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Service Charge on a Semi-Detached House
gazfocus
Posts: 2,512 Forumite
Following on from my previous post, we are making enquiries into the purchase of a 2-bed Semi-Detached house that's for sale on a shared ownership.
The house is for sale at £50k for 70% of the property but the property needs a fair bit of work (new kitchen, new bathroom, modernising throughout, old conservatory demolished as it's unsafe).
We have been told by the estate agents that there's an £850 per year service charge on the property but as of yet we've not received details of what the service charge covers but while we wait for the details I'm just looking for thoughts.
The house is on a normal estate, used to be freehold but is now leasehold (not quite sure why) and all other properties on the estate, as far as we can tell, are privately owned.
This £850/year service charge could well be the deciding factor as to whether we go for the house or not because it seems incredibly expensive, especially in comparison to the service charges on new build shared ownership properties.
The house is for sale at £50k for 70% of the property but the property needs a fair bit of work (new kitchen, new bathroom, modernising throughout, old conservatory demolished as it's unsafe).
We have been told by the estate agents that there's an £850 per year service charge on the property but as of yet we've not received details of what the service charge covers but while we wait for the details I'm just looking for thoughts.
The house is on a normal estate, used to be freehold but is now leasehold (not quite sure why) and all other properties on the estate, as far as we can tell, are privately owned.
This £850/year service charge could well be the deciding factor as to whether we go for the house or not because it seems incredibly expensive, especially in comparison to the service charges on new build shared ownership properties.
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Comments
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By definition, you can't have a freehold shared ownership property. There has to be a legal framework for your occupation and rental of the portion which doesn't belong to you. That's the purpose of the lease.I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.0
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Yeah, I understand that, however, I don't understand why the property wasn't a freehold then became a leasehold so potentially wasn't a shared ownership and then became shared ownership further down the line.kingstreet wrote: »By definition, you can't have a freehold shared ownership property. There has to be a legal framework for your occupation and rental of the portion which doesn't belong to you. That's the purpose of the lease.
However, I'm all for paying a service charge for leasehold but £70 is an enormous amount. Service charges on the new build shared ownerships are in the £10-£30 per month region.0 -
Service charges can be low at the outset and increased later. There are many threads on here about increased rent and service charges on SO properties.
The property is freehold, with the freehold owned by the housing association. You purchase the leasehold rights. The HA retains the freehold.I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.0 -
kingstreet wrote: »Service charges can be low at the outset and increased later. There are many threads on here about increased rent and service charges on SO properties.
The property is freehold, with the freehold owned by the housing association. You purchase the leasehold rights. The HA retains the freehold.
Thanks, will have a look. As I said, this may well be the deciding factor because it's more than we currently pay for council tax!!
Would the fact that the property is leasehold mean we would need permission from the freehold owner to extend once we'd bought 100% of the house?
Also, does that mean if we buy the remaining 30% later down the line we may be able to buy the freehold as well?
Anymore thoughts on the service charge? Am I right thinking it's extremely high?0 -
Isn't the £850 the "rent" charged for the 30%? It might include the cost of buildings insurance that the HA would take out.RICHARD WEBSTER
As a retired conveyancing solicitor I believe the information given in the post to be useful assuming any properties concerned are in England/Wales but I accept no liability for it.0 -
When staircasing upto 100% of a shared ownership house you can purchase the freehold at the same time. Many HAs will include it automatically.Would the fact that the property is leasehold mean we would need permission from the freehold owner to extend once we'd bought 100% of the house?
Also, does that mean if we buy the remaining 30% later down the line we may be able to buy the freehold as well?
I don't find the service charge particularly high, no. There are much higher charges for flats and other SO stuff. I 'spose it depends on location and what's available nearby.Anymore thoughts on the service charge? Am I right thinking it's extremely high?I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.0 -
No, the rent for the 30% is £86 per month.Richard_Webster wrote: »Isn't the £850 the "rent" charged for the 30%? It might include the cost of buildings insurance that the HA would take out.0 -
I'd definitely want to know what the SC covers. It might be OK if it covers maintenance to the external bits of the building, but I agree it looks expensive (given by the sounds of it you aren't buying in a particularly expensive area).0
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