Author: ablesurveyors

Are you looking to buy a flat, either for your use as a home or as a buy-to-let investment? Flats including apartments and maisonettes are generally sold on a leasehold basis, and the length of the remaining lease has a big impact on the property value. The price of a short-lease property, therefore, may be appealing. However, before you go ahead with the purchase of a short-lease flat, it is highly recommended that you do your homework to fully understand the legal and financial implications you are taking on.

What constitutes a short lease?

Residential leasehold properties usually have an initial lease term of 99 years or more. 125 years and even 999 years are also quite common. Properties with less than 70-80 years left to run are generally regarded as having a short lease. Of course, this doesn’t prevent these types of flats from being sold. Properties with leases of as little as 5 years or less remaining still happily change hands.

That being said, the point is that leasehold property is, by definition, a depreciating asset. This means that ownership of the property will revert to the freeholder once the lease term has expired unless the lease is extended in time.

How to extend a short lease

The good news is that leasehold owners have a statutory right to extend the lease of their property under the Leasehold Reform, Housing and Urban Development Act 1993. “A lease extension under the 1993 Act gives the leaseholder the right to an additional 90 years on top of their remaining term at a peppercorn ground rent,” explains one expert in the field.

To qualify for a statutory lease extension, the original lease term must have been at least 21 years, and the leaseholder must have owned the property for at least 2 years. Of course, this is of little use to a prospective buyer, but all is not lost. If the seller fulfils the eligibility criteria, you can request that they initiate a statutory lease extension as a condition of purchase. This benefit can then be assigned to you on completion of the sale.

Outside of the statutory framework, there is nothing to stop the leaseholder from approaching the freeholder with an informal request for a lease extension. In this scenario, there’s no need to wait 2 years and any private agreement reached between the leaseholder and freeholder will be perfectly valid in law, albeit without the statutory protection.

Should you let the lease run down?

A lease extension is not always the right course of action; there are certain circumstances where it might make sense to let the lease run down. Short-lease flats may be an attractive option for retirees and homebuyers who have no one to leave their estate to after death, meaning they don’t need to worry about protecting the value of their property asset.

Short-lease properties can also make very attractive buy-to-let investments. The profit made from renting out the flat for the remainder of the lease term can amount to a multiple of the initial purchase price. Once the lease is up, the property reverts to the freeholder.

That said, short-lease flats are often in a poor state of repair and may require extensive (and expensive!) refurbishments before they become viable rental property, while service charges and ground rent may be considerable. Make sure you know exactly what you are buying.

Can you get a mortgage for a short-lease flat?

Unfortunately, it is rather difficult to obtain a mortgage for a flat with a short lease. Lenders typically refer to the years remaining on the lease as the ‘minimum expired lease term’ and the shortest term acceptable will vary between mortgage companies. The majority of lenders consider a short lease to have fewer than 75-85 years remaining. “You may be able to find a provider willing to lend on a 65-year lease, but this is very rare,” advises one mortgage comparison website.

Speak to an experienced mortgage broker to investigate all possibilities including specialist lenders and shorter mortgage terms, and be prepared to pay much higher mortgage interest rates to cover the lender’s additional risk.

What are your options?

Given the difficulties of securing a mortgage, short-lease flats tend to be sold at auction rather than through the traditional estate agent route. Auction buys can be financially attractive and if you can pay cash for the flat, it could make the property a good investment.

However, don’t forget to factor in the cost of having to extend the lease yourself, which can be substantial. The shorter the remaining term, the higher the cost of a lease extension. If you include lawyers’ and surveyors’ fees, the cost can run into £10,000s for a property with 60-70 years left, rising steeply for shorter leases. Here’s a handy calculator to help you do the initial sums.

Your best option would be to ask the seller to initiate statutory lease extension proceedings before the completion of sale and come to an agreement regarding cost sharing.

The property transaction won’t become legally binding until contracts are exchanged, and before that happens, we urge you to commission an independent home survey. With one of our experienced building surveyors investigating the condition of the property and delivering their findings in a detailed report to you, you can make key decisions on whether and how to proceed with the purchase.

