Buying a home and don't know how anything works

[Puddy_Tat]

I am looking to buy a 2 bed flat. Ex council mid-1960s. The place looks to be in good condition - but I've noticed traces of black mould along some windows and the sellers have a dehumidifier in the bedroom.

Mould aside, you will be at the mercy of the local authority with service charges, some repairs and antisocial behaviour. Depending on the property, lease etc. it might not be mortgageable.

a few thoughts -

in general, if you can get somewhere freehold, that's better, but it's going to be more expensive or you'll get somewhere smaller for the same money.

have you done the whole leasehold thing before? lease advice may be worth a look if not. i'm assuming you're in england - some of the law round this varies round the UK.

i live in an ex council leasehold flat (block of 4) that was probably built in the 1970s (i bought from a buy to let merchant) and have been here 20 years now.

you're going to get some condensation in almost any place in the winter - i get a slight bit of mould inside window frames in the winter and clean it off regularly. i don't think i have a problem as such and it hasn't materialised on walls and ceilings.

councils vary. some are better than others at housing repairs, but most are short of money. private / corporate freeholders also vary, and can be even more of a pain in the tail to get hold of when something goes wrong, and you do get some horror stories with corporate freeholders as well. may be worth a web search on [wherever] council leasehold and see if there's any horror stories in the local rag etc. some councils have a physical or virtual forum for leaseholders. if it's a reasonable size estate, there may be a local tenants / residents association.

for that matter, is it still council council, or is it somewhere that council transferred some / all their estates to housing associations? they also vary and some of them regard leaseholders as somewhere between a nuisance and a source of plenty of money for very little.

yes, with leasehold, you will have to pay ground rent and service charges and building insurance (which the council sort out and then charge you for - you can't organise your own) - in my case i pay 90 quid a year service charges, which basically covers sending me the bill every year, cutting the communal grass badly a few times a year, and painting outside woodwork very occasionally (think it's been done twice while i've been here). buildings insurance is about 500 a year and that's about doubled over the last 5 years - apparently few insurers are willing to do that sort of thing now, which may be after-effects of the grenfell tower fire.

you also don't get new kitchen / bathroom / windows if council is refurbishing the block, although you may get a chance to have them if you pay for it.

but i have seen leasehold flats (relatively small 2 bed) with private / corporate freeholders up with service charges / building insurance of over 2 grand a year, and some put rip off clauses in so that the service charges double every 10 years or some bollocks like that. (if you do leasehold, you need to get solicitors to check the lease carefully for nasties.)

some places are 'share of freehold' where each flat owner gets a share in the company that owns the freehold, but you're still a leaseholder of that company. as with all such things, you can get one or two people being bloody difficult.

i've also seen some leasehold places where it's a condition of the lease that you can't let it out (taking a lodger might be ok) - these tend to be cheaper as they are no use to buy to let merchants.

most councils will try and address anti social behaviour on estates. many private landlords don't give a shit as long as they get the rent, or will turn their place over to airbnb or the like, or will cram loads of people in to the place. (of course in a 'council' block you will get an unknown quantity of flats that have been bought privately and may or may not have been sold on by the original resident. you might get an idea looking on rightmove for past sale prices to see how many are listed as having sold - any that haven't are probably still council.) my 3 neighbours are all (to the best of my knowledge) all council tenants - previous 2 families downstairs were verging on 'problem family' status although i didn't really have any bother with either of them other than kids being noisy (which isn't exclusive to council tenants.)

another potential issue with some estates is the 'regeneration' agenda (translation - the current tenants / leaseholders can fuck off to 'somewhere else' and we will demolish everything and build expensive cunt hutches - see heygate estate) - the leaseholders got a pretty shit deal.

government is currently making noises about 'reforming' leasehold - although they have been making noises about it for years and bugger all has happened, and depends if you believe a government of any colour is going to do something that benefits individual leaseholders and stops big landlords ripping people off.

how long has the lease got left? i don't quite understand it all, but once a lease goes below 80 years' left, it gets more expensive and complicated to do a renewal, and mortgage lenders generally won't want to know.

a few mortgage lenders won't touch ex council places (i didn't have any issues) although most will only do relatively small blocks / traditional construction and roof - concrete tower blocks may be a different matter.

