so far fomr public sources and or the vendor.
That way your offer, and any issues, are quickly addressed early on, as the other job that a solicitor does in reporting on title, the contract and related enquiries, local searches, and carpets and curtains create fewer problems less often.
This approach may only take a few days to a week and is well worth pursuing to make sure that problems are identified and dealt with at the earliest time, not 4/5 weeks before you planned to jump in the moving van!
You will make your own decision about decor, lifestyle, and location, but there is a lot more than that to the price you offer.
What you will read below may have little effect on that, but can very often have a substantial, and even scary, effect on the initial agreed price. A vendor may not agree to a reduction, happy to try again, and, as you will lose money and time and your dreams and plans dashed, you might compromise.
EAs often play on this, encouraging the tough questions to be asked later and “sorted by solicitors” who in turn often only highlight the big issues late in the day. Similarly your survey and valuation and request for information from managing agents or freeholders can take a couple of weeks and important issues come to light late in the process.
As you can see the assumption is that the price is accurate and legally physically and organisationally, all will be well. The problem is that where it isn’t, you are often on the back foot in renegotiation as your move and all the related changes will be planned.
What I outline below runs contrary to established routines but will help you, and not the EA or vendor, so be patient persistent and polite with them.
It is important to try and extract the information needed from the vendor at the negotiation stage, as it is often to hand or available online with better managing agents or freeholders, and not later.
Step I What you can’t See -understand that you are going to need to check, with professional help, the hidden issues of services and utilities, the plumbing boilers and electrics.
Step 2 Revisit - the property and locale several times especially in the evening and weekend; inconsiderate neighbours, not enough parking and people lurking nearby might not be apparent on a Wednesday afternoon.
Step 3 Is “what you see, what you get?”- roof terraces gardens might not be included so ask the vendors or EA to confirm that there is right to use it or own it, a few pots shrubs and a deck chair doesn’t mean that the roof is yours or that space to park doesn’t mean you can.
Step 4 Its never too early to Read the Lease- this is favourite put off by EA’s anxious to sell and have you on the backfoot when issues arise. The lease is available online at the Land Registry and some Vendors might even have a copy.
-Length of the Lease- A flat with 122 years and an identical one next door with 75 years have vastly different sale values, which is often not taken into account by the EA’s “ valuation” for sale. It is essential that the lease, no matter who owns the freehold, is long enough to be a long term investment for you. You are buying the lease of a flat for X years which in theory is handed back at the end and is therefore a valuable long term investment. Postponing that by extending the length means that the landlord ( whether a freeholder or residents group that own the freehold) must be compensated. That makes big difference to your offer and if the lease is offered with an interest in the freehold, there is no guarantee that the extension is “free”.
-Ground Rent - this is a mandatory payment and can vary from a peppercorn a year, to several £000, which, in many modern leases is regularly, and often hugely, increased. Not only is this, for you, a lot for nothing, it can significantly increase the cost of a lease extension.
-Restrictions- Just because you own it doesn’t mean that there are no restrictions on pets, the right to let it out, alterations, or installing the devils floorboards-laminate flooring.
-Who Does What- you are buying a drawer in chest of drawers and in most cases someone else is responsible for the rest and you pay a share for that. Even in small converted houses that does not mean that the work can be done DIY or by hiring a Chum and costs are therefore often higher and out of direct control.
In some cases you are buying a layer of a cake and are responsible for the walls and often a roof or foundation and drains. That may be advantageous,. But can the nice but penniless old lady above afford to maintain the roof, even if she wants to?
-Is there Someone At the Wheel-It is important to understand who and how this takes care of the building and if it is effective as it has a big effect on the service charges and while “ we just sort it out between us” sounds attractive, it can mask problems with agreement and cost sharing, plus dangerous amateurism on wasted money on inexpert work inadequate insurance cover and in appropriate priorities.
Poor planning can lead to surprise bills, huge ones at that, and the friendly cooperative can explode with arguments that linger for years. External freeholders are just as likely to surprise you too. In the former you might well have more input, but the risk is that nothing gets done, while in the latter needed work is normally pushed through, so signs of good coherent management is a must. I
-Service Charge- Service charge information looks at the current and previous years estimated charges, the budget, and the actual charges that are compared to the estimate at year end, in one form or another of accounts, and any difference refunded or billed to you. Remember these are in most cases an estimate which you pay in advance to allow the owner or their agent to arrange for and pay for works, not after the work has been done. You should try to get the current if not at least three years of the budgets and accounts.
-The Survey- it is important to add to your own look round the building and grounds, to specifically ask the surveyor to identify what needs doing, in the future, and how much it might cost. That will affect the service charge, and who does what- something might be a specific flat owner’s responsibility and not a communal one- and how well the building is or will be maintained.
Be wary of informal friendly arrangements as they can explode when the roof has to be done and the chap of the GF refuses to pay. This applies equally to modern new build and old converted piles covered in moss.
-No such thing as share of freehold- you will own the lease of your flat and that is what you will own and borrow on and sell in future. There are two main setups for the building ownership/management
1 a landlord/freeholder or a residents group with joint ownership of the building or via company in which they have a share or are a member of.
2 A tripartite lease where an intermediary takes on all or most of the management of the building and can be a company owned by the residents or a company that owns and manages premises, and historically a person such as a trustee or chartered surveyor
All of these may employ a managing agent acting for them.
There are also right to manage companies, owned by residents, and tribunal appointed managers, where the control has been removed from the freeholder. In social housing, management might be provided by the council a housing association or a tenants management organisation- TMO.
Residents Associations are commonly referred to in error as they are rarely in control and in fact are only advisory and consultative bodies. Their role and control should be verified.
