Can I Afford It: Buying a leasehold property

It’s common for flats to be leasehold, especially in large developments. Some houses are also leasehold properties but this is less common. When you buy a leasehold property, the freeholder (your current landlord) will still be responsible for maintaining the building and the surrounding communal areas – as defined in your lease.

Things to consider

Mortgage

The type of property you live in can affect whether you can get a mortgage. For example some mortgage lenders won’t lend money on a flat in a high-rise block. It’s worth checking this early if you need a mortgage to buy your property. Even if you don’t need a mortgage, it’s worth checking whether lenders are willing to give mortgages on the flat you are buying, as you may want to sell in future to someone who does need a mortgage.

On-going costs (service charges)

When you buy your home, you take on some on-going costs and responsibilities that you might not have as a tenant. If you buy a leasehold property you will become responsible for service charges once you own your home.  When major repairs and maintenance are needed in your block or surrounding areas (such as gardens or play areas), you’ll have to pay a share of the costs too.

However you are protected from unexpected costs for the first five years. Service charge costs must be included in the offer notice (Section 125 letter) your landlord will send you. For the first five years, the amounts for repairs and improvements may only increase due to inflation, even if something unexpected needs doing. Service charges detailed in the offer notice include:

• Annual service charges.
• Five year forecast of maintenance work to the block in which the property is situated
• Five year forecast of repair work to the block in which the property is situated.
• Five year forecast of improvements to the block in which the property is situated.
• Internal and external insurance premiums and cover amounts.

If you have already received your offer notice and are unsure whether the service charge costs look reasonable, or are not sure about the terms and conditions of the lease, get advice – see below for details.

Home improvements

If you own a leasehold, you may need permission from the freeholder (your current landlord) to make certain changes to your property. This should be set out in your lease.

Where to get help

If you’re just getting started, it’s worth talking to local leaseholders (for example your neighbours) to get an idea of service charges in your area.

It’s also important to get professional advice. The Leasehold Advisory Service (020 7832 2500) or the Law Society have free, unbiased information and guides available and are a good starting point.

Check your lease carefully with your solicitor before you sign anything.

Be wary of individuals or companies offering to help you with your Right to Buy. It’s likely that they will charge you for their services and may be offering a deal which is better for them than it is for you. Always check first if there are any costs involved.

You can find more information on buying your council flat and leasehold charges on GOV.UK.