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Generally when buying a flat or occasionally a house
on an estate you become a leaseholder. You are in fact buying the property but
not the land on which it stands. When buying a leasehold property you purchase
a lease for a set number of years,
this can be as little as 10 to 999. When the lease expires you no longer
own the property, consequently, properties with shorter leases are worth
less than those with long leases. Most mortgage lenders will not
advance mortgages on properties with leases shorter than 50 years to run.
Statutory provision exists to allow leaseholders to buy the freehold under certain conditions, within the period of the leasehold.
If you purchase a leasehold property you will be expected to pay ground
rent and service charges. Ground rents are primarily low but get your solicitor
to check if they can be increased in the future.
Service charges generally apply to apartments and include building insurance,
maintenance costs of the building and cleaning and lighting of communal
areas also a "sinking fund" to cover the cost of major repairs.
You should also consider that the lease particularly when buying an apartment
might also have restrictions placed on the use of the property, for example,
decorating clause, no pets, etc.
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