service charge

michaelkav36

hi all. i have been told that the service charge for a leasehold flat we are looking at is £700 a year. The flat is 1 of 3 within a converted building. there is only 1 communal entrance, 1 flight of stairs and a landing. I dont know if this is expensive or not, the building also looks in good condition as it was converted in 2007. The property is in merseyside if that helps. regards

Ladybird20

i live in merseyside...our conversion is 4 flats one communal area 90.00 pcm

Ladybird20

were bouts in mersyside btw..?

michaelkav36

garston village. thanks

chappers

Doesn't sound too bad , I would check to see if any major works are planned for the future though as its not just communal areas that this covers.

asajoseph

If you can, speak to someone else who lives there to find out what the charge covers in practice.

I know people who pay several thousand (in London), but get a gym, 24 hour security, and very nice communal areas. On the other hand, plenty of people pay £500-600 and get absolutely nothing in return apart from VERY basic repairs.

property.advert

My last place in London was about £3000 a year service charge.

3 in a building is £2100, minus buildings insurance (£300 ?) leaves a little for maintenance and around £30 per week for cleaning.

Remember though that the true cost of a service charge is the amount you pay, minus things like buildings insurance which you'd have to pay anyway inverted by the mortgage rate into an amount of cash which you are not buying or "throwing away".

Thus, in my example of £3,000 and perhaps £500 costs, the £2500 at 5% means interest on £50,000. If prices were rising 10% per annum, then having that £2500 service charge was costing me £5000 in year one, compounded at 10% per annum thereafter.

Something to really think about when it comes to service charges.

Richard_Webster

If you can, speak to someone else who lives there to find out what the charge covers in practice.

Sensible advice! You must talk to other lessees to find out this and generally what the landlord is like!

Landlords are not all the same. Some are good, some bad. The money may be wisely stewarded with provision for long term works so you don't get sudden shocks when work is required, or it may be that a significant part of the charge is spent on various scam expenses. an example is a fee for checking the insurance value of the property where a non-local managing agent charges a high fee for going to look at the outside of the property to assess the insurance amount. In this kind of case you have to ask whether anyone ever went out of the office but can a lessee prove they didn't?

Lessee's legal rights are all very well but involve at least a hassle and some cost in making a landlord behave. If you are later on trying to sell a property where the landlord has not behaved, then you will not want to have made complaints etc or had disputes with the landlord because that may put off future buyers! Your seller might be in that category now!

There are some Landlords/managing agents who are known for making unreasonable demands etc - you may find reference to them on this forum or elsewhere. If they are involved, don't buy.

BonandDom

Even more sensible advice (I have worked in a property management company)- ask for a budget showing how the service charge will be split.

Should show things like:-
Gardening (if there are any communal grounds)
Electricity for common parts
Cleaning for common parts
Exterior maintenance
Possibly some funds being transferred to a reserve account to cover the cost of major works in the future.
etc etc

TBH - £700 sounds about right - is this a new property? If so you may find this amount changes next year, as some, not all, developers set a low sevice charge for the first year and on review towards the end of the service charge year increase it.

Good luck BTW

AlwaysWorking

There has been some really good advice given - epecially by BonandDom. I would ask to see the budget and also speak to the other occupiers to see how good the management is...eg how long does it take for repairs to be carried out. I'd also check if any work is planned so you don't get any nasty surprises in a few months time!

Fire_Fox

michaelkav36 wrote: »

hi all. i have been told that the service charge for a leasehold flat we are looking at is £700 a year. The flat is 1 of 3 within a converted building. there is only 1 communal entrance, 1 flight of stairs and a landing. I dont know if this is expensive or not, the building also looks in good condition as it was converted in 2007. The property is in merseyside if that helps. regards

There are presumably also windows, walls, a roof, fire escape ... is there a sinking fund? If so £700 is probably a fair deal: you should get a detailed breakdown of what is covered. Read this so you understand the legal position:
http://www.lease-advice.org/publications/documents/document.asp?item=14