Ex-Local Authority Blocks
Liz Hodgkinson is an experienced property developer, landlord and journalist. Over the past decade she has bought, renovated and rented out or lived in many flats of all kinds, from new-build to Victorian, from purpose-built 60s and 70s blocks, to conversions and mansion blocks. She contributes a regular landlord and tenant column to the Evening Standard and also writes for the Mail on Sunday, The Lady, Saga, The Independent and Daily Mail.
EX-LOCAL AUTHORITY BLOCKS
A lot of flats in these blocks have come onto the open market since the original buyers, former council tenants who bought at a huge discount under Mrs Thatcher’s right to buy scheme, have sold and moved on. At one time, flats in these blocks were distinctly cheaper than others; now, depending on location and the condition of the estate, they often go for much the same price as any other flat of a comparable size.
Advantages
The flats are often surprisingly roomy, with good storage and big, square rooms. In addition, they are often in excellent locations, and have well-kept communal gardens.
Service charges are usually low, when compared to comparable private flats in similar locations. Very often there will be a balcony which gives at least some outside space.
Security is usually good and caretaking services are provided in the service charges. Also, rubbish is collected regularly.
The buildings are looked after by the local council, so there are rarely serious management problems. Also, nobody is making a profit as in the private sector, as local councils are not allowed to make a profit.
Disadvantages
They can be on rundown estates. These blocks rarely have any architectural features of merit, and can look forbidding and offputting, even if inside they are often a pleasant surprise.
If buying into a high-rise or tower block, leases can be short and it may be difficult to extend, which means it is impossible to get a mortgage. There will be little or no resale value if you buy on a short lease higher than the seventh floor.
Common parts and lifts may be covered in graffiti or vandalised. Values are unlikely to increase significantly even with a long lease on a first or second floor flat where there is a high proportion of council tenants, homeless or rehoused people.
You are buying into mixed tenure. In the majority of ex-local authority blocks, there will be a mix of leaseholders, tenants of leaseholders, property investors and social tenants. This means that these blocks tend to have a lower value than in the private sector.
Service charges usually seem low and this is because local authorities are not allowed to amass a sinking fund. This means that whenever major repairs are indicated, you are charged for your percentage share under the lease, which could come to four or five figures unexpectedly.
Even when the common parts are clean and tidy, they are rarely warm or welcoming, as most council blocks were originally built as cheaply as possible.
SMALL BLOCKS
Apartment buildings vary enormously in size, from a two-maisonette building to a very large block containing four or five hundred flats. As ever, the definition of a ‘flat’ is where you share roof and foundations, and possibly, some external walls.
A ‘small block’ is usually one where there are six or fewer units in the building.
Advantages
With small blocks, you almost always know your neighbours, there is no real need for outside management adding to the running costs, and provided you are all neighbourly, you can sort out repair and maintenance matters amicably and without fuss. Small blocks are necessarily cheaper to run than large blocks; you may not need to employ outside caretaking and cleaning services and will probably not have to go to the expense of a lift.
Disadvantages
Small blocks can be a nightmare where there are feuding neighbours, or one owner who refuses to co-operate. Also, you are not likely to enjoy the amenities of a large block such as underground carpark, communal gardens or a gym, for instance.
LARGE BLOCKS
By far the great majority of newbuilds are large blocks, as these are more cost-effective for developers. But there are also many large blocks dating back to Victorian and Edwardian days, and every decade up to the present time. Large blocks can contain several hundred individual apartments.
Advantages
You can be more anonymous in a large block; this is an advantage for some, but a disadvantage for others. There is likely to be better security and cleaning arrangements in a large block and of course, there is a greater choice of properties within the block. Neighbour disputes tend to be less personal, and as flats are frequently changing hands in a large block, even quite serious disputes do not usually last long.
It is easier to club together and buy the freehold in a large block, to exercise the Right to Manage, and to form a Residents’ Association. In a large block, there is safety in numbers!
Disadvantages
Large blocks cost far more to run than small blocks, so service charges will be higher. Large apartment buildings can also be forbidding, and repairs expensive and difficult to carry out as they almost always need scaffolding. There will often be at least one or two debtors and vexatious owners in a large block. Large blocks also definitely need outside managing agents, and this also hikes up the cost of service charges.
The older the block, the more likely it is to have fallen into at least some disrepair, and need major renovation or updating. Lifts in large blocks, for instance, can be very expensive to repair or replace.
