Investors' Chronicle quotes Hannah Catt and Lauren Fraser on what to consider when buying a flat
When flat hunting, there are several key considerations and areas to examine before purchasing, including service charges, rising ground rent, lease length, property characteristics and amenities, and legal changes.
Hannah Catt, Senior Associate in the Private Property team and Lauren Fraser, Senior Associate in the Real Estates Disputes team are interviewed by Investors' Chronicle on what to consider when buying a flat?
If rising ground rents are an issue, purchasing a share of freehold or converting a leasehold into a share of freehold can eliminate this and enhance the property's marketability. It also provides more control over building management and associated costs, allowing freeholders to replace management companies if necessary. However, this arrangement brings added responsibilities, especially if you become a director of the company owning the freehold, requiring compliance with company law.
In smaller blocks or period conversions, the freehold may be jointly held by individual flat owners, necessitating collective decision-making and discussions on potentially sensitive topics.
Lauren Fraser, Senior Associate in the Real Estates Disputes team, comments:
Unfortunately I do see quite a lot of situations where those discussions have broken down, because there’s conflicts in terms of major building works required and some people don’t want to pay for it while others do.
However, neighbourhood disputes can arise regardless of property tenure, and it's advisable to inquire about existing disputes before purchasing.
Extra considerations for rental properties
Prospective landlords considering purchasing a leasehold flat should also be aware of several additional factors. These include extra costs such as service charges and ground rent, it's important to assess whether these costs can be recouped through monthly rent.
Landlords will also need to make a decision about whether they want a leasehold or share of freehold property. For landlords, this often comes down to how involved they want to be in the management of the building.
Hannah Catt, Senior Associate in the Private Property team, comments:
An investor should think very carefully about what it is they want to get out of the property, and how much time and money they want to put into it. That should be mapped on to the property you’re investing in.
Read the full piece in Investors' Chronicle here.
