From cladding to service charges: navigating the ongoing complexities of buying a flat
The landscape surrounding leasehold properties has become even more complex in recent years and more needs to be done to ensure that leasehold homeowners and prospective buyers are getting a fairer deal.
Service charges for apartments cover areas like landscaping, insurance, utilities, lighting, and other communal expenses. Over the past few years, these charges have steadily increased, causing added financial strain on leasehold flat owners.
Despite the significant rise in service charges, lenders have been slow on the uptake when it comes to adapting their criteria when loaning on flats.
The increasing financial burden on apartment owners and the unwillingness of lenders to provide loans that cater to these costs has created substantial difficulties.
As a result, leasehold flat owners have been left stuck in a vicious cycle of being unable to sell and therefore unable to buy elsewhere.
The Grenfell Tower fire in 2017 shook the nation and drew attention to the inadequate fire safety measures in many residential buildings. Six years later, it’s disheartening to note that real progress on cladding and fire safety issues have been slow to materialise.
This continues to put homeowners and prospective buyers lives on hold, with freeholders forcing owners to fork out thousands for interim safety measures and insurance costs.
Furthermore, some lenders are refusing to mortgage properties that still have combustible cladding and unknown fire safety risks, leaving prospective sellers without buyers.
While some lenders have given the green light on offering mortgages to properties with cladding issues, these are few and far between.
So, the journey towards reform remains an arduous one. The proposed leasehold reform bill is expected to prohibit leaseholds for new houses but this will not cover new flats.
With nearly five million leasehold homes in England, 70 per cent of which are flats, the bill aims to restore genuine homeownership to only one portion of the leasehold demographic.
While offering a glimmer of hope for those looking to buy new homes, those looking to buy or sell a flat will continue to face uncertainty and battle the costly fees imposed by freeholders and management companies.
The impact of increasing costs on mortgage affordability, as well as the complex criteria surrounding lending on a leasehold property, has resulted in lenders scrutinising service charges even more closely.
This means the need for mortgage advice has never been more vital. Brokers with experience in mortgages for apartments in city centres can guide you through this complex space and ensure that prospective buyers enter the market with their eyes wide open.
Brokers like us will work with you to identify where you stand financially prior to submitting an application, and will tailor your application to le n ders that may allow you to borrow .
Mortgage Advice Bureau, Bingley, tel: 01274 5688 3 2