Bad survey results

Speaking from many years of experience in the property surveying business, it is by no means unusual for a survey to flag up problems with the building that the buyer is unaware of. From structural issues such as subsidence, damp, timber and roof defects to invasive garden species including the dreaded Japanese knotweed, a bad survey result can certainly take the shine off your new home.

If you decide to go ahead with the purchase with full knowledge of the facts, you may want to reconsider the price in light of the survey findings – and you are absolutely within your rights to do so. Your offer to purchase is ‘subject to contract’, which includes the results of any survey that is undertaken. If defects in the construction are identified, or our surveyors have highlighted that repairs are needed, then these will affect the property value.

How will the vendor and their agent react?

Estate agents are a hardy sort; they’ve probably seen every conceivable building problem under the sun and are unlikely to be fazed by your request to renegotiate the price on account of a ‘bad’ survey result.

What’s more, the agent won’t have been aware of issues with the property when they valued it for sale, so when new information comes to light that has a bearing on the value, asking for a discount is not an unreasonable request.

The vendor and their estate agent should certainly not dismiss your concerns. After all, you could pull out of the transaction at any point before contracts are exchanged – do they want to risk losing you as a buyer? And if the property does go back on the market, other buyers are bound to find the same defects.

How to renegotiate a previously accepted offer

If you are serious about asking for a discount, don’t just tell the estate agent over the phone and ask them to pass the message on to the vendor. Instead, take the formal route and put your request in writing, explaining that you are putting forward a new offer as a result of the findings provided by an independent RICS Chartered Surveyor.

It is worth emphasising in your letter that you are still very much committed to the purchase, but that you are not prepared to pay the full agreed price when serious defects were found and repairs are needed. You can also add a polite note to say that other buyers would face the same problem.

Hopefully, the vendor will realise how inconvenient, time-consuming and costly it would be to have to find a new buyer and be motivated to accommodate your request.

What your letter should contain

Your best approach to successfully renegotiate the purchase price with the seller is to construct your arguments on evidence-based facts and deliver these politely but clearly.

• List all the serious defects highlighted in the property survey along with their associated costs of repair, such as are included in our Level 3 RICS Building Survey.
• By way of evidence, it’s worth providing a copy of the specific pages of the survey report that relate to the repairs. There’s no need to supply a copy of the whole survey to the estate agent or the vendor.
• Total the costs and decide on what you would consider a reasonable discount off the original accepted offer price. You may decide to claim the entire cost of repairs or come to a cost-sharing agreement with the vendor.
• To strengthen your proposal and renegotiation chances still further, include the name of any contractors who have given quotes.

In receipt of your fully considered proposal, the seller will now need to consider their options and get back to you within a few days, so as not to risk derailing their sale. All you can do now is to keep your fingers crossed and remain flexible in reaching a mutually agreeable outcome to your negotiations so that your home purchase can stay on track.

At Able Surveyors, we have 25+ years of experience providing expert advice and guidance to prospective home buyers to help them make the right decision, and we can assist you too. Contact us to discuss your specific requirements and let us advise on the best choice of RICS home survey – HomeBuyer Report or Building Survey. We look forward to hearing from you.

Subsidence is one of those fearful words that no homebuyer wants to hear. But what exactly does it mean for the property, and what can you do about it? At Able Surveyors, we are experienced at detecting signs of subsidence in properties of all ages. Our professional service portfolio includes the full range of RICS home surveys, meaning we can advise you of major faults and building defects before you proceed with the purchase. In addition, we can provide ongoing monitoring services for newly detected cracks and other situations where the presence of structural movement in a building is suspected and must be confirmed (or ruled out).

What is subsidence?

In basic terms, subsidence happens when the ground on which the building stands begins to sink. Unstable foundations can cause the house to become askew and strained by the movement below. Structural damage can occur that calls into question the integrity of the building. While, ultimately, this could lead to the collapse of the structure, in practice subsidence can often be dealt with quite easily, particularly if the signs are spotted early on.

What causes it?

There are many reasons why subsidence may occur. Moisture plays a critical part and this can manifest in various ways. If the house is built on clay soil, for instance, the ground is likely to swell and shrink with rising and falling moisture content through the seasons. This can cause natural shifts which may well affect the building on top. Soils such as gravel and sand, on the other hand, won’t shrink or swell but could be at risk of being washed away as a result of extended periods of wet weather or, more likely, damaged underground drainage pipes.

