Buying a Leasehold Property
At some stage your conveyancer will send you a copy of the lease. You must read it, in conjunction with the conveyancer's report. Do not assume that because your conveyancer is happy with it then you will be as well. You need to check that the plan is correct and it shows the access routes clearly and if there is a garden or garage that it is included on the plan and in the description. You must read the covenants and restrictions in the lease. Most of them will be quite innocuous but the conveyancer will not know that you have a pet alligator or that you like playing the saxophone at 3 in the morning.
The buyer's conveyancer will need to examine the mortgage offer when it is issued to ensure that there are no special requirements relating to the lease.
Provisions for service charges will be set out in the lease. These will give the freeholder quite wide powers to spend your money. However this is normal as it is necessary for good management.
Your conveyancer should send you a copy of recent records/accounts to give you some idea about service charges; future expenditure will mainly depend upon the physical state of the building and you should rely upon your own survey for this. An older property will require more maintenance and therefore need more money spent on it.
You should also be aware that the freehold could change hands at any time, although in most cases the lessees must be given the opportunity to buy it first.
If there is a new lease there is no record of service charges to examine or accounts to check, so there is no indication of the competence or otherwise of the lessor and any managing agent; there is a certain element of risk involved in this situation which is unavoidable where a new lease is being granted. The rules of "Caveat Emptor" (buyer beware) still apply even if the seller will become the freeholder after the matter has completed. The developer will usually quote a figure for proposed service charges but it will only be an estimate and could be no more that a guess especially if the flat is a conversion of an old building. In this case you should check the guarantee very carefully and discuss it with your surveyor.
As with any house or flat purchase you should arrange for a survey to be carried out. However this may not be a great deal of help if it is a large block and the roof cannot be examined. And remember the surveyor will not have seen the lease, and will assume that service charges are reasonable. Try to obtain details of service charges at the start of the transaction, as these very widely. They may be only a few hundred pounds a year or several thousand pounds.
Do not rely solely on the surveyor. Have a good look around the common parts to see if the property has been well maintained, and visit during the day and evening. Neither the conveyancer or the surveyor can detect noisy neighbours, and as with any purchase check out the neighbourhood at different times of day.
When you are assessing the desirability of a property remember that a major concern is how easy it is to sell again when the need arises and even if you are prepared to accept high service charges it can make a property very difficult to sell, unless the level of services provided is correspondingly high, eg where concierge facilities are included.