If you’re looking at buying a flat in the Wimbledon area, it’s most likely a leasehold property. For anyone new to the London property market, it’s worth finding out about the differences between leasehold vs freehold properties, and some of the things to look out for when purchasing a flat or apartment.
During your property search you might have found a discrepancy between the cost of buying a flat or a house in SW19 or SW20. You might even have found the odd flat for sale at what seems like a bargain price for this desirable area of south-west London.
Part of the reason why Wimbledon houses attract a premium price tag is the amount of space on offer – both inside the property and in the surrounding gardens. But this isn’t the whole story.
It is also down to the tenure of the property being bought or sold – in other words, whether it’s leasehold or freehold.
The overwhelming majority of houses, which we sell in Wimbledon, Wimbledon Village, Coombe Hill, Kingston Hill and elsewhere in South West London are freehold. It is, however, rare to find a flat on the market that is not a leasehold property – this is true across London as well as in most areas of England and Wales.
Purchasing a freehold property gives the buyer sole ownership of both the building and the often-expansive grounds it stands on.
This means the owners of freehold homes may make any alterations they wish to the property – as long as they adhere to planning regulations or, if required, obtain Listing Building Consent.
Almost every flat in Wimbledon and the surrounding area is a leasehold property, whether it’s part of a new-build development, mansion block or period conversion.
Freehold house or leasehold flat?
Unlike freehold houses, a leasehold flat gives the purchaser the right to occupy the property for the amount of time specified in the lease.
Although leaseholders own the property’s internal space, fittings, floor and walls, they do not own the land the flat sits on or the fabric of the building, including the roof and external walls.
As part of a leaseholder’s contractual rights, they would normally expect the freeholder – also known as the landlord – to manage, maintain and repair the building’s structure, common areas such as staircases, hallways and lifts and exterior grounds.
The lease will outline an owner’s obligations, which may include keeping the flat in good order or behaving in a neighbourly fashion. It may also include clauses such as no pets, without the prior consent of the landlord.
3 things to consider when buying a leasehold properties
With leasehold property such a common form of tenure, there is no reason to be put off a purchase. But there are three important things to bear in mind:
1. Lease length
Lease length can vary dramatically, so this is the first question you should ask about the property before deciding it’s the one for you.
A flat’s original lease length is likely to be for a long period of time, which exceeds the number of years the property’s first owner would be likely to live there. Some new-build properties come with a 99-year lease, although their length is now more commonly 125 years. Some developers provide 999-year leases on apartments. Older properties may have much shorter leases – this may be the reason for a flat appearing to be a surprisingly good value for the area.
Ownership of a leasehold home will revert back to the freeholder once the lease runs out. Anyone buying a flat with a lease of less than 80 years remaining may also find it harder to obtain a mortgage. Even if you are a cash buyer you may find it difficult to sell the property on, should you wish to.
If you’ve set your heart on a flat with a short lease, you shouldn’t write it off entirely. Under the 1993 Leasehold Reform, Housing & Urban Development Act, flat owners are entitled to a 90-year extension to their lease at a fair market price, as long as they have owned the property for at least two years. You can also make it a condition of sale that the vendors begin this process for you to inherit.
TIP: Read more about the costs and process for extending a lease.
2. Ground rent
This is the fee payable to the landlord on an annual or half-yearly basis. While it is usually a token payment in the region of £200 or £300 a year, some landlords, in exclusive areas of London, can charge thousands of pounds each year.
Beware that the landlords of many new-build developments are now inserting clauses into the leases, allowing for dramatic increases in pay ground rent, although the government is looking to curb this practice.
3. Service charges
To cover the costs of maintaining the fabric of the building and the shared areas of the development, the landlord or managing agent will impose a service charge.
While fees vary depending on the size of the development, some service charges include contributions to a reserve or sinking fund that is used to cover large one-off bills.
Leasehold tenure and charges aside, flats in the Wimbledon area are a wise investment, particularly you take steps to extend your lease on the property.
If you have any questions or if you are looking to buy, sell, rent or let a property in the Wimbledon area, contact us today.