What to Consider When Buying a Flat

For many UK homeowners purchasing a flat is become a good idea due to the uncertainty of Brexit, coupled with later retirement ages, higher house prices and unavailability of new build shared ownership schemes.  You would think with the average flat price and floor space being considerably lower than a house, that purchasing and owning a flat would be much simpler, but in fact for many considering such a purchase, the move is fraught with fear over horror stories about leaseholds, section 20 claims and nightmare neighbours.

Flat Owners are Protected by UK Legislation

But actually due to government legislation over the past few decades flat owners are now very much protected.  The legislation was driven by the plight of Welsh miners whose home leases had been sold by the mining companies to remote corporate investors.  The 1967 Leashold Reform Act was pushed through parliament to relieve the fears of such home dwellers in low-value homes. A 1993 reform to this Act added further legislation to protect those owning a flat in a building owned by a corporate entity.

The Act has allowed the right for acquiring a freehold on fair terms, and for a leaseholder to acquire a 50 year lease extension free of charge valued at the site value of the property.  The measures were to ensure that a clear division was made between ownership of the land, and ownership of the building.

A further reform, the Commonhold and Leasehold Reform Act 2002, made key changes to fix the share of value between landlord and tenant at 50/50, and abolished it altogether where the lease has more than 80 years to run.

The government has clearly made moves to protect the UK flat owner and the European Court of Human Rights has upheld these changes, with case in example of The Grosvenor Estate in 1986 where a decision to force a landlord to sell its interest at a price was upheld in the interests of the public.

Cost of Ownership Lower for Flat Owners

Despite the concerns over large maintenance costs under Section 20, and ongoing services charges that may rise every year, the cost of flat ownership is significantly less than home ownership because the maintenance and repair of communal areas of the building is shared between all property owners in the building, which may vary from just two to upward of two hundred.  

Another factor, brought to our attention by Deacon, a specialist block of flats is insured by the owners of the block, and often disseminated through the communal service charge, the cost of insuring a flat is much lower than a home.  Over a decade this could mean a saving of upward of £1000 for a flat owner. While it is advisable to take out your own contents insurance, the buildings cover is provided by the building owner.

So now is a good time to consider whether flat ownership could be the right property move for you.  With legislation in place and cost of ownership lower for flat owners, it is certainly a viable option for most property buyers.