Ground rent and service charge

Worried

Could I ask for your opinions? I am buying a one bed conversion maisonette for which there is a service charge/ maintenance fee of £600-700 p.a. and a ground rent of £300 p.a. There is a communal garden, which the current vendors garden, but I guess there is fencing and a pathway that the managing agents may maintain. Apart from that there are no communal areas. The outside of the building appears very well maintained. The vendors tell me it is quite regularly redecorated. I haven't quite got to the stage in my conveyancing where I've got a breakdown of what these fees cover, obviously this covers buildings insurance etc., but I can't quite see why the building attracts such a high maintanence fee because of the lack of internal communial areas.

Really my question is, do you think such high charges would put of potential buyers. The building does look well maintained from the outside, but it still seems quite a high figure and the ground rent is one of the highest I've seen. I am just thinking of resale. It would probably be a first time buy, as is a one bed. Potential buyers would have to factor in £80 a month extra for these charges. Do you think this is off-putting? I was surprised to find such high chrages for a conversion that has so few communial areas, but I'm going ahead as it is such a lovely flat.

cattie

Whether it's reasonable or not can depend on a few different factors. Location of the flat, is it London or another central city location? Does the service charge cover a sinking fund, meaning there will be regular contributions towards essential maintenance & repairs or is this basically a fee covering management & buildings insurance?

I've owned 2 or 3 leasehold flats & maisonettes close to central London in the past & the ground rent you quote does sound high, although if the service charge is contributing towards a sinking fund along with the buildings insurance then this really isn't overly high.

You are right to be weighing up the pros & cons before commiting yourself & also bear in mind that in conversion flats the noise level from other residents can be very intrusive. The buildings were never intended for multiple occupation originally, so there is no sound insulation between the seperate properties. I've never owned or wished to own a conversion for this very reason.

dmg24

The service charge is about the same as mine (I am in a two bed new build maisonette), and I agree, it is extortionate, especially as the apartments on the development with communal areas are only marginally more!

Mine covers:

Buildings Insurance
Sinking Fund
General Repairs
Electricity & Bulb Replacement (external areas only)
Landscaping (what landscaping?!!)
Management Fee

My biggest gripe is the management fee - £180 per property. There are eighty properties on my development = £14400 to arrange a blanket insurance policy and replace some lightbulbs?!!

The ground rent does seem very high (mine is £50 per annum) - I don't think I've ever seen one that high for this type of property!

As for whether it will put people off I think it is a case of if they really want the property then they will pay it, and factor it in with their mortgage costs. The only thing that may put them off is if there are similar properties in the area that are either freehold or that have lower charges?

Have you looked into Right to Manage? Something I'm trying to persuade my neighbours into at the moment!

mrsc_4

Our charge is £35 a month, and our communal garden is lovely, ours is very cheap as the maintance is kept in house so to speak, the people who live above us head the company and he is a keen gardner so doesn't mind the work. £5 of our charge also goes into a roofing fund should it be needed.

I don't know much about the charge except our estate agent called a lease a peppercorn lease. When we brought our flat the maintance charges were something that concerned us, and its something that potential buyers asked us about, and our buyer couldn't believe how cheap it was.

Worried

Its greater London. Hopefully will be discovering exactly what charge covers sometime in the next few weeks. Ground rent is high isn't it? Lease has been extended back to 99 years and this was a condition of the extension. Good to offer a 99 year lease, when a lot of conversions in the area are falling to below 80 (many were converted in the 80s) but it sounds steep and think it might be off putting. It is a nice flat, in a nice road, with it's own entrance and I think it is quite hard to find something like it in this particular area, but have to say charges of similarly priced conversions that I've seen are lower, although a lot of flats in purporse built complexes in the area attract a similar fee, but at least there you can see where the money goes there i.e. into maintaining communal grounds, stairwells etc. We have none of these!

Sarahpuggy

Hi..

We are buying a 2 bedroomed flat near Kingston Upon thames, in Surrey...Greater London. The maintenence and Ground rent comes to just under £1000 a year.Its purpose built, around 1950's. We are also yet to receive any information about exactly what it includes...but everything that we looked at also had a similiar if not more expensive fee attached. We get a brand new 125 year lease though.

I worry a bit too about the re-sale in a few years, but maybe i should worry more about buying the place first! hehe. You can always do a deal with potential buyers if it looks like it is putting peoeple off..like you pay it for a year or something..but that would be after all else fails!

Are you the SW side of Greater London? Just out of curiosity..

dmg24

We are buying a 2 bedroomed flat near Kingston Upon thames, in Surrey...Greater London.

Are you buying a flat in a communal block, or a maisonette? Maisonettes don't have communal areas, so should be paying less service charge.

Sarahpuggy

Well i think its a maisonette but it is being marketed as a flat. Its like a little row of what look like terraced houses, with only the ground and first floor. The first floor has steps to the outside, but also a communal stairwell. There isn't a huge amount of communal area...just the stairwell and the gardens.

Worried

Are you the SW side of Greater London? Just out of curiosity..

No Southeast - north kent boarder

DrFluffy

Our service charge alone is £1850 pa. Wanna swap?