Social Homebuy Opportunity

AdKM

Dear all,

Yesterday we finally received an offer from our Housing Association re: our flat under the Social Homebuy Scheme.

On the face of it, it looks like we're getting a good deal. Our Flat is a large, one bedroomed, top floor flat within a Victorian Conversion (1 of 4 flats - the other 3 are also HA) in Sydenham, South London with great transport links.

The valuation we've been given is £165k. Minus the £16k discount, the purchase price is £149k.

Before diving in, I have some concerns about the Service Charges and from a bit of research it looks like spiralling service charge costs can be a bit of an issue with Housing Associations / Councils as Freeholders.

The following costs look on the steep side. It would be interesting to hear other people's feedback.

Service Charges (Budget 2013/14)

Buildings Insurance: £61
Day to day repairs: £100 estimate
Major Works Sinking Fund*: £600
Audit Fees: £14
Sub-Total: £775
Management Fee: £84.03
Total Budget Service Charge Expenditure 13/14: £859.03
Service Charge per month: £71.59

* For cyclical decs and other occasional major works

Anticipated works to which you might be required to contribute:

External decoration of block 2017.
We anticipate this to cost in the region of £10800.
Your contribution will be 1/4th of the total costs at £2700

2014 Bathroom Extractor Fan £250
2017 Kitchen Extractor Fan £250
2017 Communal Decorations £800

-

Our one bedroom flat used to be a two bedroom flat. We are considering converting it back and changing our very large living room into a kitchen diner / living room.

We love our flat and would like to start our family here.
One final thing to consider, is that in the current climate of the bedroom tax, we are sure some people in other social housing might like to downsize. We are reluctant to do an exchange at this moment, but I guess would be foolish not to consider it, if someone in a council house with two beds would like to exchange.

The question to those of you with a sound investment head, is what would you do in our shoes?

Have we missed anything we ought to consider? e.g. In 5 years would the flat be difficult to sell because of the service charges?

Many thanks in advance.

AdKM

ILW

Service charge sounds fair. What happens with the other tenants may be more of an issue if you wish to sell.

tim123456789

The service charge is more than reasonable. High services charges have a 1 in front and a 2 in front is not unknown.

HTH

tim

AdKM

tim123456789 wrote: »

The service charge is more than reasonable. High services charges have a 1 in front and a 2 in front is not unknown.

HTH

tim

Thank you Tim.

Most people do seem to think these costs are ok. I was a little surprised by our portion of the communal decoration costs of £800. On that basis the fee to decorate (i.e paint) our communal hallway would be £3200. It was done last year. It took two men four days. Seems on the high side to me. I also don't understand why the HA want to charge us for servicing the 2 extractor fans. Surely it is would be up to us to service and replace them after the mortgage went through? Lastly aside from the cyclical painting which is charged separately, I am not keen on paying a £600 sink fund per annum. Since 1997, as far as I am aware no work has needed to be done. It's good to hear other perspectives though. We've never taken a step like this before.

Fire_Fox

What you have to contribute to and who organises the works is laid out in the long lease, have you read it carefully? Is there provision in the long lease for simply repairs and maintenance or improvements and for a sinking fund? Does your property meet 'better homes' standards at present? You would likely need the written consent of the freeholder to convert the flat to a two bedroom, have you applied for this? Is it possible to do that and meet current building regs (likely stricter than when it was two bed before)?

It's not monthly service charges that are generally the problem, it's major works that can run to tens of thousands of pounds in ex council properties, which is why I am asking about improvements and 'better homes'. Most of those annual charges are for the sinking fund anyway which is a good thing because it helps you budget, even with that the service charges are low to moderate. I don't understand why you say no works have been done since 1997 yet decorating was done last year?

Those major works could easily cost much more, can you comfortably afford double that, just in case? Would you still have the money set aside if your circumstances change and you end up reliant on benefits? Most social housing properties are repaired by 'approved contractors' these cost more than average but should adhere to certain standards of behaviour and quality, and be better insured than the average small tradesman.

The problems with major works is why I would rarely recommend anyone buy an ex social housing property unless they are getting a massive discount, sorry. Even if you don't have to pay for pricey major works, if they are planned in the next few years after sale date it will turn off buyers.

AdKM

Thank you for taking the time to write Fire Fox. We really appreciate it. It has given us some good food for thought. We are not at the stage where the long lease has been prepared for us to see. I imagine that will happen in the next few weeks. We'll be sure to look at it carefully get it looked at by a solicitor. Thanks again.