Many people fear that renting a property is ‘dead money’, so is not money ‘well spent’. However, for many Londoners, renting is far cheaper and a far better way to live than trying to buy.
The reason being is if you want to buy in London, then firstly you are more likely to have to buy a flat. This brings problems with the length of lease and the cost of maintenance. For example, things you need to consider if you are buying a flat are:-
Lease length needs to be above 80 years
If the lease length is less than 80 years or will be during the time you own the property, you are unlikely to be able to sell it on the ‘open market’. The reason being, most mortgage lenders will not lend on a property which has less than 80 years on the lease.
This means the value of the flat will decrease substantially if the property can’t be sold to ‘anyone’ who has a mortgage. As a result, it may be better to rent than to buy and suffer a valuation drop.
Maintenance costs
Although some freeholders run good management, there are many that try and make money from the cost of maintaining a property. New roofs can cost £10k and this cost may be sprung on you with only 12 months or more to find the money to pay. They may ‘bunce’ on the cost. For example, the cost of works might be £100k but they charge you £120k which may include ‘maintenance management’ of £20k.
Questions over your lease
Fortunately there are organisations such as the ‘Leasehold Advisory Service’ may be able to help you for free regarding advice on the lease you take out.
You should always make sure if you buy a flat you have a member of ALEP look after you who has expertise in leasehold agreements.
One of the key questions to ask a freeholder when buying a property is what major works are required, when will you be warned about them and how much time will you have to pay the cost?
Is renting better than buying?
For many, renting will be more cost effective than buying. You won’t have to:-
You will also have the freedom to trade up to a new rental home, or trade down to a room rental if you are struggling to keep up with rents. In addition, if you change your job and decide to work abroad or in another location, it’s quick and cheap to move.
So if you want to rent in 2014, it’s vital to find a good landlord or letting agent. One who is a member of the National Landlord Association or the Residential Landlord Association, or indeed a letting agent who is a member of NALs, ARLA or RICS. This way if anything goes wrong during your rental period, you have a free third party complaints procedure you can use and a landlord that understands the importance of renting a property legally.
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