Flats mean Leases, and Leases mean...

If you live in a flat, you almost certainly have a lease, a landlord, and neighbours above, below or to the side. Often, this arrangement is harmonious. Often, it is not. If you are a buyer, you should find out as much as you can in advance about the building and the people who people it - and learn about the lease too.

These people fail into roughly two categories: those who live in it, and those who own and/or manage it.

In some buildings, the leaseholders collectively own the freehold and, as such, control its management. In some instances, the building has a freeholder but the leaseholders have the right to manage it.

Research

You can tell a good deal about a building by using your five senses. Is the building clean? Quiet? Secure? Tidy?

The lease is the bible that governs the running of the building. It is a document of critical importance. Make sure you consult it.

Some key characteristics of a building will not be immediately evident. Who are the occupiers, and how do they get along with one another, and with the management?

To answer this sort of question, you can - and should - talk to people who live in the building. This may mean knocking on the doors of complete strangers - not the easiest thing for many of us to do. But you can learn a good deal about your new neighbourhood, and your neighbours.

Flats Above Shops

Flats above shops can be a great deal: convenient for shopping, spacious, excellent value for money, and often the only way for first-timers to buy instead of rent. But a shop that is a quiet sedate bank today may become an odiferous restaurant tomorrow. In boom markets, these flats sell quickly; in falling markets, they suffer, and some lenders think they are high-risk and won't lend give mortgages for them.

Are all Leases Identical?

No, they are not. Some are long, some are short. Some are in clear English but most are not. Some are defective. Before you buy a flat, make sure a professional has read the lease and explained its conditions to you. An actual lease is reproduced here.

Leasehold Basics for Newbies

"Living in Leasehold Flats: A Guide to How it Works, Your Rights and Responsibilities." This is the long title for a short downloadable brochure that provides an overview of leaseholds: definition of a lease, rights, responsibilities, ground rent, service charges, reserve funds, insurance, managing agents and other topics. It was prepared by a knowledgeable threesome: ARHM (Association of Retirement Housing Managers), LEASE (Leasehold Advisory Service) and ARMA (Association of Residential Managing Agents.) Obtain a copy from the ARMA publications page: www.arma.org.uk

Leasehold Info in More Detail and Depth

The 1996 edition (revised in 2000) of the Which? Way to Buy, Own and Sell a Flat ( Which? Consumer Guide) was written by a solicitor, Michael Haley, and looks it: effluxion, remedies for breach, forfeiture, there is lots of legal jargon and not all of it makes for easy reading. Nevertheless, the book provides a comprehensive and fairly accessible overview of a complicated area of law. Many libraries still hold copies of this out of print and, in some aspects, out of date but still informative book.

10, 21, 60, 125: Short versus Long Leases

For freeholders, short is better (they get ownership of the property sooner rather than later). For leaseholders, longer is better (they get to own it longer). A lease of about 60 years or less is, to many mortgage lenders, too short - they may not grant a loan. A lease of about 125 years or more is effectively the same as a freehold.

If your lease is short, you may be able to extend it by 90 years, but there are a lot of 'ifs.'

Lease Extensions

The right provided by the 1993 Leasehold Reform Act (as amended) is for the grant of a new lease for a term of 90 years, plus the present unexpired term, all at a peppercorn rent (effectively, rent free).

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