Things to know about UK properties - what you should know
Article reviewed: 2013/01/23 | Next review due: 2014/08/11
New buildings are increasingly popular with each unit clean, finished and ready with fully equipped bathrooms and kitchens equipped. The new owners have more than to have their furniture and now they are at home! But there are advantages and disadvantages to buying such a property.
Leasehold or Freehold
Older properties and stand-alone houses are usually Freehold property properties, meaning that the owner owns the property and the land on which it stands.
Most new flats built today are Leasehold properties, that is to say that the owner owns the flat itself, but the exterior (gardens and common areas) of the building and the land on which the building stands belongs to the builder or developer (the freeholder).
The leases typically last 100-150 years (not more than 999 years). They can be renewed or extended, subject to a renewal fee, with the price varying depending on the value of the property but can sometimes reach 10% of the property's value. One thing to note is that if there are less than 50 years' left on the property lease, it will be harder to resell.
If a dwelling is leasehold, is is the freeholder's responsibility to take care of the land and building exterior. For this, leaseholders pay a service charge to the Freeholder for maintenance works, which can often include garden maintenance, parking and security services.
The annual cost of any service charge can range from £500-£3,000 per year, but also depends on the size of your property. For example, an appartment of 50 square metres may incure a service charge of £500p.a., versus an appartment twice the size at 100 square metres which would incure a service charge of £1,000p.a..
With well-established property developers, they will often provide an estimate of the expected service charge or a property, however be aware that there may be some additional charges. These can include window cleaning, ecological heating systems, CCTV, or free gym access.
Adding up the total cost
When you decide to buy a home, think carefully about the possibility of additional costs. If the house is relatively old, realistically assess whether any additional work should be done with regards to plumbing, heating, insulation or roofing. Hire a surveyor to assess the house - he will provide a report on recommendations of work to be done on the house, and estimated costs.
With new builds, you get guaranteed, newly fitted, good quality heating, plumbing and insulation, and many find that it takes away the headache associated with older houses, despite the additional service charges to pay.
- Leasehold: A property whereby the owner owns the property/dwelling, but the exterior (gardens and common areas) of the building and the land on which the building stands belongs to the builder or developer (the freeholder).
- Freehold property: A property (usually older properties or stand-alone houses) that is completely owned in its entirety by the owner, including the land on which it stands
- Freeholder: A person who owns a freehold property, or who owns a freehold piece of land on which a number of leasehold buildings are built