If you are thinking of buying a leasehold flat or are in the process of doing so please consider these tips – make sure you know what you are buying!
1. Do you know how long the lease has left to run? If it has less than 83 years left you should take specialist advice before exchanging contracts as the lease may be able to be extended at the same time as the conveyancing transaction is progressing. The shorter the leases term the higher the premium payable for a lease extension.
2. Do you know how much the ground rent is? The level of ground rent is directly linked to the premium a leaseholder pays either to extend a lease or collectively acquire the freehold. The ground rent may look reasonable to pay on a yearly basis, but consider whether it increases during the term of the lease which will increase the premium payable for a lease extension. The higher the ground rent the higher the premium paid for a lease extension.
3. Do not rely on online calculators. If you have calculated the cost of a lease extension online, then be wary. These calculators are generally known to be conservative and do not usually take into account rising ground rents which increase the premium. Online calculators are not a substitute for professional advice by a solicitor and valuer/surveyor.
4. Ask your conveyancing solicitor to make enquiries of the seller. The seller may have already had discussions about a lease extension with the landlord which might be helpful. The seller might also have had a valuation. If the premium is higher than expected this might be a reason why they are selling and is something you should know about.
5. Do not be afraid to ask the estate agent for information before making an offer. The estate agent should, at least, have a copy of the lease. This will give some of the information you require early on and, with professional advice, will enable consideration to be given as to what the market value of the flat really is and hence what offer you should make.
6. Have the lessees already acquired the freehold or exercised the right to manage? If so, ensure your conveyancers ask for details of this. If not, ask your conveyancer to enquire of the seller whether any discussions have taken place amongst the leaseholders. If any of the processes have begun or are about to begin you may not want to be left out.
7. Carefully consider your choice of conveyancer. Some firms undertake the conveyancing process cheaply, but they may not have a leasehold enfranchisement specialist in the firm who can provide advice on these more complicated matters, which may increase your overall legal cost and cause you financial loss later.