Opinion on buying a leasehold flat

[Mabsa]

I am a First Time Buyer in the process of buying a leasehold flat in a 3 storey building. I am still waiting for all the searches and documents to be provided to me. However, I have noticed in the Fire Risk Assessment that the overall rating is Moderate (Moderate Harm and Medium Likelihood) which makes me nervous. I still haven't seen the EWS1 certificate, awaiting for it.

The report mentions: The external wall construction of the building does not appear to be of sufficiently low risk that it can be assessed visually as part of this Type 1 assessment. Parts of the front building façade has timber cladding. A specialist survey will be required.
Balcony approaches on first and second floors to rear of building appear to be constructed of non-combustible materials. There is some timber cladding to the front elevation

The building is owned by a Housing Association so this would be their responsability. However, I am worried about the potential impact that this could have if I decide in the future to sell the flat. What's your view on this? Anything I should be checking? Since I am a cash buyer, I didn't have to get a mortgage approved, hence my worry.

I am also not sure that a EWS1 certificate will be available as the building is only 3 storeys (picture attached)

Thanks! The building is from 2005 - the lease is 170 years and service charge is around £1600 year. No ground rent.

In respect of the cladding on the front, what would be your approach if you were to buy? My thinking is that I will need to see a EWS1 certificate and it needs to have a B1 rating, otherwise I am out. I think this is what the bank would look at if they were granting a mortgage, isn't it? Anything else I should look at or consider?

Thanks!

Exactly this

Well said

If the leaseholders/management company have poor reviews then I'd avoid like the plague

^ exactly
And again - i learnt that the hard way

have just been presented with an additional invoice of £6.5k for roof repairs

Well I had to pay 7k to repair my roof so...why would a flat be any different to my house?

I wouldn't touch a leasehold with a bargepole. Managed to sell put leasehold flat a few years ago and I cannot tell you the relief. All the BBC News articles are completely reflective of what we experienced.

@EducatingArti
I second every word. In my case, the accounts appear to be reasonable but it appears there is no money in the reserve
My DS is a chartered accountant and even he can't put his finger on where the money has gone

I have a leasehold flat, as is the norm for FTB in central London. For me personally it's been fine. I was aware when I bought it of pending major works, and had money ready to pay for them. I will need to look into leasehold extension within the next couple of years, but that's fine.

Unless you are a millionaire, most people in London can’t afford freehold anything. Leasehold is the only way to buy anything and is completely normal. Yes, you need to be aware of service charges etc, but for many people, living in a leasehold in London is far better than living in a freehold a long way away.

I've never heard of a 500 year lease. 170 is perfectly healthy enough for the OP and most unlikely to contribute to losing money.

The point about the roof repair is valid.. if it's your roof and you can choose when to spend your money
Lots of leaseholders say they won't pay and are being taken to court which puts more expense on everyone else and causes resentment.

Leasehold of 999 years is the norm

The cladding is potentially a problem - you're a cash buyer now, but what happens when you want to sell it? Anyone wanting a mortgage is going to have a problem. In the interim, the building insurance costs could become a problem if the insurer becomes concerned about the uncertainty over cladding.

The length of the lease is a concern. The current length is OK but there isn't loads of time remaining without it being a potential problem for a future buyer. Remember that they will also be thinking about their ability to sell in the future. The length of the lease directly affects the property value.

The lease costs might be reasonable now. What happens if they sell this on? If a predatory company buys it then you are fucked - completely at their mercy and facing endless legal wrangling to try and sort it out, even if they are egregiously wrong. This was in the news yesterday - the freehold was sold on: https://www.bbc.com/news/articles/cy84g9822gro

I would run from this far and fast. I wouldn't buy a flat without having the share of the freehold and a residents own management arrangement, with clear transparency over decisions, repairs, sinking fund etc.

Only on new-builds or possibly some extended leases. It is definitely not “the norm”.

Exactly

Agree with @rewilded I am in a leasehold house currently - have had no issues with lease in the 6 years I’ve been here and now am looking to sell and move to a flat which will more than likely be leasehold too. Of course there are benefits to freehold that people mention but leasehold can provide many options and doesn’t always = problems if it’s a decent property with a non-predatory lease, decent length of lease (longer the better but 170 certainly isn’t problematic) management co have decent reviews, you could ask neighbours who live there or post on local groups.

the cladding would put me off on this particular property but I wouldn’t rule out other leaseholds - reform is coming also so can only get better. And people will always buy flats as they are more affordable.

for me personally I’ve owned houses included free hold and I want a upper level flat next because I want to downsize and I personally don’t want the cost and responsibility of having to deal with outdoor maintenance myself. There’s cost involved with maintenance whether it is free hold or leasehold, with leasehold having a decent management with leasehold checking terms of lease and checking for service charge review periods etc is the things that can help you make a decision

I have plenty of friends in leasehold flats who are happy and sold them. There are also people with bad experiences but it doesn’t mean they are all bad

The leasehold advisory service site is a reliable source of information re pitfalls

This. 170 years is not healthy to me either.

Personally I’d try find a share of freehold flat or a small house in a slightly less desirable area. We were in this situation of house versus flat for our first property and went for a house in a less desirable area.

You made the right choice re house

Exactly this. I had a share of freehold flat and organising repairs was a nightmare.

Bricks needed repointing and the upstairs neighbour refused to pay so my mum just got downstairs done. A few years later her entire flat was mouldy and turns out surprise surprise the bricks did need repointing, she lied about ever having refused to get it done before and argued that we needed to pay half since we share responsibility. Roof also needed replacing and she pleaded poverty so nothing was done. Found out we had the wrong buildings insurance and again, left up to me to sort out and try get money out of her.

Sold it, glad to be rid of it and in future I would be happy to pay a reasonable service charge to make sure stuff actually gets done.

@CraftyNavySeal so sorry this happened to you - I have heard similar from others who had share of freehold definitely not all plain sailing. What a nightmare

I find this thread bizarre. A short lease is defined as 80 years or fewer. Of course 170 years is great.

Thanks for all the inputs! In respect of the cladding, what due diligence would you do?

Your solicitor should be querying the cladding already - what it's made of, when it was last inspected, any fire safety concerns depending on the material, whether the building insurer is aware of the cladding and if they are, whether there are any special conditions or premium loading for it (and requesting a copy of the current building insurance certificate, statement of fact and policy schedule to confirm).

Your solicitor should also be asking the management company whether there are any plans for the cladding - are there any likely future expenses for it, such as further inspections or even replacement work?

Agreed! Even if OP were to stay in the flat for the rest of her life and not renew it, it still wouldn't be classed as particularly short.

Saying she'll lose money if she sells within a few years due to the shorter lease is bizarre!

Leaseholds obviously require thorough investigation but to say they're all scams is rubbish. Share of freehold can bring it's own problems, as mentioned.

Honestly OP, I'd avoid buying a flat with cladding. Since the Grenfel Tower fire, new regulations have (quite rightly) been brought in, making selling flats much more complicated. We're in the process of selling ours - no cladding, shared freehold, and we've had to spend c. £700 on a fire risk assessment £250 on an asbestos report, had to get a fire door fitted c. £500 (it's a listed building so door has to look right). It's been a complete headache.

You're in a great position being a cash buyer, but when you come to sell anyone who needs a mortgage may struggle. Owning a flat has challenges, don't let cladding be one of them.