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)

I reckon that particular poster is actually after that flat 😂

There is nothing fundamentally wrong with buying a leasehold flat. They exist outside London too. Talk to your surveyor for more information. Leaseholds under 80 years are an issue. Extend before this.

I would say don't do it! I work in conveyancing and there are quite a few problems that people buying flats in a leasehold building can incur. There are many restrictions regarding what you can do with your flat, even though you are the owner. You will probably have to pay service charges and definitely rent. You would quite likely need to become a shareholder in the company that owns the building. It really has so many complications that I would never go for such a property. Honestly, you're better off renting from the Housing Association direct if you can. If you want to buy, go for a starter home or flat which you will be able to own outright once you've paid the mortgage.

Don’t do it ! The fees could and probably will go up over the years!

i have a share of freehold flat - there’s 7 flats and we all run it together as a limited company and it works very well for us

I’d never go leasehold again had loads issues and massive bills with my previous flat

If you want to buy, go for a starter home or flat which you will be able to own outright once you've paid the mortgage.

I'm not sure what you mean by this? All flats have a lease of some kind.

Ah, I see you are a cash buyer so don't need a mortgage. As the poster just above has said, you can buy a share in a freehold flat. However, if you can afford it I'd go for a house.

I would only buy a flat where the freehold is owned by the residents. I own a leasehold but in a block where residents have bought the freehold and leaseholders self manage the development..

Service charge is subjective, we pay 2k but we have a large sink fund and it's a 1930s development with a large garden. And we have plans to replace the doors and we have done up the interiors nicely. Also in London and the cost of tradesmen has really gone up. Similarly for large flats in developments with carpets in the communal corridors and art hanging on the walls and grade 2 listed, I can see why the service charges are double that or perhaps even more and it's not necessarily a scam..

Developments where residents own the freehold can also have leasehold flats! In my development only half of the residents bought the freehold, the other half didn't but we all pay the same service charge..

Yes that's why I was put off share of freehold in a house conversion. They say the sweet spot is share of freehold in a development of 10 to 36 flats, not everyone can be lunatics. Too many and the development is too big and service charges higher..too few and one of them could be a lunatic.. highly unlikely all 30 of them are lunatics.

I have a leasehold but it is in a development where residents own the freehold and there is a residents management company where the leaseholders can be directors.

Get a solicitor to explain. If not happy look for freehold propo

Watch the programme that was on last night on BBC 1 and I'm sure you'll run screaming, one poor guy suddenly had the service charge upped to £14k per month to cover repairs! I had a leasehold flat once, never again, even tho it was one owned by the occupants, when there was some major damage to the building there was not enough in the funds to pay it and we all had to pay a share. So glad to sell it and get out!

You don't necessarily need to pay ground rent. My ground rent is peppercorn which is zero. My flat is leasehold but the freeholder are the other residents(who bought the freehold) and they allow leaseholders to be director of the residents management company.. we can keep dogs and cats.

We pay service charge but flats are usually in more expensive urban areas. A 2 bed house is 200k more. The interest on that alone is 9k per annum which is a hell lot more than 2k service charge per year..if you move further out to a place where you can buy a house for the same cost you are going out of London, commuting is easily 4k per year while my husband is able to cycle to work and I take the tube.

Pay service charge or the rail companies- both choices are valid. Also I planned to work after having a baby (and am pregnant now), and I didn't want to be dealing with cancelled trains while trying to pick my child up from daycare..

I think you're overly hung up on the EWS1. They're not required for this type of building and it is quite a long way from meeting the requirements for one. Potentially a future buyers mortgage provider might take a view but it's not normally that difficult to find an alternate provider with a different view - they certainly enjoy to lend money!
FWIW, it had no trouble selling lightly cladded 3 story without one back when the EWS1 form was newer and more enthusiastically used.

Honestly I'd run a mile from buying a flat in a block like this, housing associations will bill you for a proportion of the overall cost, (unless there is a clause) for parts of any major works that need doing, such as balconies, I would look into it carefully.

I have a share of the freehold.
We employ a management agency for the day to day stuff. If anyone does not pay (reasonable charges of course) they eventually forfeit their lease.

Our annual service fee is £1300, 3 floors no lifts.

Leasehold is always a risk as it could be sold to a dodgy company. The BBC ran a story this week which is alarming - and it's likely to put a lot of people off leasehold if they've read it.

However the government is currently trying to pass a bill designed to stop a lot of this. If I could I'd actually wait to see what the bill says and whether it's likely to offer protection.

Make sure you read and understand any leasehold - get a good conveyance solicitor who can talk you through it properly - don't get some one cheap. I've done shared ownership before and our solicitor was brilliant at explaining the details - neighbours on a similar scheme didn't get this advice and were surprised by some of the details.

This is particularly true of service charges. Who decides the amount, how and how likely is it to increase.

Re the cladding, my thoughts would be that if it's dodgy then you'll struggle to get a mortgage at this point. Lenders are really wary of cladding so won't give mortgages to properties that spook them.

If the property has been on for sale for a while and then the sale has collapsed I'd be asking questions about the above too.

If a standard lender will give you a mortgage on it, it's probably ok.

In terms of selling in future if the above is cleared up, you probably won't have issues selling because demand is there.

But if the leasehold bill is viewed as weak and ineffective or doesn't pass, I'd be more wary. The leasehold market is liable to get even more exploitative if this bill doesn't resolve these issues adequately (hence why I'd say hang fire if you can).

If freehold is owned by the residents then it's unlikely to be sold toa dodgy company given the effort taken 10 years ago to buy it from a dodgy company. And if not all residents participate those units are still leasehold..my flat was owned by a 90 year old lady when the freehold was bought by the residents, she didn't take part as she had no money (according to my downstairs neighbour who is a long time residents and now a freeholder, the flat was in such a terrible state it had to be gutted and sold at auction)..

However, we still pay the same service charge as everyone else and as the residents management company predates the purchase of the freehold by the residents, we are also directors of the management company

I'm in a leasehold flat. Our management company have been very reasonable, fixed things quickly, had no large unexpected bills, and service charge has only increased minimally each year. Not all leasehold is as bad as its made out, although I understand some are. Flats are a great way to get on the property ladder and it's been a great home to us.

Exactly

And again - having owned leasehold previously myself - a huge mistake of mine in my younger years was buying a leasehold flat

170 is not a “low leasehold” new properties tend to have 99 or 125 year leases. So it’s still significantly more than that.

Exactly.

The service charge/management fee can only increase to the extent provided for in the lease, they can’t just make it up.

Aslong as the lease is sensibly drafted it’s fine. All flats will be leasehold - perhaps a share of freehold but that’s not always better as you might still have Bob the investment banker who lived abroad and has no interest in signing anything when you come to sell.

OP speak to a conveyancer/solictor.

There’s some absolute guff on this thread.

There are many restrictions regarding what you can do with your flat, even though you are the owner. You will probably have to pay service charges and definitely rent

You won’t have to pay rent at all - unless it’s shared ownership.

The LH bill has passed its just not all come into force and isn’t particularly well drafted leaving scope for confusion and difficulty in its application.

Some have a ground rent, but again, these will be set out in the lease and can only increase to the extent provided for in the lease. Developers using ground rents as a means of income and having ground rents which increased rapidly (normally they are inline with inflation) was where ground rents and thus leaseholds got their bad press and will probably be the basis of many negative opinions on this thread.

New properties tend to have way higher leases than that