Making The Offer
Let me restate that the initial offer/price might not reflect problems and affect saleability and the price.
The EA and Vendor will insist that this is dealt with later as
a you will be out £1000s time and dreams and likely to compromise
b the Vendor need not agree to any reduction and try their luck with a less astute buyer
Step 1 Make your offer
- subject to Survey
- verification of the SC GR and lease length and
- what you see IS what you get
Step 2 Instruct Your surveyor to inspect immediately even if it means paying again for the mortgage valuation
Step 3 Tell your solicitor not to use their standard procedure and urgently
-obtain a copy of the lease and report on it to you
-immediately seek the managing agent/freeholder enquires( there will be a fee) assuming you only have some of it so far fomr public sources and or the vendor.
That way your offer, and any issues, are quickly addressed early on, as the other job that a solicitor does in reporting on title, the contract and related enquiries, local searches, and carpets and curtains create fewer problems less often.
This approach may only take a few days to a week and is well worth pursuing to make sure that problems are identified and dealt with at the earliest time, not 4/5 weeks before you planned to jump in the moving van!
Stop! Think. Read the small print. Trust nothing and assume that it is your responsibility. That way it rarely goes wrong.
Actively hunting down the person who invented the imaginary tenure, "share freehold"; if you can show me one I will produce my daughter's unicorn
Actively hunting down the person who invented the imaginary tenure, "share freehold"; if you can show me one I will produce my daughter's unicorn
3
Comments
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Bump
And a little tidy up of the text. Stop! Think. Read the small print. Trust nothing and assume that it is your responsibility. That way it rarely goes wrong.
Actively hunting down the person who invented the imaginary tenure, "share freehold"; if you can show me one I will produce my daughter's unicorn0 -
Great summary, propertyman.0
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Most welcome.
I asked MSE if they would consider it as a sticky- they didn't even have the courtesy to acknowledge that or reply. :mad:Stop! Think. Read the small print. Trust nothing and assume that it is your responsibility. That way it rarely goes wrong.
Actively hunting down the person who invented the imaginary tenure, "share freehold"; if you can show me one I will produce my daughter's unicorn0 -
Bump...................:DStop! Think. Read the small print. Trust nothing and assume that it is your responsibility. That way it rarely goes wrong.
Actively hunting down the person who invented the imaginary tenure, "share freehold"; if you can show me one I will produce my daughter's unicorn0 -
Shameless bump as apparently its not worthy of being a sticky ... booo :pto MSEStop! Think. Read the small print. Trust nothing and assume that it is your responsibility. That way it rarely goes wrong.
Actively hunting down the person who invented the imaginary tenure, "share freehold"; if you can show me one I will produce my daughter's unicorn0 -
How exactly do you get a copy of your lease from the Land Reg?Mortgage received 21/12/2018
Mortgage at start - £261,980
Current mortgage - £260,276
Saving towards a loft conversion first, then to smash the mortgage down!0 -
You can visit their site http://www.landregistry.gov.uk/public/online-services
which tells you details of fees and ordering procedure. Never used it myself so I can't give any feedback.
Good post from Propertyman;
From my experience, I don't like 'leasehold' properties - but a good rule of thumb is that if the freeholder/landlord lives on the property, then s/he has an interest in keeping the place in good order1 -
Good post.
One question, when buying a house I can see the advantage of a full structural survey, what happens with a flat. Would a !!!!!! survey the block or just the flat? I'm assuming that you wouldn't want to buy a flat with subsidence without knowing, so how do you check this out in a flat?I'm a Forum Ambassador on the housing, mortgages & student money saving boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Forum Ambassadors are not moderators and don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com (it's not part of my role to deal with this). Any views are mine and not the official line of MoneySavingExpert.com.0 -
Good post.
One question, when buying a house I can see the advantage of a full structural survey, what happens with a flat. Would a !!!!!! survey the block or just the flat? I'm assuming that you wouldn't want to buy a flat with subsidence without knowing, so how do you check this out in a flat?
I had a surveyor do as much of a full structural survey for the flat as she could as the place I'm trying to buy is in a converted victorian terrace.
Basically she based her report on what she was able to access which in my case was the front of the property and loft (which has been converted). She wasn't able to access the back of the property but did as good a look out of the window as she could do.Starting Mortgage Balance: £264,800 (8th Aug 2014)
Current Mortgage Balance: £269,750 (18th April 2016)0 -
Although there is a standardised inspection for flats beyond the mortgage valuation, when buying a flat it is always doing two things
-employing a chartered (building) surveyor direct- (often they are on the panels of the lenders and can do the MV as well, rather then they being appointed/arranged by the lender) to inspect and report on a broader specific brief for you, which you can discuss between you.
- That can involve issues inside the flat but on broader issues such as likely repairs and timescales at the block
- This starts with looking at the budget and past accounts and asking about how things are looked after from drain cleaning and gutter cleaning to ensuring the roof is regularly checked and cleared esp on flat roofs.
- When the last electrical test of the common parts was carried out on the lights to power to lift or boiler supplies and to entry phones or gates etc.
- You can ask about all manner of things as above through boilers lifts air con window cleaning cradles fire and security and entry systems as to the service contract in place, when they were installed and when the anticipated replacement date/life is.
- This is key to the major work plan, which if it is absent is cause for concern, and whether the provisions are correct, sufficient and all encompassing. I see plans for painting and carpets but omit roofs roads paths, even boiler or light plant and (basics) longer term issues like water mains and electrical systems, which are especially important in older buildings.
Stop! Think. Read the small print. Trust nothing and assume that it is your responsibility. That way it rarely goes wrong.
Actively hunting down the person who invented the imaginary tenure, "share freehold"; if you can show me one I will produce my daughter's unicorn0
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