 

[WouldBe]

Bitumen doesn’t…. smear like that.

Does look like that if it's been scraped off.

 

[WouldBe]

And you need to know what the underlying cause is. Is there another, possibly larger, issue behind the mould?

Who says it is actually mould?

 

[WouldBe]

you also don't get new kitchen / bathroom / windows if council is refurbishing the block, although you may get a chance to have them if you pay for it.

Might depend on the council. Local estate has had all windows and doors replaced and walls rendered even though some are privately owned. Probably have been heavily billed for it too.

 

[story]

Who says it is actually mould?

Who says it is actually mould?

t0bytoo said so, in their first post about the flat they’re thinking of buying.

“but I've noticed traces of black mould along some windows and the sellers have a dehumidifier in the bedroom.”

I said all the it might be, it could be, might not be stuff. You want me to add disclaimers and qualifiers in every single post?

 

[WouldBe]

“but I've noticed traces of black mould along some windows and the sellers have a dehumidifier in the bedroom.”

But didn't specify wether inside or outside and the photo is clearly outside.

 

[story]

Ah okay. I made an assumption because they said the humidifier was inside.


Anyway, Puddy_Tat has given a much more useful post.

Hope it all turns out well for you t0bytoo

 

[t0bytoo]

I looked at the wall with cautious eyes and thought ‘that looks odd’

I live in a leasehold place at the moment. Housing association who are mostly ok. Enough other residents are proactive and everything is in good order.

The new place is managed by a private freeholder, though it was all council once. My cousin lived on the estate in the 90s and is pretty positive about the way it’s run.

It’s in a wealthy town - not london - and am reasonably happy that it is well managed. There is current work to replace all the balconies and this building is next. I’ve checked for section 20 and there is nothing scary in the short term.

Thanks for all your input. Will read more closely when I haven’t just got in from the pub!

 

[Puddy_Tat]

Might depend on the council. Local estate has had all windows and doors replaced and walls rendered even though some are privately owned. Probably have been heavily billed for it too.

i might have been able to get my windows and doors done a few years back, but there was a bit of a communications balls up - got something to say they wanted to send a surveyor round to have a look at the windows.

he told me they were planning to replace them - i said i was a leaseholder not a tenant and how did it work - he didn't know either but said they would get back to me.

then a few weeks later i got a letter saying they were coming round to do them the day after tomorrow - in a week i couldn't take any time off work - and no mention of how much it was going to cost or anything, so had to not do it.

: facepaw :

 

[Cat Fan]

The government are legislating for leasehold reform at the moment, so it might be worth holding off on making a leasehold purchase until the details are clearer if you have the option.

 

[hash tag]

There is current work to replace all the balconies and this building is next.

That sounds like an expensive job. You will need to check when, how much and who will be responsible.

 

[t0bytoo]

That sounds like an expensive job. You will need to check when, how much and who will be responsible.

I’ve been told the payment is covered by existing funds.

 

[Cat Fan]

When was it built? What is the energy efficiency like?

You want it to ideally be energy efficient and low maintenance otherwise the bills will stack up over the long term and the flat may eventually become unsellable.

 

[mod]

Generally speaking, I agree with you, but leasehold can be a bit like comparing apples with oranges.

Leasehold houses that formed part of an old estate/land interests

There are older buildings that are leasehold on 999 year leases, tend to be residual issue from old big estates, land interests. Ground rent tends to peppercorn or minimal amount. There can be quirky convenants about rights of access or what you can or can't do.

And one thing to look out for in older properties, say in a village or old parish, is ecclesiastical covenants, where there's a legal obligation to pay towards upkeep of the local church. Some people have bought a house and then found themselves landed with a bill for repairing or replacing the roof of a nearby church, although it's possible to buy indemnity policies against such eventualities.

Leasehold properties that are ex-council/social housing

This will tend to be flats/maisonettes, as houses are usually sold freehold - although a house might be leasehold if it's part of some communal heating system.

The pros are that the ground rents can be relatively cheap, eg my ex-council flat has a ground rent of £10 per year. And the service charges can be relatively cheap, eg service charge for my three bedroom second floor walk-up flat in central Manchester is just under £60 a month, which seems reasonable enough.