The water content of the soil is also affected by trees, shrubs and bushes growing near the building. Plants draw up the moisture they need through their roots, leaving the soil drier and therefore more susceptible to shrinkage. The effect is obviously compounded on clay soils. Some trees such as willow, poplar, oak and elm are particularly thirsty and should always be situated at a safe distance from the house, and preferably not planted at all in a regular-sized garden.

Other causes of subsidence can include seemingly innocuous things like persistent traffic-induced vibrations and building work close to the house, long-term leaking underground pipes, and a history of mining in the area.

How to spot the signs

If there is subsidence, detecting it early will make remedial work much easier and potentially a lot cheaper. Tell-tale signs include cracks in the wall that appear suddenly and are:

• Generally larger than harmless plaster cracks (>3mm)
• Typically diagonal in nature, often being wider at the top than at the bottom
• Often situated around windows and doors, or where an extension joins the main building
• Visible on the inside and outside of the property

Drops in flooring is another potential indicator of subsidence. Uneven skirting boards, with gaps underneath, and uneven surfaces elsewhere, may all point to structural movement having occurred.

At Able Surveyors, our team have a keen trained eye and will be able to tell the difference between cracks that are perfectly normal and nothing to worry about, and signs of subsidence, which will be clearly documented in our survey report.

Should you buy a house with a history of subsidence?

Of course, the $64,000 question is whether you should run a mile from any house that has suffered from structural movement at some point, or whether it is OK to proceed with the purchase, and at what price. Our professional advice is to obtain all the salient facts before making your decision. To that end, we recommend that you:

• Have a full RICS Building Survey carried out to establish the nature and severity of any structural problems. The report will also contain our recommendations for remedial action along with cost estimates.
• Discuss the property with your mortgage broker or lender as a matter of priority. Lending criteria vary between mortgage companies, and additional checks will be necessary, while some may refuse to provide finance on subsidence affected properties altogether.
• Obtain proof from the seller that any historic subsidence issue has been fixed, including details of what was done (monitoring, underpinning etc) and when it was completed.
• Research home insurance options for properties with a history of subsidence. Standard home insurance cover may not be available, or only at exorbitant premiums, but there are many niche insurance providers who may be suitable.

What price should you pay?

While there is little doubt that a house afflicted by subsidence, past or present, will be worth less than a comparable property where structural movement is not an issue, it is difficult to put a clear figure on this. Every property is different, and it is up to the seller and the buyer to negotiate a mutually agreeable purchase price.

This is where a RICS Building Survey can be hugely helpful to the buyer. Armed with the detailed report findings regarding the structural condition of the building, you are now in the best possible situation to make an informed decision, whether you choose to proceed with the transaction as planned, ask the seller to remedy the problem, renegotiate the price or walk away from the sale.

If you would like to discuss your next property purchase with our expert team, or get an instant survey quote, please contact the Able Surveyors team.

Property surveying is a complex technical discipline with information that is often hard to comprehend unless you are a Chartered Surveyor yourself. Little wonder, then, that there are many myths and misconceptions surrounding building surveys circulating among homebuyers who have no experience in the field. Let’s take a look at four of the most common wrongly-made assumptions and replace fiction with facts.

1 – You don’t need a property survey if you have a mortgage valuation

One of the most common falsehoods is the belief that a mortgage valuation is enough. Please be warned that this is not the case. A property valuation carried out on behalf of your lender is for their benefit only; its sole purpose is to ensure the property is worth the loan you are applying for. Often little more than a tick-box exercise performed during a brief site visit, it gives next to no information about the condition of the property, and you may not even get to see a copy. An independent property survey such as the level 2 RICS HomeBuyer Report or RICS Building Survey, on the other hand, is an impartial inspection of the property to assess its condition, carried out on your behalf to protect your investment.

