I am new to buying a leasehold flat. I am really struggling to decide if this will be a good investment. The seller is selling the flat with a 105-year lease, the monthly rent is £700, and the service charge is £129 a month. It is a 2-bedroom 75sq ft flat. The tenants moved into the flat in August 2025; they were vetted by Bramleys estate agent. My solicitor sent me the tenant’s report yesterday, which looks like Bramleys use a website called Home Let to vet the tenants. My concern is that the couple have been approved by Bramley’s. Still, neither of them is in secure employment, and they are both 21 years old. One is earning an annual gross income of £16,638 working what looks like an apprentice scheme started in July 2025, the other is a student, who looks like her fees are covered by the NHS, she receives an NHS midwife bursary of £7k a year, including £2k for parental support (they have a child aged 3years). The report indicates that they can afford the £700 a month rental. I do not know what to do. Will they be viable tenants, or are they going to struggle paying the rent each month?
Im struggling to see why someone with no experience would opt for an encumbered property, where the due diligence required is extensive and potentially costly and the tenants already fail on affordability!
I’m struggling to see why it would be a good investment even without the tenant issues. The service charge is circa 20% rent, you’d need to allow similar amount for internal maintenance and then 10-15% on management. You can self manage but there is a lot to know and you presumably value your time. That’s at least half the rent gone before any unexpected issues….and then you have the 5% stamp duty and ongoing tax/ potentially NI…unless its very cheap I wouldn’t bother…
For vast majority buying rental properties no longer makes sense. Governments have tried to ensure it doesn’t and one of few things they have succeeded in.
75 sq ft ? Do you mean 750 sq ft?
great picture. Are they all landlords selling up?
105 year lease is not that long. I have never bought below a 999 year lease with about 800 years left You have to pay the service charge of course.
only until you die though so…
so been there 2 months , both 21 , 3 year old child. Just make the rent ratio. At home before this? You will make£571 after service charge. But how much is the purchase price? Are any big repairs due with management that are coming up ? Will service charge increase next year?
Welcome
Sounds like you aren’t very sure.. Maybe try thinking about what would make you think worth taking the risk (a guarantor? 3 years evidence of past payments at a similar level in a previous place?) and what your options are
- Purchase but say only on a vacant possession basis? If you love the property/it’s a great price but think you can get better tenants and more rent
- Purchase with tenants in situ and decide when a couple more months have passed whether to give them notice (but with RRB harder in future to get folk to leave as s21 ending)
- Check/consider if you could get rent Gtee insurance for them to mitigate the risks - may be around 20 quid a month
- Walk away - big commitment from you so if unsure why go ahead.
I think as they have only been there a short time, are on the cusp of affordability criteria (30x monthly in) and babies aren’t cheap, many would avoid.
If the agents found tenants while property already on mkt then seller may have been trying to get some short term income and been less worried about the risks you highlight
Good luck!
Thank you. It’s on sale for £61k, and it would be a cash purchase.
No big repairs, previous seller made improvement before these tenants moved in. £571*12=£6852. No service charge increases for next 2 years, previous years the service charge has been stable. After tax the annual return is 7.5% net.
well is stacks up with regard to the price
Thank you for your advice. I will give it some further thought.
Thanks for your helpful input. With people like you around to give sound advice the world will always be a better place !
they barely make the affordability and probably have absolutely no savings to fall back on should anything happen. They have a child so that will compromise their ability to work and manage affordability as their expenses grow. One has a job that is an apprentice scheme and you’ve not mentioned whethere there’s a guarantee of employment at the end of that and if so, what that would bring in.
On top of that, service charges are notorious for rising unexpectedly, flats are notorious for attracting or causing issues for other flats and the freeholder could also do anything at any time. Plus, whenever you do decide to sell this, the short(er) lease is going to reduce it’s value which, along with any CGT/fees, might well wipe out any appreciation.
But that’s just me thinking with the risk half of my brain…