Buying your first apartment: what to expect
Something that many of you might not realize is that buying an apartment can be more complicated than buying a house. That’s because you’re not buying the land outright, but rather just the space within the house or building. With this in mind, we’re going to outline some of the things you need to expect to come across when buying your first apartment so that you don’t get caught out.
Understanding the ownership
A starting point is understanding the difference between the buying options – leasehold and freehold. Freehold is a property where you will own the land as well as the property. Leasehold, on the other hand, means you will buy the right to occupy the apartment, but you will share the building with others. This is particularly important if you intend to splash out, say on Ariel luxury apartments.
• Understand your ownership agreement
• Have any agreements checked by a lawyer
Length of the lease
Another important aspect to consider is the lease length. With a leasehold, you’re buying the right to live within that apartment for a specific period. This can vary depending on the contract and, with time moving forward, the value can decrease as there’s less time left on the lease. You should always look for one with at least 70 years left on the lease when going for a mortgage.
1. Extensions of a lease can cost a lot of money
2. Some lenders won’t accept anything less than 70 years
What changes can you make to the property?
As this is an apartment, there are sometimes rules and regulations regarding what you can and can’t do inside it. Though it’s often technically your apartment, sometimes there are restrictions. For instance, some you will not be able to remove walls changing the layout of the apartment. Sometimes there are more subtle things you can’t do such as changing the color of the front door – something you may not think about
In some cases, you may be able to change things depending on any agreements within the building. You should also check to see what happens when there are repairs needed in the apartment. For instance, your service charge that comes with the purchase should include general repairs such as plumbing and such. If it’s something you have caused, then the cost is likely to be on you.
Will you deal with a landlord or management company?
This is important when buying an apartment as it can mean the difference in contact. Landlords are often easier to deal with on a more regular basis in comparison to a management company which can take longer to get in touch with.
Are there additional costs other than the apartment cost?
In many cases, yes, there are. Some additional costs you will likely come across include the service charge which is often a yearly payment so you will need to budget that in. Other costs can consist of admin fees or management fees from a company.
How to get more help?
As a first-time buyer, you will likely have a ton more questions once the buying process begins. If this is the case, you can get in touch with your lawyer or even contact the government’s advisory board on leases and ownership.