The cons are that every now and again you might be hit with a massive bill for 'major works' to replace windows and doors, or to replace a lift (I'd be wary about buying a leasehold flat in a building with lifts, as they're notoriously expensive to repair and replace, not to mention inconvenient if you live on the fifth or eleventh floor or whatever and the lifts keep breaking down).

Councils/housing associations are seemingly susceptible to contracting cowboy bodge builders to do works for them, which can be inefficient and expensive.

Another way in which they can be inefficient and incompetent is that when a leaseholder wants to do essential major works - decorating the block, replacing a roof, etc - basically anything that will cost each leaseholder more than £250, they are legally required to serve a Section 20 Notice and consult. It's 99.9 per cent of the time a 'con'sultation as they've already decided what they are going to do and which contractor they are going to use (even though they're supposed to get different quotes, this conflicts with their long-established practice of putting work out to tender and using the same contractors for all their building works).

Their incompetence can work in a leaseholder's favour, though, if/when they fail to serve that legal notice, because failure to serve the notice means that the bill for major works will be capped at the £250, so you won't have to pay more towards your eg £17,000 share of the costs for lift or roof replacement.

Many people who've bought under Right to Buy, or who've bought ex-council because it's relative cheap, have come unstuck by bills for major works and some have had to remortgage or even sell up due to being unable to afford a £15-30k whatever bill for their share of lift or roof replacement.

Leasehold property built by private developer

Leasehold houses are commonly known as 'fleecehold' because even though many property developers have offered purchasers the right to buy the freehold, even when someone buys the freehold they might find that there are still some covenants that aren't extinguished, like they still have to pay towards the upkeep of communal areas on a new build estate, like occasionally resurfacing a car park or maintaining playing area or gardening landscaped area, and people often complain that they're paying hundreds of pounds and not getting much in return.

But if you haven't bought the freehold, there will likely be lots of onerous charges associated with a new build (actually new, or recently new build in the last 2-3 decades), these will include above estate charges, but also lots of permission charges. Fancy painting your front door a different colour? If you're not precluded from doing so, they will probably charge you a permission fee for giving you permission to paint your own front door. Want to change your windows? Build an extension? Permission fees. Want to convert the integral garage into a bedroom or playroom or study? Permission fees. Want to knock your kitchen and dining room through and put in French windows opening onto your back garden? Permission fees. You won't be able to do anything to your own home unless you get their permission and pay for the privilege.

But worse of all is the issue of ground rent, which has been a cash cow for property developers. Many developers imposed ground rents that were due to be reviewed at regular intervals increase with the rate of inflation every five or 10 years or so, or some would double. £100 annual ground rent might not seem so bad, but if it's doubling, in 50 years, it's going to be £3,200 a year, an annual ground rent starting at £250 a year would turn into an annual bill of £8,000 due to doubling.

Lots of lenders consider doubling ground rent or even inflationary ones to make a property unmortgageable and you'd have difficulty selling to anyone who needs a mortgage.

And what's even worse is that a legal anomaly means that a ground rent of more than £250 outside London and more than £1,000 inside London means that it becomes an Assured Shorthold Tenancy. Do not touch with a bargepole. Now or if your increasing ground rent is going to put you in this territory any time soon.

Assured tenancy traps – the unexpected AST

Most people think of an Assured Shorthold Tenancy (AST) as a short-term let. It may come as a surprise, therefore, that long leases of say 125 years can also sometimes be ASTs. For a leaseholder, this won't always be good news.

www.mishcon.com

The clue is in the word 'rent'.

But what this means in practice is that you will lose your home if you get into three months of arrears. Not might or could, but will.

If you get into more than three months of arrears with ground rent in (if your ground rent is in the >£250 outside London or >£1k inside London category), then a court must grant possession to the freeholder. There is no discretion, no asking to pay of the arrears, nothing will make a difference because the law stipulates it. So you could lose your property. You might think you would be careful and not get into arrears, but 99 or 125 years is a very long time to trust that there won't be any bank-related IT glitches, that you won't change bank and forget to set up a new direct debit, or that you won't ever be skint/overdrawn and the payment won't bounce. And, again, if payments are missed, and you inadvertently get into three months arrears, it doesn't matter if you pay them off, the law says possession must be granted.

