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.
Before long, there will be more people living in flats or apartments than houses. All over the world, more apartment blocks than separate houses are being built, even in countries which still have plenty of building land left.
This means that in future, large numbers of people are going to have to take on board a completely different way of living and relating to neighbours.
When you live in a flat, you may have people above and below you as well as next door and along the corridor. With flats, everybody is interconnected in a way that does not happen with even the most closely-packed terraced houses, and because of this there have to be strict rules to ensure that all residents behave in a responsible and community-minded fashion.
Not only that, but buying a flat is a completely different process from buying a house.
When you buy a house, you purchase the freehold and that is that. To all intents and purposes, you own the land on which your house stands until the end of time, or until you come to sell. This applies even with terraced or semi-detached houses.
Flats, though, are usually sold leasehold, which means in effect that you buy a length of tenure, rather than the actual property.
Your flat may be sold with a specific length of lease remaining. Or, it may be sold with a share of the freehold. Or, it may be sold ‘commonhold’. There may be several layers of ownership, such as ‘head leaseholder’ or ‘under-leaseholder’. There may be managing agents, residents’ committees and a Board of Directors, none of which apply when you buy a house.
Then, when you buy a flat, shelling out money does not end with the purchase. You have to continue to pay monthly service charges, to ensure the building remains in good repair. And you must legally abide by the terms of the lease you have signed before completion.
What does it all mean? What are your rights, and what are your responsibilities when you buy a flat? This book explains all, and tells how to get the very best out of this modern and increasingly common way of living.
Flats can be safer, warmer, cleaner, easier and cheaper to run and also friendlier than houses. They are ideal for single people, young couples, busy workers, older people downsizing or, in fact, anybody who does not want the fuss and bother of looking after an entire house. Apartments are often in vastly better and more central locations than houses, and there is a huge choice of styles available.
The vast majority of property investors buy flats, rather than houses, to let out. But before buying a flat, either to live in yourself, or rent out, you need to know exactly what you are letting yourself in for.
Nowadays, ever more people are living in flats rather than whole houses. At one time, flat living was relatively rare but in England and Wales at least, more flats than houses have been built since 2003, and over 100,000 new flats are now being built each year.
In April 2000, just 16.5 per cent of properties bought in Britain were flats, but by March 2005, this figure had risen to 20.5 per cent. Over 72 per cent of all properties bought in London are now flats, and in 2004, 40 per cent of all homes built by Barratt, Britain’s biggest housebuilder, were flats. This is more than twice as many as ten years previously.
Worldwide, the vast majority of newbuild properties are apartment blocks rather than houses, and as the population inexorably expands and becomes ever more urban, it seems that separate houses will one day be the rarer type of dwelling.
But the ever-increasing popularity of flat living is not only to do with population growth and housing demand.
CHEAPER FOR DEVELOPERS
One significant aspect is that, so far as developers and builders are concerned, it is cheaper and easier to build blocks of flats rather than individual houses.
Where land is scarce but demand is high, as in waterfront locations and inner cities, for instance, it may no longer be possible to build separate houses for everybody. Also, even where there is space, it is easier to obtain planning permission for apartment blocks which will house many people, than for a few detached five-bedroom houses standing in their own landscaped gardens. As you can build more dwellings on less land, acquiring land is cheaper, too. Then there is great encouragement to build on brownfield sites – where there has already been a building of some kind – rather than on greenfield sites.
It is most common for apartment blocks to be built on brownfield sites; greenfield sites are usually reserved for separate houses, but it is much more difficult to get planning permission to build on these sites than where it is already built up.
Apartments can be squeezed in where it would be impossible to put a house, such as on top of supermarkets, for instance, and all kinds of previously non-residential premises such as fire stations, warehouses, libraries, schools, factories and police stations can quite easily be converted, and are being converted into apartment buildings. For example, The Old Fire Station, the Old Brewery, the Old Candle Factory are becoming very smart addresses.
It is also easier and cheaper to lay on services such as electricity, gas and water to an apartment block than to a series of separate houses. Architects like the challenge of apartment blocks because they can go to town, whereas they are severely restricted to thinking ‘inside the box’ with separate houses.
There was once a distinct stigma about living in a flat rather than a house but this is fast disappearing and cost and density are not the only reasons for this. Ever more people are now living on their own, and young singles and couples, divorced and separated people and the elderly, increasingly do not want to live in a whole house but prefer the ease and security of a flat. Most retirement and ‘age-exclusive’ housing, for instance, consists of apartments rather than houses, and for the majority of first-time buyers, their starter home is now a flat, not a house.
ADVANTAGES OF FLAT LIVING
Nowadays, flats afford more lifestyle and location options than houses, and depending on pocket and preference, you can go for a tiny studio in a very central location, or have a huge rambling flat in an imposing Edwardian mansion block.
You can go for a characterful Victorian conversion or an ultramodern apartment in an award-winning new building.
