Urban block of flatsIn Wales and England, it is very common to own a leasehold property. However, it is sometimes tricky to know what that means exactly and you may find you have lots of questions.

I have my dream house, but it is a leasehold. What does that mean?

First of all, don’t panic. In Wales and England, leasehold is among the most common ways to own an apartment, maisonette or flat. Freehold is the other option where you own a property outright, with leasehold the only exclusive ownership that you have is the right to occupy a property for the term of the lease. That can range from 99 up to 999 years depending on when the lease was initially created.

I would like to make alterations to a leasehold flat after purchasing it. Will I be able to do this?

There are some leases that completely ban alterations, while others allow them as long as you obtain permission first and others do not have any restrictions at all. It is common for flats to lack adequate storage so you may want to install more cupboards, but if this is not allowed on the lease you can always store your belongings in Blue Box Storage. Before making your purchase you should first check to see if you need to obtain consent from the lessor in advance before any alterations are made. However, you might have to approach the managing agent who is working on behalf of the landlord or lessor.

I have heard people talking about ‘ground rent.’ Will I need to pay for this?

Yes, unfortunately, there isn’t any way around it. A leaseholder pays their landlord ground rent every year. It can either be a substantial amount (£200) or a small amount (£10) per year. The ground rent in some cases may increase significantly over a short period of time. If that is the case, you should be advised of this by your solicitor, but it is also a good idea to check this early on and find out the ground rent amount, whether it will change and when and the implications of the increased rent.

If I purchase a leasehold flat will ‘service charges’ be applicable?

Yes, you will need to have some cash set aside for it. Service charges refer to your share of the expense to maintain the building that your apartment, maisonette or flat occupies. This also covers communal services and communal areas. Usually, these charges are paid in advance and annually, but the amount varies depending on the building, its condition and age.

I am considering purchasing a leasehold flat. How does maintaining the building work?

You become a leaseholder when you purchase a leasehold. Similar to a tenancy agreement, your lease will set out what your obligations and rights are. The landlord, who is usually a freeholder, will also have obligations and rights that the lease will detail.

Like all other buildings, a block that contains flats will need to have external and internal maintenance. It might have communal lifts or heating that also need to have maintenance. Normally the freeholder is responsible for this work, although the service charge passes the cost on to the leaseholders. Typically the freeholder will employ agents who will manage the building for them.

How can I check the fire risks on a building where I want to purchase a leasehold flat?

By reviewing the fire risk assessment for the building. Your solicitor should request a copy from the building manager. A fire safety risk assessment is required to be conducted on a regular basis on all blocks of flats in Wales and England.

I am hoping to sub-let a leasehold flat that I want to purchase. Can I do this?

There are some leases that do not allow any sub-letting, some require you to obtain consent in advance and others have no sub-letting restrictions. Since leases vary, it is very important to check with the lessor of the leasehold (your landlord, who is usually a freeholder) before you make a purchase, to see whether there are any sub-letting conditions or restrictions.

Will my leasehold expire?

Yes, it will. Like any other tenancy, there is a start and a finish to all leaseholds. Before you buy, make sure you are aware of how much time is remaining, since as it grows shorter, it becomes harder to sell. After owning it for two years, you will have the right to extend your lease on the flat, but you will need to pay the freeholder for that and it can be a substantial cost, depending on the amount of time that remains on the lease. If the lease expires, you will have certain rights if you are living in the property. However, if you continue living there most likely you will need to pay the market rent.