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Essential information for buyers of flats and apartments in England and Wales
Your solicitor should submit a questionnaire of standard enquiries about the property. Study this information carefully and ask your solicitor to highlight any concerns. In particular you should be satisfied the building has been properly maintained. You should see three years service charge accounts, know what service charges you will pay and be satisfied there are sufficient monies in a reserve fund to finance contingencies such as roof repairs or lift breakdowns.
Your lease will set out basic rules that are necessary for residents’ well-being. These are sometimes referred to as covenants and are enforceable in law. Before buying a flat read your lease carefully to be sure you understand your obligations.
You cannot individually own the freehold of your flat because the land and building is shared with other occupiers. What you acquire is the right to exclusive occupation of your property for the term of your lease. The longer the term of your lease the greater its market value. Unlike a rent-paying tenant you will retain the right to sell your lease and benefit from increases in property prices.
The freeholder is known as the landlord through ownership of the land on which the building sits and can charge an annual ground rent to all occupiers. Your lease should specify the proportion of rent you are required to pay. Your landlord is responsible for the maintenance of the grounds and all the shared parts of the building such as entrances, corridors, stairways and any shared facilities such as a lounge, laundry room or guest room. These are collectively known as the ‘common parts’.
During the period of your lease you will have to pay a contribution towards the upkeep of the building and common parts, known as a service charge. Your lease should stipulate the proportion of service charges you pay. If your lease provides you with a parking space or your flat is one that shares a lift you may pay extra towards maintenance.
It is usual for the landlord to appoint a professional company to collect service charges, undertake the insurance and maintain the building and common parts. These companies are called managing agents and must adhere to statutory procedures. Your managing agent may employ an on-site manager, caretaker or concierge, the cost of which will be shared by all leaseholders.
Leasehold is unique to England and Wales. Unlike a freehold house your flat is part of a larger building that contains other dwellings. The developer of the building usually retains the freehold and sells long-term leases to individual flat owners who are defined in law as leaseholders or tenants, with rights under landlord and tenant legislation.