Buying flat, apartments

Kynthia

Leasehold does have running costs to pay for each year, however in a freehold property you are responsible for the maintenance of the property yourself. The main difference is you can choose what maintenance to do and when in a freehold and there isn't a reducing lease that needs paying to extend.


A freehold flat is rare and not desirable. They are often unmortgagable. What you can get is a leasehold flat where the owners have clubbed together to form a company that buys the freehold. This is commonly known as a 'share of freehold' but the term is misleading as the flat is still leasehold, but often means the flat owners have more control.

Cpu2007

Thank you guys.
The idea of having buying a flat is more appealing and also better financially, as it turns out they are more economical to buy.
However as you guys explained, this leaves to a lot of uncertainty because I'm buying something that is not really 100% and future charges are something that I don't want to have to deal with.

I will ask all the questions I've been advised on here and hopefully, if they are all answered, I should get a clear picture of my future expenses(at least a good estimate).

I will try to get familiar with the terminology used in some of the questions (reserve funds,lease restrictions,alterations etc.)

Once I have done this then chances are I'll be bothering you guys again

Thanks a lot in the meantime and if you think there's anything extra I need to know then please post it as I'll be regularly checking this thread.

THank you

Errata

However as you guys explained, this leaves to a lot of uncertainty because I'm buying something that is not really 100% and future charges are something that I don't want to have to deal with.

A leasehold flat IS 100% a leasehold flat! If you don't want to deal with future charges, buy a freehold house.

AlexMac

Cpu2007 wrote: »

Thank you guys.
The idea of having buying a flat is more appealing and also better financially, as it turns out they are more economical to buy.
However as you guys explained, this leaves to a lot of uncertainty because I'm buying something that is not really 100% and future charges are something that I don't want to have to deal with.

I will try to get familiar with the terminology ... then chances are I'll be bothering you guys again

THank you

While you're researching, and further to my post above, here are some numbers based on my own flats as a case study;

I have three leasehold flats (2 BTLs and one of my own) and while its true that they tend to be cheaper than houses (which tend to be freehold, although even some house can be leasehold - our kids bought one), I made sure I knew before I bought what the likely level of service charges were.

They were £600 and £700-800 pa respectively on a couple of ex-Council 2-bedders which are probably now each worth about £175k and £450 pa on a little one costing well under £100k. Think about this; because if the service charge was, for example £1-2k or more pa in perpetuity, that could buy you a bigger mortgage!

I also asked prior to buying how communal repairs were charged; in the case of the 1st two, there is no 'sinking fund' or reserve kitty. The freeholder decides what needs doing and when work such as replacement windows, roof repairs or external decorations are done, these are charged as a one-off, split pro-rata across all the 12 flats in the block. So everyone shares everything; i.e. it's not just the top floor flats who pay for the new roof or the basement ones who pay for a new damp-course if one should be required!

In the case of the little one, because it's well managed (in effect it's a 'shared freehold' where we are all members or directors of the freehold 'non-profit' Company which owns the block) there is a surplus each year from the £450 contribution by each six flat owning 'leaseholders'. So next year, when we repaint the exterior woodwork and stonework, it will cost £5-6k or more, but we'll already have a few grand in the kitty, or 'sinking fund', so each owner will only have a one-off hit of a few hundred quid.

Whereas when the Council freeholder decided to replace the rotten old windows in another flat's block with plastic ones, I had to stump up £4.5k- albeit this was good value.

So do the numbers!

Snakey

Re: future charges, I think that when you consider a house it's easy to mentally ignore potential costs, whereas with a flat it's right there in black and white - a thousand pounds a year or whatever and you think eek, that's twenty quid a week, forever, whereas a house will cost me nothing!

Of course the reality is that a house isn't going to cost you nothing. Over the years it will need roof repairs, fresh paint, guttering, new windows, the fence will blow down in a gale, all that good stuff. It's just that you can't see those bills from here (if you see what I mean). Even just buying a lawnmower and a hedge trimmer and a decent ladder is going to set you back half a year's worth of service charges up front. And then there are the time costs of the routine things that you have to do yourself, like gardening and window cleaning.

I'm not particularly arguing in favour of flats - I happen to have one, but only because there wasn't much choice around here - but make sure you are comparing apples and apples.

emcap

On simple cost wise basis

House Price = Apartment + £30k

for same level of outgoing towards mortgage + lease + service payments.