Do you know what a leasehold property is and how it differs from freehold? There are several things to bear in mind when buying a leasehold property and these are just a few of the important ones.
First things first…. Read the lease; have your legal advisor read your lease and make comment. The lease is very important as it sets out everything you need to know in regards to your future obligations including ground rent, maintenance, service charge and what you are allowed and not allowed to do. If you don’t understand it ask your legal advisors or surveyor.
What is the service charge cost? Can it increase and how often? What are your obligations? Is there a sinking fund? How are any future works going to be funded? A service charge collection should collect a sinking fund for future repairs on a regular basis so that the current owner contributes towards future repairs even though they may sell before such works are completed. If this is not the case the lack of contribution should be taken into account in the sale price.
Is there a Planned Maintenance Plan? A Planned Maintenance Plan will show when works are proposed and more importantly how much they are likely to cost.
Section 20 Notices. Have any notices been served on the current leaseholders?
The first notice (The Notice of Intention) will set out what works are proposed and will give leaseholders 30 days of consultation on the works and allow them to recommend contractors to tender for the works.
The second Notice (The Notice of Estimates) will set out the cost obtained for the works, again leaseholder will have 30 days to review the costs and make observations and ask questions).
The final notice (The Notice of Reasons) should set out who has been instructed and why.
Proposed work. Ask your surveyor to review your proposals on site and with the lease during his inspection, they can often provide useful hints and tips to realise the properties potential.
Always talk to your legal advisors about a leasehold property if you are unsure. We’d be happy to advise and recommend legal advisors should you wish.