Service charges and city centre apartments

Ike1

Hi -

Was just wondering... some city centre apartments in Manchester have now dropped to circa £100,000. I'm expecting other apartments that are currently around £150,000 to fall to a similar level later this year. With my fairly sizeable deposit, the cost of a mortgage (plus buildings insurance, services charges, ground rent etc) would now equal the amount that I pay in rent (£650).

At first I was quite excited about this but then I started worrying about service charges. Obviously, quite a few city centre apartments are being reposessed at the moment and BTLers are running into difficulties paying their mortgages. Would the service charges on apartments be increased if flat owners begin defaulting on ther service charge payments? In addition, if service charges aren't paid, is there a danger of the block falling into disrepair due to a lack of maintenance?

Ike

Generali

Ike1 wrote: »

Hi -

Was just wondering... some city centre apartments in Manchester have now dropped to circa £100,000. I'm expecting other apartments that are currently around £150,000 to fall to a similar level later this year. With my fairly sizeable deposit, the cost of a mortgage (plus buildings insurance, services charges, ground rent etc) would now equal the amount that I pay in rent (£650).

At first I was quite excited about this but then I started worrying about service charges. Obviously, quite a few city centre apartments are being reposessed at the moment and BTLers are running into difficulties paying their mortgages. Would the service charges on apartments be increased if flat owners begin defaulting on ther service charge payments? In addition, if service charges aren't paid, is there a danger of the block falling into disrepair due to a lack of maintenance?

Ike

Yes. If leaseholders can't pay their service charges then the services will be cut off eventually. In many cases that could mean the sewage I believe.

Quidco-ette

Interesting question - I will soon be moving into my new Manchester apartment where the service charge is about 1k as well as £400 management charge. I would hope they would set up some kind of contingency in the case of non paying residents/unsold apartments.

I am probably being way to optimistic as usual though

PasturesNew

I wouldn't buy a flat just because of service charges, maintenance charges etc. At £1000-2000/year that's a lot of money to fork out when you're older (say retired).

If I did go for a flat it'd be an older block, where I could see how it had evolved, what the level of maintenance was like, the parking areas and bin areas (you can tell a lot about neighbours/attitudes from that). Some service charges I've seen are £60/month and include a communal boiler/heating and hot water and the buildings insurance. . . that to me would represent better value for money when you compare the cost of providing those yourself in a property.

But, a house wins over a flat any time.

Ike1

Unfortunately, there aren't too many houses in 'decent' neighbourhoods that are close to Manchester city centre (where I currently live and work).

City centre apartment services charges (approx £1200 per year) are equivalent to annual public transport costs. I would much rather walk 15min to work than have to spend up to an hour faffing about commuting on public transport (I used to commute and hated it... hence my liking for city centre living!)

Ike

dmg24

Ike1 wrote: »

Unfortunately, there aren't too many houses in 'decent' neighbourhoods that are close to Manchester city centre (where I currently live and work).

City centre apartment services charges (approx £1200 per year) are equivalent to annual public transport costs. I would much rather walk 15min to work than have to spend up to an hour faffing about commuting on public transport (I used to commute and hated it... hence my liking for city centre living!)

Ike

Remember that the service charge could double (or more) year on year. I would Google the relevant management company, see if you can get some opinions from residents on other developments. Management companies are not known for being the most scrupulous companies!

epz_2

Management charges are actually one of the few things that might prevent these flats being turned into council blocks.

Assuming the council is competent then it would realize it would land its tenants with a massive liability which it might need to pay. Many of these properties are also have far too high tax bands so it would combine to give anyone who lives in them with a bill for hundreds extra each month if they come off benefits.

That of course assumes the council know what they are doing and dont just take a back hander from the developer but if that were the case it could make these places the least desirable of the council stock:eek:.

SouthCoast

Service charges owed by bankrupt owners will have to be collected from the remaining owners.

olly300

It depends on the wording of the particular lease and you are not likely to see that until you are in the process of buying.

Some management companies will chase the person/company owning the property for the service charges and legally the freeholder is allowed eventually to get a court order to get the property back of the leaseholder.

In practise they are likely if they can legally get away with it charge the remaining leaseholders more.

Either way if service charges are not being paid parts of the communal areas will fall into disrepair and repairs will not get done. So you could find yourself with non-working lifts and unlit dirty corridors and halls.

olly300

epz wrote: »

Management charges are actually one of the few things that might prevent these flats being turned into council blocks.

Not necessarily.

The freeholder has the right to end their contract with the management company at some point.

So they could then sell teh freehold to the council for some money. However as councils are penalised for taking on or building more council properties it would be a housing association who would take the property on.

Ike1

PasturesNew wrote: »

I wouldn't buy a flat just because of service charges, maintenance charges etc. At £1000-2000/year that's a lot of money to fork out when you're older (say retired).

If I did go for a flat it'd be an older block, where I could see how it had evolved, what the level of maintenance was like, the parking areas and bin areas (you can tell a lot about neighbours/attitudes from that). Some service charges I've seen are £60/month and include a communal boiler/heating and hot water and the buildings insurance. . . that to me would represent better value for money when you compare the cost of providing those yourself in a property.

But, a house wins over a flat any time.

...and I doubt that you would be able to buy a house for £100,000 in a decent area in any part of the UK...