The OXON Property Search Guide to Purchasing Apartments
Following our previous blog post (Tuesday 3 May) highlighting rising activity from apartment purchasers, we will now provide our top four expert tips for purchasing apartments.
In England properties are either owned under Leasehold or Freehold tenures. Generally houses own the land they stand on, and mostly possess a Freehold tenure. This is however not the case for apartments which tend to hold a Leasehold tenure.
1. Lease Length
Leaseholds are set for a fixed period, a term which starts from the point in time the lease is created rather than the date of sale. It is important therefore to ensure a satisfactory remaining length of lease. Generally lease extension premiums (cost to extend the lease term) rise from 80 years or less remaining. With a view to owning for at least 20 years before the property value becomes impacted by the decreasing lease length a lease term of 100 years or more is ideal.
2. Ground Rent
Ground rents are sum payable to the Freeholder, usually annual in Oxford these typically range from £100 per annum to £200. Lenders can sometimes refuse to lend on Leases which contain rapidly rising, or doubling ground rents. Making sure you have a clear understanding of the current and all future increases to the Ground Rent lease liabilities, and your lenders requirements for the same, is therefore important.
3. Service Charge
This is the amount payable, either annually or six monthly, to a Management Company towards the collective costs of running the development. Gardening, insurance, maintenance or 'sinking' fund plus any other 'running costs' usually determine the overall Service Charge. Older buildings tend to have higher service charges as maintenance requirements are greater, and facilities like shared swimming pools, lifts, electric gates or large grounds can inflate charges. Apartments with particularly high service charges can sometimes be hard to sell, so assessing the costs vs benefit of any service charges is essential.
4. Managing Agent
Leaseholders often collectively employ a Block Managing Agent to handle required maintenance, safety legislation and insurances, plus the collection of ground rents and service charges. Service standards across Block Managing Agents vary enormously, so it is advisable to take opinion on the appointed block agent to ensure they have a positive and proactive local reputation.
The early establishing and examining of answers to the above points is key to successful apartment purchasing. At OXON Property Search we undertake full and through investigation before recommending our clients proceed further. Our familiarity and experience within the local market helps us to ensure clients avoid leasehold pitfalls, which can often remain hidden until much later in the legal process. We ensure our clients avoid the time and money wasted in pursuing unsuitable properties.
If you would like to discuss our expert service and detailed market insight, or for further information on purchasing apartments please don't hesitate to contact us.