FLATS OVER SHOPS
In recent years, the government has been trying to persuade people to invest in flats over shops, which have historically had a bad reputation.
Advantages
Such flats are usually in excellent locations, as they are in shopping areas, and being over a shop means they are cheaper to buy than a comparable flat not over a shop.
Disadvantages
The lease situation will usually involve the shop, and be complicated, as it is part-commercial and part-residential. This means the landlord is very likely to be a company or corporation, rather than a person. You will have no say in the kind of shop you are over, and if you are over commercial premises which turns into an off-licence, betting shop or charity shop, your flat may lose value.
Flats over shops are less easy to sell than others, and often have extremely dismal, dilapidated common parts and nasty doors. Common parts also tend to be very dark and poorly lit.
SHELL APARTMENTS
These are sold as ‘shells’ where in effect you buy an empty space already marked out as a flat, but possibly without already being divided into rooms. There may not be a kitchen, bathrooms, flooring or any storage when you buy the apartment. In a way, shell apartments are the complete opposite to standard newbuilds, which come ready with fully-fitted kitchens and bathrooms, carpets and other flooring.
Advantages
Shell apartments are almost always in large cities and unlike warehouse conversions, which they resemble in some ways, tend to be built from scratch. They are usually large, and mean you can totally stamp your own personality on your home, which can be difficult with the average newbuild apartment. Shell apartments can be made to look strikingly individual.
Disadvantages
It can be difficult to budget, as obviously everything you put in will be at extra cost to yourself, and it may also be difficult to visualise exactly what it will look like when finished. Shell apartments are usually aimed at the high end of the market and will be expensive in the first place.
It can also be hard to make these apartments look cosy.
You need to have quite a lot of the interior designer and architect about you to make a shell apartment work successfully.
LIVE/WORK UNITS
These are a relatively new idea, and refer to a combination of living and working units in a single, purpose-designed type of accommodation. This idea is very different from working from home, as the workspace will be a dedicated commercial unit.
Live/work units can be a good idea for people who are setting up their first business and may not be able to obtain separate finance for business premises.
So far as tax is concerned, live/work is not currently a recognised term, and is classified under the old-fashioned phrase ‘composite hereditament’. This means it contains both domestic and nondomestic property, but there must be some domestic use involved. Live/work units cannot just be regarded as cheap offices.
The part of the unit used for living is rated under ordinary council tax bands, and the work area will be charged under business rates. A Valuation Officer will have to come round in each case and make an assessment.
You can get either a residential mortgage, a commercial mortgage or a mixture of the two. In normal cases, live/work units are mortgageable in the same way as ordinary residential units.
Advantages
The advantages are obvious! You can live and work in the same space, yet have clearly defined areas for each activity, so you are not running a business on your kitchen table. Ordinary leases do not normally allow businesses to be run from residential premises, so these units are a breakthrough. Most live/work units are sold on leases of at least 100 years and the ground rents and service charges applicable are very similar to those of ordinary residential apartments.
Disadvantages
Well, you can never escape from your work or shut the door on the office and go home, because your home and office are in the same space. There may well be restrictions on the type of business you can run from such a unit, or whether you can have employees, and it may be difficult to expand your business as there is nowhere for it to go.
The Capital Gains Tax situation could be difficult when you come to sell, as you will be liable for the business part of the property and not for the living part.
You would also have to sell your unit to another live/work buyer, so it could take longer to sell than a purely residential unit and is also unlikely to increase in value as much as a fully residential property.
RETIREMENT/AGE EXCLUSIVE APARTMENTS
Nowadays, there is a huge choice of apartments aimed at older people, from the simple ‘age exclusive’ home where you have to be, typically, 50 or over to buy into the development, to whole estates which offer a full range of hospital and nursing services.
Retirement homes come at every end of the market, from exclusive apartments in gated developments to cheap mass-produced housing.
Many retirement homes also have visitor suites which you can book, communal dining and games rooms, and a warden or concierge on duty. Most also have a ‘panic button’ which you can press for immediate medical assistance.
Retirement apartments are the fastest growing sector of the housing market and, for the developers at least, one of the most profitable.
Advantages
As these apartments are purpose-built for older people, they will often have wider doors than usual, for wheelchair use, easy-access bathrooms and other features designed to make life easy for older and less able people.
