Are you thinking about buying your first residential property?
Have you decided whether you prefer a house or apartment?
In this piece I will give you my opinion about which is the best buy. I am assuming, in this article, you wish to live in the house, and not buy the property as an investment property.
But first, why should you pay any attention to me?
Firstly, I bought my first property in 1986. It was a small shop unit in Dublin with a one bedroom apartment overhead. Since then I have bought sites, other retail businesses, a petrol station, a pub, sites with planning permission, sites without planning permission, apartments, and houses.
I have also built a small (8 units) block of apartments. So, I have had a pretty long and, for the most part (with the exception of the property crash a few years ago), successful relationship with buying and selling property.
Let’s take a look, shall we?
The first big difference between buying a house and apartment is the legal interest you will be acquiring. Buying a house will mean you are buying a freehold interest; buying an apartment will involve acquiring a long leasehold interest.
From a legal perspective, this is not a problem. The leasehold for the apartment will be a long lease with a very small, insignificant rent. I have written elsewhere on this site about the differences between buying an apartment and house from a legal perspective.
The Management Company
Where problems may arise, however, is in the whole area of the management company.
In an apartment development each apartment owner becomes a member of the management company which will be needed to be set up. This management company’s job will be to manage and maintain the common areas-for example stairs, lifts, roof, of the development-and will have to appoint a managing agent who will manage it on a day to day basis.
However, problems with management companies can be common enough and some apartment developments are not well maintained with an understandable frustration for apartment owners and occupiers. Property owners will then retain the annual management company service charge, thereby making matters worse because the management company has even less money to provide the services.
Management companies also have to prepare and file annual accounts and collect the management fees from the owner of each unit.
In addition, it may have to pursue the owners who won’t pay by way of debt collection procedures which will be time consuming, expensive, and leave a bad taste all around.
Another factor to consider is that many apartments were purchased by investors as investments and future pension pots. This means that a large percentage of occupiers in an apartment block are likely to be renters. If you have a young family this may be less attractive for you given the likely higher turnover of occupants, and the lack of social cohesion in the “neighbourhood”.
There is also the problem of anti social behaviour and noise pollution in an apartment complex versus living in a terraced or end of terrace house.
A problem I have also encountered from my own personal experience is leaking from balconies, and even bathrooms, causing damage being to neighbouring units. These problems can be hard to sort out, expensive, and lead to bad feeling between neighbours.
In summary, the problems I have seen with apartment living are
- Poor management companies or agents
- Noise pollution and hassle
- Apartment units more likely to be owned by investors than owner occupiers.
The advantage of buying an apartment versue a house are
- They are, all things being equal, cheaper than a house
- They are lower maintenance, for example you will not have any garden to maintain.
My advice, and this is not legal advice but practical property advice from my own experience and observation since buying my first one in 1986, is that I would choose a house over an apartment if I could.
That is assuming that all things were equal, and we are comparing like with like-that is, a house and an apartment in the same area- I would choose a house, especially if I had a young family. If you are a retired person, then an apartment may well make more sense and you will not want to have to maintain a garden, access to public transport may be better etc.
Obviously you need to take into account your own personal circumstances-for example your family situation, your work circumstance, and budget-before choosing.
And my advice generally in relation to buying a property is to buy the worst property in the best area, rather than the best property in the worst area.
You can change many things about your property and make improvements over time, but you can never change its location.