2 – A survey is nice to have but the money could be better spent elsewhere

Unfortunately, many homebuyers still believe that an independent property survey is a needless expense. But think of it this way: you wouldn’t buy a car without giving it a thorough once-over first, so surely the same principle applies to what could well be the biggest financial commitment you will ever make? A survey may cost a few hundred pounds but the findings may include hidden and unexpected defects that may cost thousands to rectify later on. It could even flag up serious issues that may make you change your mind about the purchase, or the price. Rather than a needless expense, think of a property survey as due diligence to ensure you’re making a sound investment.

3 – Survey reports are deliberately vague to cover the surveyor’s back

Another cynical misconception is that survey findings are purposefully reported in an unclear fashion so as to protect the surveyor from any legal action if problems are later uncovered that should have been flagged up in the survey. With a reputable and experienced firm of RICS-accredited Chartered Surveyors such as Able Surveyors, that won’t be the case. We meticulously inspect every property and deliver a comprehensive and detailed report of the condition of the property. Our aim is to provide you with full feedback, including implications of any defects found, so that you have all the information you need to make an intelligent purchase decision.

4 – I won’t be able to understand the survey report, so there’s no point having one

At Able Surveyors, we offer the full range of RICS home surveys –including RICS HomeBuyer Reports and in-depth RICS Building Surveys – as well as a range of specialist investigations. Our reporting follows a standardised structure and clear, jargon-free language to enable everyone to understand the findings and their implications. We will go the extra mile to ensure that you fully understand all the information presented, offering opportunities to discuss the survey findings with our surveyors and obtain plenty of professional advice and guidance from our competent, friendly team.

If you are thinking of buying a property, don’t make the mistake of skipping the survey – you could regret the decision in years to come. An independent home survey is the best way to provide you with the peace of mind that your investment is sound. At Able Surveyors, we can advise on the best choice of property survey for your needs, answer any queries you may have and provide an instant quote. Please feel free to get in touch.

Buying a home is a big investment, probably one of the biggest in your life. Being a freeholder means you own the building and the plot of land it stands on, but leasehold is a different type of property ownership. When you buy a leasehold flat, you own the right to occupy the property (subject to the terms of the lease) for the length of your lease agreement with the freeholder.

Leases can be complex documents, often written in archaic legalese that are difficult to understand. But since the Lease is the basis on which the contract between you and the seller is drawn up, it pays to be vigilant. We’ve put together 5 important questions you should be asking before you go ahead with your purchase.

1 – How many years does the Lease have left to run?

The number of years left on the Lease will have a direct bearing on the value of the property, so this is one of the first bits of information you need to find out. In theory, once the Lease has run out, property ownership reverts to the freeholder, though it rarely comes to that. Still, the threat is real.

In particular, if there are less than 80 years left to go, this can affect your chances of getting a mortgage and you may well struggle to sell the property further down the line. While you have the statutory right to extend the Lease, this can turn out to be eye-wateringly expensive for properties with less than 80 years remaining.

We would recommend that you only shortlist properties to buy that have a remaining Lease term of more than 90 years, or have an arrangement in place for a lease extension as part of your purchase.

2 – How easy is it to extend the Lease?

By law, you have the right to extend the lease of your property by 90 years, while reducing ground rent to zero. However, you need to have owned the property for at least 2 years to be eligible and there are certain situations where a property may be exempt from statutory obligations. Make sure you get clarity before you sign on the dotted line.

That said if you are planning to extend the lease, be advised that this can be a lengthy process with the potential for things to go wrong. From absent freeholders to failing to agree on the premium to be paid, delays are certainly not uncommon. There is a set statutory process to be followed and, if all else fails, you have recourse to a tribunal. But this is a slow and expensive journey.

Our advice is to involve an experienced lease extension surveyor at an early stage. At Able Surveyors, we are happy to help with expert advice and a professional lease extension survey and valuation to help reach an agreement with your freeholder.

3 – How much is the annual Service Charge?

The day-to-day management of leasehold flats typically falls to a management company or residents’ committee. Each flat in the building will be required to pay a service charge for the upkeep of any common or shared areas including roofs, stairwells, lifts, external elevations and communal gardens.

Currently, there is no cap on how much the service charge can be, and levels can vary widely. It makes good financial sense to find out how much you will be charged compared to similar properties in the area.