Flats tend to be more secure than houses and the modern ones at least, have far more amenities. It might be difficult to afford your own private gym or swimming pool with a house, but spas and fitness centres are increasingly a factor of even quite modest blocks of flats.
Plus, with a flat, you can have the modern equivalent of servants or staff, such as porters, gardeners, valet parking, painters and decorators and cleaners. And the more people there are to share each amenity, the cheaper it becomes.
When you buy a flat, you can have a much more luxurious style of living than you would be able to afford with a house. You can also enjoy stupendous views on the top storeys of an apartment building; views which would be inaccessible with even the tallest house.
If you are away a lot or like to travel, you can lock up and leave a flat in a way that would be extremely difficult with a house.
Because so much of the building is shared, it is usually cheaper to live in a flat than a house. Utility bills are vastly cheaper, and as all works and exterior decoration are shared between the residents, renovation and upkeep costs less.
Also, size for size, flats feel more spacious than houses. A house of 2,500 square feet can feel tight, as corridors, stairwells, halls and landings have to be squeezed into this footage, whereas a flat of the same size can feel extremely spacious.
DISDAVANTAGES TO FLAT LIVING
The overwhelming drawback to buying a flat is that the property will almost always be sold leasehold rather than freehold which means, in effect, that you are buying a length of tenure rather than the property outright. By contrast, when you buy a house, you buy the freehold, which means you own the property in perpetuity.
Apart from the extremely complex laws concerning the tenure of apartment blocks, there is also the fact that you may have up to 200 near neighbours to contend with, all living on top of each other.
UNDERSTANDING LEASEHOLD LAW
Many laws relating to the tenure of apartments are difficult to understand and even conveyancing solicitors often do not fully appreciate all their complexities and subtleties. Nor do mortgage lenders, it must be said.
Although you enjoy many ownership rights with a long lease which does not happen when you rent month by month, as the lease runs down, your flat will be worth ever less, and by the time the term is up, your stake is worth nothing. At this time, it will automatically revert to the freeholder, or landlord. You often see examples of the rundown lease in very upmarket London postcodes, where 16-year leases are frequently offered for sale in places like Eaton Square. Often, such leases cost around £500,000 − about the price it would cost to rent that property for a similar length of time.
The lease itself is a lengthy, legally-binding document written in offputtingly archaic and tortuous legalese. Many leaseholders have never even glanced at the lease before buying and have no idea of its terms. Then they are later appalled if they are accused of breaching one of its hundreds of clauses and schedules.
Strictly speaking, a leaseholder is known as a tenant, and somebody who rents from the leaseholder is referred to as a subtenant. The actual owner of the property is the freeholder, or landlord, and this means the person who owns the actual building and ultimately, the units within it.
Leasehold law comes somewhere between owning and renting and is in many ways a horrible hybrid which governments have been trying to simplify for decades, even now without complete success. In fact, some legal experts claim that every time the government attempts to simplify leasehold laws, it ends up making them even more complicated.
To sum up, when you buy a flat, you buy a length of lease rather than outright ownership. New leases tend to be either 99 years or 125 years long, but can be 999 years. Although you can sell this lease on to another buyer, the shorter the lease gets, the less valuable the property becomes. So, a lease is a wasting asset.
Leases can also in extreme cases be forfeited, for persistent and wilful breaching of the clauses. Where this happens, the leaseholder loses everything, even when there are many years left on the lease.
Since 2004, when the Commonhold and Leasehold Reform Act of 2002 was implemented it has also been theoretically possible to buy flats with a new type of tenure known as Commonhold. Here, there is no outside freeholder, and the commonholders collectively own the common parts as well as their own individual units. But the new commonhold, as will be explained later, is just as complicated as the old leasehold.
There are very many laws and regulations relating to apartment living, not just because of the ramifications of leasehold and commonhold laws, but also because ways have to be found of ensuring that residents living cheek by jowl and sharing many common areas, are enabled to exist in reasonable harmony with each other.
A NATURAL WAY OF LIVING?
Although living in a flat makes such a lot of sense these days from so many points of view, the real problems arise not so much because of leasehold/freehold issues, important though they are, but because it is basically unnatural for humans, and indeed, most species, to live on top of one another.
Apart from some insects like ants and honeybees, most creatures have their own individual dens, lairs or nests. Even when masses of birds congregate on a cliff, you will notice that each keeps to its own space, however small. Humans are no different. Notice how all passengers try to maintain their own space in a crowded tube train, for instance, and pretend that the traveller jammed up tight against them is not really there at all. There is a deep instinct to be territorial, to mark out your own space and with flat living, you cannot really do this. True, you will have your own lockable front door, but it will most likely be on a shared corridor. And, as with a hotel room, you will usually have people above and below and be able to hear their footsteps and comings and goings.
This is why, in the past, great lords and aristocrats built their own massive homes well away from prying eyes. The richer you were, the more you could afford to indulge this basic instinct for privacy. It was only the desperately poor people who had to live on top of each other, in tenements and rookeries or attics and garrets. In the past, success in life meant having your very own house and, until very recently, this remained the aspiration of most people.
