Should I buy my flat?

jak731

jak731

jak731

Soldato
Joined
17 Mar 2007
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5,508
Location
Plymouth
So ocuk should I buy my flat? A little background:

Moved down to Plymouth last summer for a very secure job, after working 8 months on a 12 h contract at tesco it was a godsend. Only had 3 weeks notice to move down so ended up lodging at a friend’s parents’ house for a few months. It was ok but a bit awkward at times, I’ve also had bad experiences living with random people before so ended up renting a 1 bed flat by myself.

I like the flat and it’s been refurbished recently, double glazed, GCH which also feeds the shower, new carpets, new bathroom and new kitchen. Front room is a decent size and it has everything I need really. Close to work and has an off street parking space. The landlord has decided to sell the flat (the new landlord would have to honour my tenancy).

Flat costs £65k (I know the landlord accepted an offer at this level but buyer pulled out)
Lease is only 71 years : / (I understand it gets expensive to increase once under 80 years, and may make getting a mortgage tricky)
Ground rent is £28 a quarter and maintenance is £260, altogether about £96 per month (bit high)
I earn around 27k gross, I get around 19k after tax, student loan etc and £100 monthly repayments on a tax free loan I got from my company.
I have enough for saved for a 5% deposit and bank/solicitor fees.

Tempted to go for it but not sure I want to be tied down with that much responsibility. I could get a 25 year mortgage from virgin fixed for 5 years, which with the ground rent and maintenance would be almost exactly the same as the rent I pay currently.

I’m in my mid-twenties and would be a first time buy, what would you do?
 
Depends what your future prospects are really, I'd do it if you can afford it because it gives you somewhere stable to live and you can always rent it out at a later date :)
 
Firstly hello, welcome to Plymouth. I live there currently :)

I am of the opinion its always better long term to own rather than rent.

That been said a flat never goes up in value the same as a house does.

As you say the lease length is short and may cause an issue for a mortgage, after owning the property for two years you have the right to extend the mortgage however there is no set cost associated with that. You may want to ask the freeholder now what cost would be involved.

Might if I ask were the flat is? obviously I have a bit of local knowledge as been here a few years after moving from Oxfordshire.

The maintenance and ground rent of basically £1200 a year isn't massively high. It depends how big the communal areas are and how well they are looked after.
 
71 years will be ok for the mortgage. I would extend it as soon as possible. You can by law do this after owning for 2 years.
 
If you do go for the flat make sure the leaseholder kicks off the process as a condition of the purchase. You can then take over and extend the lease without having to wait two years.
 
Read through the leasehold agreement very carefully. Pay special attention to conditions under which ground rent and maintenance fees can be increased.

As you say they are already on the high side (well the maintenance fee is anyway) and could potentially rise further in the future. Is there a lift in the building?
 
The current landlord has owned the flat for less than 2 years so not really any options there. I got a pdf copy of the lease agreement from him today (can probably email it if someone is really interested), the annual ground rent is 1/600 of the value of the flat and is re-evaluated every 21 years. The bit about the maintenance charge is not as precise, basically seems they can set it to whatever they deem reasonable and is updated every September. I'm on the 2nd floor which is the top of the block, there is no lift. I think they are planning on replacing the carpets and windows in the shared area so the maintenance cost could go down next year.

There seem to a be a lot more rules with a leasehold than a freehold, have to update the furnishings and fittings every 7 years with the freeholder checking the work. Also it seems no pets is part of the lease not just letting agent nit picking. The only really worrying thing is it doesn't mention anything about extending the lease.

The flat is in Devonport which isn't the best area of Plymouth but I grew up in Pitsmoor, Sheffield so it seems fairly docile in comparison.
 
jak731 said:
The current landlord has owned the flat for less than 2 years so not really any options there. I got a pdf copy of the lease agreement from him today (can probably email it if someone is really interested), the annual ground rent is 1/600 of the value of the flat and is re-evaluated every 21 years. The bit about the maintenance charge is not as precise, basically seems they can set it to whatever they deem reasonable and is updated every September. I'm on the 2nd floor which is the top of the block, there is no lift. I think they are planning on replacing the carpets and windows in the shared area so the maintenance cost could go down next year.