Your annual payment may include a contribution towards a reserve or sinking fund, which is there to cover unexpected capital expenditures such as a new roof or heating installation. This is good practice as it protects individual leaseholders from sudden demands for large payments, instead helping to smooth cash flow.

4 – What about the ground rent?

In addition to an annual service charge, you will also have to pay a yearly ground rent. Again, this can vary from ‘a peppercorn rent’ to punitive formulas enabling the amount to double every 10 or 15 years, amounting to thousands of pounds.

Soaring ground rents were at the heart of the ground rent scandal a few years ago, with many leasehold owners effectively trapped in unsaleable properties because they didn’t realise what they were signing up for when they bought their homes.

Your conveyancer should review every aspect of the Lease and associated documents with a fine tooth comb, checking for risky ground rent clauses. It should go without saying that it is unwise to commit to the property unless these onerous clauses can be removed.

5 – Do you need freeholder permissions?

If you are thinking of buying a leasehold ‘doer-upper’ and are looking forward to refurbishing the property, it is important to find out in advance what you can and can’t do. The Lease will be your first port of call. For alterations, you are permitted to undertake you will need to obtain a Licence to Alter from the freeholder, and you may also need Planning Consent from your local authority.

A fee will be payable to the landlord, and you will also be responsible for any legal and surveyors’ fees incurred by the freeholder, which can make the entire project financially unviable. Make sure you do your homework and crunch your numbers to ensure you will able to realise your plans for the property.

At Able Surveyors, we have more than 25 years of experience providing building surveys and other property management surveys to a broad client base in London and the Home Counties. To discuss your leasehold purchase with our expert team, please don’t hesitate to get in touch.

Buying your next home can be an exciting journey, but resist the temptation to fall in love with your dream home. Properties presented for sale may not be what they seem, and it’s the job of your building surveyor to find out if there are any issues you should be worried about. An independent property survey is your due diligence safeguard – don’t skimp on it!

The purpose of a professional building inspection and survey report is to point out the risks you could be taking with your investment, so you can make informed decisions. For most homebuyers, buying a property will be the biggest financial commitment they will ever make, so you must ensure you get it right.

At Able Surveyors, we have over 25 years experience of surveying residential properties in London and the Home Counties. As members of the Royal Institution of Chartered Surveyors, we offer a choice of RICS surveys including our popular HomeBuyer Report and full RICS Building Surveys, along with plenty of professional advice and guidance to help you with your purchase decision.

So, what do you do if the house of your dreams turns out to have serious problems? For sure, a ‘bad’ survey will be disappointing and frustrating for any homebuyer, but it doesn’t have to be the end of the road. You could look at it as an opportunity to get a better deal.

What serious issues might be found?

It is by no means unusual for the survey findings to include areas of concern, regardless of the age of the property. Some of the most common building problems revealed by a home survey include

• Damp issues and timber defects including wet and dry rot
• Roof problems and drainage issues
• Gas and electrics
• Structural movement including subsidence
• Japanese knotweed and other invasive species

Your survey report should explain the location, nature and severity of each problem, as well as the degree of urgency of any remedial action. If there’s anything you don’t understand, please don’t hesitate to ask us. The team at Able Surveyors are always happy to chat through the report after you receive it and answer any questions you may have.

What should you do next?

Once you’ve fully taken on board the survey findings and their implications, it’s important not to panic, but to consider your options calmly and rationally. You have four choices regarding how to proceed:

• Do nothing and carry on as planned

Finding a serious issue with the building doesn’t necessarily mean there’s a problem with your purchase. Perhaps you are buying the property as a renovation project? If the survey flagged up ancient electrics and plumbing services but you were planning to rewire and replace the central heating system in any event, maybe there’s nothing much to worry about. And, if the agreed sale price reflects the ‘poor’ condition of the building, then you can use the survey and any further investigations as valuable tools to help you draw up an accurate refurbishment budget and priority to-do list.

• Ask the seller to carry out repairs

Your second option is to share the offending survey findings with the seller and ask them to fix the problem before contracts are exchanged. You could even make it a condition of the contract that you will only move forward if, say, the leaky roof or faulty guttering has been dealt with. Be knowledgeable about the issue at hand and have an idea of how much it would cost to fix. A Specific Defects Report or further investigation by a specialist surveyor may help bolster your case. If the seller agrees, make sure you put a checking system in place to confirm everything has been done as promised.