Some property developers are now addressing these concerns, and are now selling freeholds, or properties with more reasonable ground rent, but many developers have already sold on property portfolios to investors, some who increase charges further.

Service charges can also be expensive. As the residents in the building with the sky pool have found out, when they realised how much it was costing to heat their outdoor swimming pool.

Wealthy residents complain about paying £164,250 to heat Sky Pool in winter

The pool, suspended between two skyscrapers 35 metres above the ground, is heated with the £9,000 annual service charges residents pay.

metro.co.uk

If your apartment building has a swimming pool or fancy gym, secure parking, CCTV, concierge, etc, then you're going to pay through the nose for those, in service charges over and above monthly mortgage payments.

Cladding

And of course leaseholders in buildings affected by cladding scandal after Grenfell tragedy are facing ongoing uncertainty and potentially financially ruinous costs.

Conclusion

Some leasehold properties are much worse than others.

If you get an older property, with peppercorn ground rent and it doesn't have any weird or wonderful covenants like making you liable for the cost of replacing the nearby church roof, you're relatively okay.

If you buy an ex-council/social housing flat or maisonette in a walk-up building, it might not be too bad. NB a ground floor flat in a tower block also shares the cost of lift! But check when major works were last done and when they're next due.

New build 'fleecehold' is generally to be avoided, because of increasing ground rents and AST anomaly meaning risk of losing property (and capital invested) and also service charges for common estate areas and also expensive permission fees.

I'll come back to comment on shared ownership later, but I'm about to head out to work...

My ground rent has increased from £225 last year to £375 this year. I got the invoice today. This isn't looking good. I moved in 2.5 years ago. Got a 5 year fixed term mortgage at the time.

You seem you know what you are talking about. Any advice?

Been looking into it today some oen mentioned a peppercorn rent or getting a solicitor to sort out a deed of variation. I'm doing research on both these things now.

thanks

 

[Cat Fan]

My ground rent has increased from £225 last year to £375 this year. I got the invoice today. This isn't looking good. I moved in 2.5 years ago. Got a 5 year fixed term mortgage at the time.

You seem you know what you are talking about. Any advice?

Been looking into it today some oen mentioned a peppercorn rent or getting a solicitor to sort out a deed of variation. I'm doing research on both these things now.

thanks

I think you can only do those things with the landlord's consent at the moment. If you're lucky the government will sort it out in their leasehold reforms but that will take a few years yet probably

 

[mod]

I've been going through emails from my solicitor and my paper docs and found 2 things that state this.

 

[Cat Fan]

I've been going through emails from my solicitor and my paper docs and found 2 things that state this.


View attachment 403520

That looks black and white

 

[mod]

That looks black and white

it does. i’ve got the email of the free holder and have sent these asking why i’m now paying £375 in 2023. let’s see.

 

[mod]

I've been going through emails from my solicitor and my paper docs and found 2 things that state this.


View attachment 403520

It was a f'ing admin error from the management company! Caused me a weekend of anxiety and hour of trawling through all the emails and docs from the purchase 2.5 years ago for no reason. The table above is correct.

Can any experts on here me if I ought to be concerned about my ground rent going up to £339.66 in Dec 2030? Is the £250 threshold likely to go up before then?

Or should i be thinking of getting a new lease and agreement by then?

There's 126 years left on the lease.

 

[salem]

 

[Cat Fan]

It was a f'ing admin error from the management company! Caused me a weekend of anxiety and hour of trawling through all the emails and docs from the purchase 2.5 years ago for no reason. The table above is correct.

Can any experts on here me if I ought to be concerned about my ground rent going up to £339.66 in Dec 2030? Is the £250 threshold likely to go up before then?

Or should i be thinking of getting a new lease and agreement by then?

There's 126 years left on the lease.

The government is consulting on ways to reform leasehold, so I would wait a few years to see what happens.

There is a small chance you will be able to extend your lease for free and/or stop paying ground rent entirely. That's one of the options being considered