Short lease - serious issues?

RoisinDove

LAD917 said:

No, there's no similar issue for service charges, though the lender will take the service charge into account when determining whether you can afford the property.

Good for you for asking about lease lengths, ground rent, and service charges.  Many first-time buyers do not, and many estate agents say it's a matter for your solicitor (and then refer one who gives them a finder's fee).  It's always better to have this information before you make your offer and IMO it should be required by law in all real estate advertisements.  You're far better to be too careful than not careful enough. Best of luck!

I'm very surprised that most first-time buyers do not. I feel very 'green' as if I really don't have a clue about anything, but perhaps I am being too harsh on myself? I am trying to learn as much as I can very quickly but there's just so much to think about and it can feel very overwhelming when estate agents are pressuring you to make an offer. 

NameUnavailable

RoisinDove said:

NameUnavailable said:

You also want to avoid flats with ground rent over £1000 in London or £250 elsewhere as they become an AST and you have fewer legal rights - again many lenders won't lend on them (or if there is a doubling ground rent clause in the lease which means the ground rent will increase to exceed those levels in the future - there are some exceptions, best to check with your lender as to their rules).

Oh really? I had no idea about this! This applies to ground rent only, right? There's no similar thing for service charges (which almost always exceed £1000 in London)?

Service charges are a whole other matter! You want to know if there is a management company, if the residents have Right to Manage or if it's shared 'as and when' maintenance.

If there is a management company (likely if there's more than about 4 flats) then a large amount of the annual service charge is for buildings insurance and then just for paying them to manage - it isn't spent on the actual property. Your solicitor will ask about recent works and any planned works so you will have some idea of what additional costs you're likely to face.

Always look carefully to see how well kept the block looks - grounds, the exterior of the building - paintwork etc. - and the communal areas. If everything looks a bit tatty then you're likely to have some larger bills coming up for redecorating etc., and it raises questions about how well the property is actually managed.

RTM/self management is great because more of your money will actually be spent on the property (rather than someones wages) but it does depend on having reasonable neighbours who will contribute to arranging works and paying their share of the costs.

bouicca21

The other thing with flats is to get hold of the lease and read it carefully in case there are provisions you don’t want/like.  A regular on this board is people who either have or want to have pets and discover the lease forbids them.  Reading the lease would also confirm just what the ground rent is, rather than what the EA says it is.

Service charges vary enormously depending on what facilities exist - lifts, gyms and concierge services are expensive.   I’d be wanting to see recent service charge demands.

RoisinDove

bouicca21 said:

The other thing with flats is to get hold of the lease and read it carefully in case there are provisions you don’t want/like.  A regular on this board is people who either have or want to have pets and discover the lease forbids them.  Reading the lease would also confirm just what the ground rent is, rather than what the EA says it is.

Service charges vary enormously depending on what facilities exist - lifts, gyms and concierge services are expensive.   I’d be wanting to see recent service charge demands.

Thanks - how do I go about getting hold of the lease? Is that a thing the solicitor would do as part of their service?

princeofpounds

The lease can be obtained from the land registry, if registered (as most will be). 

Your solicitor will obtain it, but you can order it yourself and for the small charge it's worth doing early in the process in case it throws up anything that immediately means you don't want to go any further.

RoisinDove

princeofpounds said:

The lease can be obtained from the land registry, if registered (as most will be). 

Your solicitor will obtain it, but you can order it yourself and for the small charge it's worth doing early in the process in case it throws up anything that immediately means you don't want to go any further.

Thanks very much. Can I ask what sort of charge is typical for obtaining a copy to read through?

Tiglet2

RoisinDove said:

princeofpounds said:

The lease can be obtained from the land registry, if registered (as most will be). 

Your solicitor will obtain it, but you can order it yourself and for the small charge it's worth doing early in the process in case it throws up anything that immediately means you don't want to go any further.

Thanks very much. Can I ask what sort of charge is typical for obtaining a copy to read through?

I believe it is £7, but you can look on the official HMLR website to check.

LAD917

Before paying for a lease, see if you can get an unofficial copy for free and more quickly from the estate agent, who will often have it from the vendor. 

If I'm ready to offer, I normally ask to see a copy of the lease and lease plan. In most cases, the agent will give it to me as long as they have it and I've presented myself to be a serious buyer ready to offer.  If needed, my go-to "excuses" are that I want to see if [something] is officially demised; I want to see if I can add wood floors / if the wood floors are legal; I want to see the policy on pets; etc. 

RoisinDove

LAD917 said:

Before paying for a lease, see if you can get an unofficial copy for free and more quickly from the estate agent, who will often have it from the vendor. 

If I'm ready to offer, I normally ask to see a copy of the lease and lease plan. In most cases, the agent will give it to me as long as they have it and I've presented myself to be a serious buyer ready to offer.  If needed, my go-to "excuses" are that I want to see if [something] is officially demised; I want to see if I can add wood floors / if the wood floors are legal; I want to see the policy on pets; etc. 

Ah right, thanks. I'm a bit confused about the whole 'demised' thing. I've seen a couple of places with gardens where the ad says the garden is 'not demised to the flat'. What does that mean in practice?

bouicca21

If the garden isn't demised to the flat it simply means that you are buying the flat but not the garden.  The garden could belong to another flat or could be communal - it’s another reason to read the lease at an early stage, so that you know just what you are buying.