Home buyers shifting preference to flats over houses

Are home buyers are shifting their preference towards flats rather than houses as they look to avoid hefty mortgages? The Telegraph recently reported that Britain has fallen back in love with flats. 

With mortgage rates remaining high, it is perhaps not surprising that new buyers are looking to affordable flats as their first purchase.  The BBC reported on two surveys suggesting home buyers are looking at smaller properties as well as longer-term mortgages.

There are some key things that you should consider if you are thinking about buying a flat rather than a house.

Buying a flat – things to consider

Lease term – Most flats are leasehold, meaning you own the flat but not the land it sits on.  The length left on the lease is crucial. Mortgage lenders normally want a lease to have at least 70 years left. The lease is a depreciating asset and once the term has dropped below 80 years, you may struggle with a future sale. Make sure you investigate the costs of a lease extension at an early stage.  

Service charges – Make sure you know the cost of the service charge for the flat as they can vary considerably. A service charge normally covers the general maintenance of building and grounds, lighting and cleaning communal areas. It is unlikely to cover any major works such as roof repairs. These are usually collected separately. 

Major repairs – If a major repair is required, you need to be aware of who is responsible and how any costs would be shared. It is also worth investigating whether there are any planned major works to the building and whether funding for these works is already in place.

Restrictions or covenants – Check whether there are any restrictions in respect of making any alterations or adaptations to the flat. Or, if there are any covenants that restrict your intended use of the property. For example, you might not be allowed to use the premises for business purposes. Or, you may not be permitted to keep any pets in the flat.

Ground rent – Some leases still reserve a ground rent that is payable to the Landlord each year. Ground rents can be a fixed yearly sum. In some old leases they can be a fluctuating figure. This could increase either by a fixed amount or with reference to an index (eg retail prices index). You should check the ground rent provisions are reasonable and affordable. This will also impact on any future sale or remortgage of the property.

Additional considerations

Parking – What are your rights in terms of any dedicated parking spaces or parking permits for you or any visitors.

Managing agent or landlord – Some landlords will manage the property themselves; others will appoint a Managing Agent. Make sure you are clear about who you will be dealing with.  

Whether you are buying or selling a flat, seek advice from a specialist property solicitor.