Disadvantages
All your neighbours are old or elderly! My former mother-in-law, who ended her days in a sheltered home, complained that everybody around her was deaf, and she missed the lively chatter and mobility of younger people. The biggest disadvantage, however luxurious the development, is perhaps this ‘ghetto’ aspect. Service charges tend to be high, as there are more services than usual provided in these homes, and locations are not always as good as they might be. In many instances, you have to pay a premium back to the developers when you sell, and in any case you cannot sell on the open market; only to other qualifying people.
Some retirement apartments are very small and dark, while others can be truly luxurious. This all depends on your pocket.
Only reasonably active older people are allowed in sheltered accommodation, as if you need round-the-clock or hospital care, you will not be allowed to buy. Originally, most sheltered homes had live-in wardens, but few do now, and most have assistants who come in only for a couple of hours or so a day.
IS THERE A BEST BUY?
Probably not, as each type of flat has its particular pros and cons.
The only way to look at the situation is to ask whether you can see yourself living in the place, and fitting into its existing structure. Some older people, for instance, would not dream of going into ‘age-exclusive’ apartments, while for others it is a wonderful luxury to be in a flat designed with their needs in mind.
For some people, price is the main criterion, whereas for others, space or nearness to main transport links, shops and theatres will take precedence. One friend has a gorgeous flat in Covent Garden which is above commercial premises. She is near to everything, but there is nowhere at all to park.
There is no such thing as a wonderful apartment which has all the advantages and none of the disadvantages, so you have to ask yourself how important, for instance, are architectural features or a period feel against convenience or low service charges.
I would say these are the main aspects to look out for when considering which flat to buy:
Parking provision
This is particularly important in large cities, as if the entire building is on double yellow lines with nowhere to park, you will be forever driving round the area. If there is a garage priced as an extra, as is often the case, go for it.
Most modern blocks of flats are built with underground parking; pre-1960s blocks are unlikely to have this facility and ex-local authority blocks almost never offer it.
Neat and tidy common parts
This indicates the building is well run and that most service charges are paid on time. First impressions count when you to go to view a flat.
A caretaker
In very large blocks, the caretaker may live in. There should always be somebody in charge of caretaking, rather than relying on contract cleaners.
Cleanliness of windows and type of curtains
This is maybe your biggest indicator of the type of neighbours you will have under the roof. Dingy, yellowing, nicotine-stained net curtains, filthy broken windows and cardboard or sacking up at the windows should all be your signals to steer well clear.
Condition of the exterior
This also indicates whether there is enough money being raised, or raisable, to keep the building in good repair.
The state of communal gardens, porches and driveways
Again, the cleaner and smarter these are, the more you can buy with confidence.
Other points
From experience, I would say that one thing to avoid is communal heating and hot water systems which are not only fiendishly expensive, but are always going wrong. And the hotness of the water is never guaranteed.
Buying with a share of the freehold, although often recommended, can also have its problems as very often, residents argue among themselves. Both Lease and the Citizens Advice Bureau say that neighbour disputes in blocks of flats have greatly increased since collective enfranchisement became popular.
WHERE IN THE BLOCK?
The choice does not end with deciding on the type of flat you prefer. There is also a choice of storey: you can live at the top, in the basement, on the ground floor, or go for a garden flat.
Best buy
Is there a best buy here?
Most definitely. I would always recommend buying a first-or second-floor flat, with a balcony. You can easily get cabin fever when contained in a flat, especially at weekends, and even a little outside space such as a balcony or patio makes a world of difference.
I would tend to avoid a ground floor flat, especially where you are at street level, as you are then subject to all the noises and possible vandalism of the street. You are also liable to be disturbed by the front door continually opening and shutting, and the sound of other people’s doorbells. If your flat opens straight into the hall, there will be comings and goings which are not noticed on other levels.
The only flats that come with gardens, apart from roof gardens, will be at ground floor or basement level and here you have to offset the disadvantages of being on this level, with the advantage of outside space. Do not buy a basement flat with no outside space; it is like living in a prison. In older buildings, it can be difficult to get rid of damp in a basement.
The highest premiums are, of course, reserved for penthouse flats, particularly where these have a stunning view and perhaps a roof garden. Penthouse flats can easily go for twice as much as others in the same block, and increase in value more quickly. Of course, penthouse flats are only popular in buildings with a lift. Few people want to trudge up six or seven flights of stairs and you may have trouble getting tradesmen to deliver without a lift.
Wherever possible, go for a flat with a view as these also command a premium price.
As ever, the most fundamental aspect of buying a flat is the lease. We will now take a look at the ramifications and complications of this often troublesome document.
