Flats and apartments offer many of us our first taste of independence; whether that be as an affordable first purchase or simply rental accommodation. However, over recent years buyers have become more wary of leasehold property; with media coverage of escalating ground rents perhaps adding to their concerns.
Historically, the wider public has been under informed on the implications of buying a leasehold property. Often, they have not properly understood the additional costs associated with management and maintenance, as well as ensuring compliance with regulations and have found themselves subject to large unexpected bills.
The impact of the Grenfell tragedy also cannot be overlooked. Over the past year one of our biggest challenges as valuers has been how to approach cases where the cladding is, or may be, unsafe. It has taken time for the industry to adapt to the situation, with lender and even government policy often not keeping pace with events. In the real-world, surveyors have attempted to apply common sense, considering the wider impact on saleability where possible, but with a diminishing lending risk appetite on such properties, this may leave applicants and vendors disappointed with the way their properties are now being classified and in extreme circumstances, unable to secure mortgage finance.
As a business, we have noticed a decline in the volume of buy to let work, particularly new purchases, with factors such as Brexit uncertainty and taxation changes making such purchases less appealing for investors. The net result is that many would-be landlords are now opting for more tax-efficient investments and many of those with rental properties are choosing to sell and exit the market.
Earlier this year, the BBC reported on a notable trend where despite some positive movement in the value of freehold homes, flat values are generally declining.
As valuers we are tasked to reflect the market and not to lead it. It is important that we are aware of these trends and the wider circumstances which can impact upon the desirability of different types of properties in different locations. It is therefore more important than ever that when valuing a property, a surveyor chooses appropriate comparables which are relevant to the subject property in terms of type and location but are also recent and best reflect the current market.