What Are You Really Buying?

Before committing to a flat, determine whether it comes with a share of freehold and the remaining length of the lease. A share of freehold provides more control over decisions such as repairs and service charge levels, and extending a short lease is easier and less costly if you own a share of freehold.

How Well Off Is the Block?

Examine past service charge accounts to assess the financial health of the building. Look for sufficient reserves for future repairs, realistic budgets, and any deficits that might affect current cash flow. Make sure there’s no hidden debt or issues that could impact the building’s upkeep.

Who Is the Freeholder?

Understand who the freeholder is and whether they are meeting their obligations, like maintaining the structure and keeping the building insured. Ask for up-to-date ground rent statements to ensure you're not inheriting someone else's arrears. If there’s no management company in place, inquire about past repairs and funds set aside for future maintenance.

Is There a Management Company?

If there’s a management company, find out whether it’s run by residents or a reputable managing agent. While self-management might seem like a cost-saving solution, it can lead to conflicts of interest. For example, a neighbor might violate the lease by installing wood floors instead of carpets—who will enforce the lease?

How Much Is the Service Charge?

Make sure you’re comfortable with the current and future service charge levels. Don’t just compare charges to other local buildings—ensure the charges are reasonable for the block’s specific needs, such as upcoming repairs or maintenance. Consider any potential hidden costs that could arise in the future.

How Healthy Are the Reserve Funds?

Check whether the building has a healthy reserve fund, which is used for large, infrequent expenses like roof replacements or lift installations. A well-maintained reserve fund, built up over several years, can be a major advantage when it comes to avoiding surprise costs down the line.