Assuming you want to buy a flat or you are budgeting to buy in future,there are several factors that a buyer must consider to avoid being swept by the conman in the market.The nitty gritty of the process must be very crucial.
But there are some key aspects of buying a property that need to be addressed if you’re going to avoid some of the common pitfalls of moving into your first home.
This is particularly true if you’re a first-time buyer who is buying a flat as it is likely to be the first time that you’re exposed to issues such ground rent – which can double in as little as a decade depending on the clause in your lease.
You’d be surprised about how many first-time buyers will look at a flat and then decide on their budget rather than the other way around.
With restricted knowledge about their budget, these buyers will start looking through property listings around the price they think they can afford and then become disheartened when they later find out that they’re way off the mark.
2. Will you be able to afford the monthly mortgage payments?
During the process of obtaining a mortgage, you will find out how much your monthly repayments are.
There is a responsibility on your lender to ensure that you can afford it before approving any deal, even if the Bank of England increases interest rates from their current level of only 0.75 per cent.
However, you may decide that you would rather not pay the amount stipulated – for example, it may be significantly more than you are currently spending on renting.
3. How long is left on the lease?
If you’re buying a flat, the chances are that it is a leasehold property. This is where you lease the property from the freeholder to use the home for a number of years.
Leases tend to be long term, often 125 years – and even as high as 999 years.
However, it is important to check the exact term remaining as banks and building societies tend not to lend on properties with a lease of less than 70 years.
4.Who is the freeholder?
This one is tempting to overlook, but it can have far reaching consequences depending on who it is.
For example, if it’s a big company, do they have a hands-on approach and what is their track record with dealing with leaseholders?
Alternatively, a freeholder who is a one-man band may be so distant that they cannot be contacted if there are any issues.
5. What is the service management charge?
If you are looking to buy a flat, there will be a service management charge to cover the costs of the services provided to the communal areas.
These services can include everything from garden landscaping to building insurance.
The charge is paid by the leaseholders to the freeholder (or the property management company that is party to the lease) and can vary considerably depending on the building.
It is important that you know how much the charge is a month so that it doesn’t catch you out with your monthly budget.
5. What is the ground rent?
Similarly, it is important to know how much the ground rent will be and how much this will increase in the future.
Ground rent covers the ‘rent’ paid under the terms of a lease by the owner of a building to the owner of the land on which it is built.
Some properties have a peppercorn rent of perhaps only £100 a year, while others are required much more. The rent can also increase over time.