• Renegotiate the price

However, if the problem is not a quick fix, or you would much prefer to tackle the building repairs yourself, you can ask the seller to reconsider the agreed price. One of the best things about a property survey is that it gives you greater bargaining power. With written evidence from an independent specialist to back you up and a clear idea of the costs involved to remedy the issue, you can request a discount equivalent to the amount it would cost to fix it. Of course, the seller is under no obligation to renegotiate, but with a bit of give and take, a compromise can usually be found.

• Walk away from the sale

Under English law, your offer to purchase the property is subject to contract, which means you are not legally committed to the transaction until contracts are exchanged. Talk to your surveyor to find out how much it would cost to fix the problem and whether any long-term ramifications could impact the property value or its saleabilities such as a history of subsidence, or a knotweed management plan. If, after careful deliberation, you think the survey findings constitute a dealbreaker, you are completely within your rights to simply walk away.

A bad survey result does not have to spell the end of your dream home, but you do have to be prepared to be honest with yourself and make some tough decisions in the face of the information that’s come to light.

Would you be prepared to lose the house if the seller won’t budge on the price? Would you accept having to pay the full price, despite the survey’s findings? While our surveyors can assist with detailed factual information and professional advice including general property surveys, Specific Defects Surveys, Damp Reports and many other property services, ultimately the final decision rests with you.

If you would like to discuss your next property purchase with our expert team or obtain an instant quote, please get in touch with Able Surveyors.

According to RICS (the Royal Institute of Chartered Surveyors), 4 out of 5 house buyers do not commission a property survey before committing to the purchase of a new home. In many cases, this is down to not understanding the benefits of a survey, and/or confusion about the Mortgage Valuation carried out by the bank.

Given that UK sellers are not obliged to disclose any known problems with the property, the onus is on buyers to make sure they are happy with the condition of a building before agreeing to a price. This is known as caveat emptor or “buyer beware” and, while it has certain limitations, it still results in hundreds of sales every year where buyers are unprepared for the amount of work their new house needs.

Here is a brief explanation about why a Mortgage Valuation is not an adequate replacement for a Building Survey.

What is a Mortgage Valuation?

Most lenders require a Mortgage Valuation to be carried out before agreeing to release funds to purchase a home. Simply put, they are making sure that the house is worth enough to recoup their money if you default on your mortgage repayments.

The valuation is done in about five minutes and the surveyor or valuer won’t spend time looking for specific defects. Even if they see any, they are under no obligation to tell anyone other than the lender. This can sometimes lead to a reduced mortgage offer, usually without any clear explanation, leaving you unable to buy your home without really understanding why.

How is a survey better?

If you arrange for a professional survey to be carried out, the surveyor will be specifically looking for defects and reporting their findings back to you. Any issues that may affect your decision to buy the property (or at least prompt you to re-negotiate the purchase price) will be highlighted in a clear, comprehensive document, allowing you to make an informed decision about proceeding.

Depending on the level of survey that you commission, you will also receive advice about the best repair and maintenance options for the property, along with technical information about the building’s construction materials and methods. Most buyers find their report is not only helpful for deciding whether to proceed with their purchase, but as a guide for planning and budgeting repair work when they move in.

In short, having a survey will provide you with a much better idea of the level and cost of any work that is needed to make a house safe and comfortable. Once you have that information, you can decide whether to take the property on, re-negotiate the price or walk away and find something more suitable.

Which survey is best?

The most appropriate survey depends entirely on the type of property you are looking at.

Building Surveys cater for old, large or complex properties that may have numerous issues hidden beneath the surface. HomeBuyer Reports are the mid-range option and provide sufficient detail to understand most conventional modern homes.

Take a look at our survey comparison table for a better idea of the differences between surveys. You can also find an example of a Building Survey that we carried out just below the table.

Property investment is a big decision, which is why, at Able Surveyors, we want to help our clients make the most informed decision they can. If you have any questions about property surveys or any of the other services we provide, please get in touch.