If you buy a house, you will purchase the freehold (the houses and the land it stands on) and will own the property outright. If you buy a flat or maisonette, you will usually purchase a long lease, which allows you and your successors to live in it for a fixed time, usually 125 years. The block containing the flats will still be owned by the council who will be responsible for the upkeep of the building and for any communal areas and facilities.
Issues to consider before buying your flat or maisonette
If you buy your flat or maisonette you become a ‘leaseholder’. You will have to pay a nominal rent (known as ground rent) of £10 per year plus a share of the costs of managing the leasehold service (known as the management fee). As well as this you will have to pay ‘service charges’ which include annual charges for day to day maintenance and major works. Service charges could amount to several hundred pounds each year or more if the block needs major repairs.
Your share is determined by the number of flats in the block, costs are split evenly between leaseholders and council tenants living in the block. When applying to purchase your flat the Council must give you an estimate of the service charges you will have to pay during the first 5 years and cannot charge you more except for inflation. A breakdown of the service charges and the estimated cost for each will be contained in your Offer Notice (Section 125). You will have to pay service charges every year and may also have to pay for some of the costs of major works carried out after the first 5 years.
If you are thinking of purchasing a flat it is important to consider the leasehold and service charges. Further information can be found about these from The Gateshead Housing Company| which manages all leasehold properties on behalf of the Council. Information is available on their website or from Leasehold Services, The Gateshead Housing Company, Keelman House, Fifth Avenue Business Park, Team Valley Trading Estate, Gateshead NE11 0XA
Answers to Frequently asked questions |about becoming a Leaseholder are available in the Leasehold FAQ section.