Buying a flat/maisonette with a short lease

Sirlaughalot

I have noticed quite a few flats/maisonettes up for cash sale in my local area. I'm nearing retirement and looking to downsize. I don't expect to be around any longer than 20 - 25 years, so would this be an option?

Does the freeholder still have to offer the same original contract in terms of maintenance and servicing costs as the existing leaseholder.

ExEstateAgent

If the lease is long enough to outlast you then yes it could be worth considering. The price should reflect the short lease however. 

The lease still stands - so whatever the ground rent is will still apply but service charges can vary year on year depending on whatever work is needed (and major works are usually charged in addition to service charges). 

eddddy

Sirlaughalot said:

Does the freeholder still have to offer the same original contract in terms of maintenance and servicing costs as the existing leaseholder.

None of the terms will change when you buy the lease.

To clarify, the freeholder won't be offering you anything, when you buy a 'secondhand' leasehold property.

• The existing leaseholder owns a lease (or contract).

• You would be buying that lease (or contract) from the that leaseholder.

So it's purely a transaction between you and the existing leaseholder.

No new lease is granted by the freeholder, or anything like that.

mlz1413

If it's a place you want to live and you believe you won't need to move before you die than yes it probably is worth buying for you.

If you don't have dependents this may also be good as the property won't be worth much when you do die.

Sirlaughalot

ExEstateAgent said:

If the lease is long enough to outlast you then yes it could be worth considering. The price should reflect the short lease however. 

The lease still stands - so whatever the ground rent is will still apply but service charges can vary year on year depending on whatever work is needed (and major works are usually charged in addition to service charges). 

Great, that's a good starting point!
Are there ways of finding out if there are any major works planned for the property other than asking the existing leaseholder/freeholder?

eddddy

Sirlaughalot said:

Are there ways of finding out if there are any major works planned for the property other than asking the existing leaseholder/freeholder?

You can ask the freeholder (who might have already informed the leaseholder) - some freeholders have better forward planning, maintenance schedules, etc than others.

(e.g. Some freeholders might do regular inspections, meaning they can predict when maintenance and repairs will be needed. Others might just wait until leaseholders complain - for example, that the roof is leaking - so there might not be much advance notice.)

• You can also check the lease for covenants along the lines of "The exterior woodwork must be painted every 7 years", "the common areas must be redecorated every 5 years", etc - and then ask when these things were last done

• And/or you can look at the condition of the exterior woodwork, guttering, common areas etc - and judge whether they'll need work soon

• And/or you can hire a surveyor to look at the condition of the roof etc - to see if they think they'll be big repair or replacement costs soon

GDB2222

When buying a flat, the general condition of the building is important. After all, if it needs repairs these will need to be done eventually, even if they are not planned yet. 

Sirlaughalot

eddddy said:

Sirlaughalot said:

Are there ways of finding out if there are any major works planned for the property other than asking the existing leaseholder/freeholder?

You can ask the freeholder (who might have already informed the leaseholder) - some freeholders have better forward planning, maintenance schedules, etc than others.

(e.g. Some freeholders might do regular inspections, meaning they can predict when maintenance and repairs will be needed. Others might just wait until leaseholders complain - for example, that the roof is leaking - so there might not be much advance notice.)

• You can also check the lease for covenants along the lines of "The exterior woodwork must be painted every 7 years", "the common areas must be redecorated every 5 years", etc - and then ask when these things were last done

• And/or you can look at the condition of the exterior woodwork, guttering, common areas etc - and judge whether they'll need work soon

• And/or you can hire a surveyor to look at the condition of the roof etc - to see if they think they'll be big repair or replacement costs soon

That's brilliant eddddy,
Is there a way of obtaining the name of the freeholder online and contacting them direct?

eddddy

Sirlaughalot said:

That's brilliant eddddy,

Is there a way of obtaining the name of the freeholder online and contacting them direct?

No - you would ask the seller who the freeholder is (or your solicitor would get the details during conveyancing).

But I should clarify that you would normally ask the seller about this stuff (probably via solicitors), and the seller would then ask the freeholder.

Most freeholders wouldn't talk directly to a prospective buyer.

Sirlaughalot

So any unplanned maintenance/repairs carried out by the freeholder would be paid for by the leaseholders by way of increased service charges?

eddddy

Sirlaughalot said:

So any unplanned maintenance/repairs carried out by the freeholder would be paid for by the leaseholders by way of increased service charges?

In slightly simplified terms, the vast majority of leases work like this:

• The leaseholder is responsible for maintenance and repairs to their own flat and they must pay for the work.

• The freeholder is responsible for maintenance and repairs to the structure of the building, roof, communal areas etc - and the cost is split between all the leaseholders. Your share is called your service charge.

And...

• Leaseholders usually have to pay an estimated service charge at the start of the year

• If the freeholder correctly predicts all the maintenance and repairs that will be needed during the year, they can set the estimated service charge  accordingly to cover the cost of the work

• If the freeholder hasn't predicted all the maintenance and repairs that will be required, they might send you a further service charge bill during the year