It is still true that rich and successful people buy large detached houses in their own grounds but it is also true that these same rich and successful people will often own a modern flat in a centrally-located apartment, so as to have the best of both worlds. One only has to think of Jeffrey Archer, with his main home, the Old Vicarage, Grantchester and London penthouse flat overlooking the river.
But however lavishly appointed your flat is, you cannot get away from the fact that you will be sharing a roof, foundations, common parts and common amenities, with a load of strangers. When individual flats change hands, you have no control over who buys the flat next door to you, or above or below you.
THE NATURE OF INTERCONNECTION
Flat living means that the fabric of your home will be connected to other people’s homes in a way that does not happen with even the most closely packed terraced houses.
You will share pipework, for instance, and you will share external walls, drains and guttering. You will probably share a lift and a main front door and although each flat dweller will have a separate electricity, gas and water meter, the supply will come from a common source. You will most likely share a common television aerial. If a neighbour leaves a tap running on the top floor, this will eventually flood the basement. If renovations are being carried on in one flat, the whole building may be affected.
When major works are being carried out to one part of the building, this often means scaffolding will go past your windows, blocking out your light.
Because of this close interconnection, there are strict rules on what each owner is allowed to do. Unlike living in a separate house, compromises have to be made. You may not be allowed to hang washing out of the window, to vacuum the place or use the washing machine at certain hours; you will not be allowed to put rubbish in the corridors or leave bikes or prams in the hall – all of which you could do if you so wished in your own home.
You may not be allowed a satellite dish, and in some very upmarket blocks, you may not even be allowed to choose your own type of curtains. You will certainly not be allowed to choose your own type of window, as with apartment buildings a uniform look is always desired.
So, a level of conformity is essential if flat living is to work.
RUNNING THE BUILDING
Unlike a separate house, a block of flats has to be run, and run by somebody, adding further to the complications.
Where there is an outside freeholder, there will usually be managing agents appointed by that freeholder. Managing agents do not own the block and are simply employees of the freeholder or landlord. But they are given powers to run the building and it is their duty to make sure service charges are collected, that quotations are obtained for major works, and for ensuring that the terms of the lease are met by every occupant.
Even when the block is very small, as with a house divided into two flats, somebody still has to be responsible for insurance, exterior works and general maintenance.
COSTS CAN GO ON…
Because common and exterior parts have to be constantly maintained in an apartment building, for the good of all, you have not finished shelling out when you buy a flat. Every month or every quarter, you are required to pay service charges for cleaning, porterage, rubbish clearance, exterior decoration, gardening and also any services which are, or may be, used by all residents, such as the lift.
These charges can vary from a few hundred pounds each year in a small, easily-maintained block, to £10,000 or more in a luxury block. It is your duty as a leaseholder to pay these charges, whether or not you agree with the amount.
There may also be extra levies raised from time to time, to pay for major works such as a new roof, which are not covered by ordinary charges.
There are now ways that excessive charges to leaseholders can be challenged, in tribunals and courts, but if they are deemed to be ‘reasonable’ you have a legal duty to pay them. If nobody pays service charges, the block may become dilapidated and decrease in value, so everybody eventually loses out.
So it is very much up to every occupant to pull their weight, to maintain the integrity and value of the building and each individual unit within it.
THE PROS AND CONS OF LIVING IN A FLAT
Here are the main pros and cons of living in a flat.
- You have neighbours who can look out for you.
- You may well have a porter who can also look out for you.
- Living in a flat is cheaper than living in a house.
- Utility bills are lower in a flat.
- Flats tend to be more secure than houses.
- There is a greater choice of location and size with a flat.
- Flats are friendlier than houses and tend to be nearer to shops, transport links and restaurants and bars.
- There is less risk of burglary in a fiat.
- Leasehold law, although complex, is much fairer than it used to be and there is now almost as much security of tenure with a flat as with a house.
- You are never the outright owner.
- You have to be prepared for communal living.
- You cannot maintain the block on your own as this depends on a group effort.
- Flats can be noisy.
- You are more intimately connected with your neighbours than in a house.
- It is not always easy to soundproof flats.
- Neighbour disputes are common.
- You are dependent on everybody paying their way.
- You inevitably have less control over your environment than in a house.
- Factions and splinter groups can form.
- You have to make compromises.
- The value of a flat may not rise as much as with a house.
OTHER ASPECTS OF FLAT LIVING
Neighbour disputes are common with all types of housing, but they are intensified in flats as it is less easy to escape your tormentors. You are always likely to be meeting them at the communal front door, in the lift or the stairs. You cannot escape your neighbours in a flat as you can with a house, and there are always likely to be people not on speaking terms with each other, or somebody who makes life hell for others.
To sum up, it can be a complicated matter to live in a flat. To find out why, we will now take a look at the peculiar history of apartments and apartment living in Great Britain.