There seem to a be a lot more rules with a leasehold than a freehold, have to update the furnishings and fittings every 7 years with the freeholder checking the work. Also it seems no pets is part of the lease not just letting agent nit picking. The only really worrying thing is it doesn't mention anything about extending the lease.

The flat is in Devonport which isn't the best area of Plymouth but I grew up in Pitsmoor, Sheffield so it seems fairly docile in comparison.
Click to expand...

I know Devonport, not the best as you say but they are spending a lot of money on the area. I have a property in stoke and in keyham so fairly close.

Some of the things you mentioned such as furnishings and pets are not standard leasehold clauses.

The extension of the lease doesn't have to be written in as it is a right in law after holding the lease for two years.

I rarely hear of maintenance charges going down. Is there a management agent for the block then?

I don't know the flat or the lease so cant really tell you if its a good idea or not.
 
71 year lease is fine but yes extend as soon as possible. Will probably cost 3k to 7k to extend lease but varies depending on what the leaseholder offers, how long the lease is extended for. Just note that you will probably also have to pay both your and the leaseholders legal costs too when extending.
On the maintenance charges front, I believe these should not be related to the leaseholder and work checking. What I mean is, if the maintenance charges rocket you might be able to collectively sack the company managing the flats and replace with another. I would say from what you have said that the charges are reasonable. Worth checking how much money is sitting in the bank account to cover future repairs. If high then that's good. I've been caught before with this, where a low monthly maint charge but soon as I moved in they demanded £500 for urgent repairs and have done a few more times since but I didn't mind personally as prefer to just pay when needed and managed to get the previous owner to cover the first charge as thought it was unfair for me to have to pay it.

Also, if landlord accepted £65k but buyer pulled out that does not indicate the price to pay. Ultimately they didn't buy it. So offer £60k :) stating no chain,you already live there, and wont pull out etc.

Worth noting that although a new landlord would have to honour your tenancy agreement, if a private sale to an owner/occupier the current owner/landlord could issue you with two months notice to ensure you are out before sale completes if they wanted to.
 
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Most of this is normal stuff your solicitor will investigate and advise you on.

There's no reason you couldn't ask the seller to renew the lease before the sale. I think a mortgage company would want this or you may restrict yourself in the mortgage market.
 
I don't know if the landlord would be able to start the renewal process as he has only owned the flat for about 10 months. Also if I do go through with buying the flat I wouldn't be able to afford extending the lease for a year or two anyway (unless it could be included in the mortgage). I'm tempted to make a low offer but I haven't started talking to a solicitor yet but I have had a key facts mortgage in principle from the bank.

A few bits I've picked out of the lease that worry me:

Occupy as a private residence, I'm not sure if this means I can't divide the flat up into multiple flats (impossible anyway) or if I have to be the sole occupier, i.e. i couldn't have a girlfriend move in alongside in the future if i wanted to:



To decorate (although I think was done last summer):



No pets without written permission:

http://s36.photobucket.com/user/py07jo/media/Lease concerns/nopets_zps749357d5.jpg.html?filters[user]=76679545&filters[recent]=1&sort=1&o=0

To allow repair access even with no problem in my flat:



Maintenance spiel including a statement about profit on their part:



Allow viewings towards the end of the lease, suggests to me they might not make it easy to extend the lease:

 
Good old Plymouth, I lived there for a few years and loved it.

Yes, I would buy it, better to be on the property ladder than not maybe overall you'll pay slightly more in bills than renting but you won't be binning the money, you'll still own most of whatever cash you put into the mortgage remember. Doesn't seem to be any real downsides even given what you've mentioned.

Seems an ideal price point for someone on your income.
 
I would buy rather than rent. Hope you enjoy Plymouth. I lived there most of my life until i moved. Now live in Poole still have to be by the sea :D
 
Cheers everyone, getting closer to making an offer i think. Do people usually get a solicitor before or after making an offer and when do you have to pay them :D
 
before so they can put the offer in for you? or if putting in yourself just after,its up to you,you pay them on completion/exchange of the deeds
 
I'd be asking why the LL is looking to sell after only owning for 10 months? Change in circumstances? Or does he know something you don't...
 
Funny story behind the landlord but that would probably derail the thread.

Just got 3 quotes from different solicitors, total cost ranges from £1146 to £1273, was expecting around £750 : /
 
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