How is buying an apartment different from buying a house?4 min read
You may be familiar with the steps of the home-buying journey, and what is involved in the process of purchasing a house (if you missed them, check out Lintil’s other blogs for more information).
However, if you are looking to buy an apartment, there are a few things that are a little bit different about the process that you might want to consider.
The process starts out the same. You save up for a deposit, consider how much you want to spend, and apply for your Mortgage Approval in Principle. At this point, you are ready to start looking at apartments for sale in the location you would like to live. Depending on your preference, you can look at plans for new developments or pre-owned apartments (bearing in mind that new builds will probably take longer to move into). This is also a good time to engage a solicitor, so that you can move fast when you find the apartment that you would like to place an offer on.
The main differences in the process occur once your offer is accepted.
The legal title for an apartment is different to that of a house. A house has a freehold title, whereas an apartment has a leasehold title. As each apartment in the block will have a separate owner, the leasehold ownership means you own the area of the building that is your apartment, but not the land that the apartment block sits on (this is usually owned by a local authority, private company or an individual). You will own the property for as long is left in the leasehold - this is usually over 100 years, but ensure that your solicitor checks as it would not be advisable to purchase an apartment with less than 70 years left on the leasehold.
This is where the lease is involved. You may have to pay a small, nominal ground rent fee to the building management. This will be part of a larger arrangement with the building management company.
When you buy an apartment, you will become part of an owner’s management company (this does not happen when you buy a house; everything involved with the house is the owners responsibility).
Each owner of an apartment becomes a member of an owner’s management company, and a management agent is selected to maintain day to day management. Technicalities of this will differ between apartment complexes so be aware of how things are done in the place you intend to buy- and if it is a second-hand apartment, ask neighbours what the management of the block is like. Generally, an agreement is made by signing the contracts to a leasehold property to pay any management fees and abide by clauses about maintaining harmonious living standards with neighbours. The management company makes a commitment to maintain any common areas, pay for block insurance and ensure the upkeep of the building overall. The upkeep of the individual apartment is still the responsibility of the owner, as with a house.
Home insurance is not required for an apartment- the building structure is shared with others so a fee is paid to the complex management company for block insurance. It is advised that owners get individual content insurance for their apartment separate to this, as the contents of each individual apartment will not be covered by this.
Ask your solicitor to review the title documents with long lease-hold title, determining the responsibilities of the owner’s management company (lessor) and the apartment owner (lessee). This details the services that the management company is committing to provide in terms of upkeep and maintenance. Encourage your solicitor to ask any questions you may have about the leasehold or management company before signing the contracts- these are important as once you own the apartment, they will be your responsibility to deal with.
If the apartment you are purchasing is second-hand, it is essential that you get a structural survey done. You should ensure that all titles and leases are in order by verifying with your solicitor, but also look at the upkeep of the common areas and speak to neighbours to get an idea of the involvement of the management company. This could provide some highly important insight.
If the apartment is new, it is still a good idea to get a snagger to inspect the property before moving in. The owner’s management company will not be formed yet so there is not as much background research that can be done, but you will have the benefit of being a member of it from the start. However, do not be afraid to ask questions about plans for the management company in advance of signing the contracts.
Ultimately, a lot of the home-buying process is very similar when buying a house or an apartment. The benefits of buying an apartment are that they are generally cheaper, easier to maintain as they have no garden and a management company, plus they are often easier to find in an urban location. However, it is good to be aware of the facts when pursuing the purchase of an apartment.