service charges

highway123

Hello,

New to the forums so apologies if this is the wrong place to post! I've been going through a flat purchase, had offer accepted, mortgage offer in place etc.

We were just waiting for landlord information pack to be provided before being able to set dates for exchange and completion.

When the landlords pack has come back, the service charges detailed are over £1200 / year. When I originally put the offer in with the agent, I was advised that the ground rent was £200/yr and there was no annual service charge, that this was done "as and when"

I can't afford the extra £100 / month and also wouldn't have put an offer in if I had been advised that there was an annual service charge. Wondering if anyone has any advice on next best steps as I'm quite out of pocket now due to survey, solicitors fees etc. and very annoyed as this could have been avoided if the agent had been upfront about the service charge.

Would appreciate any advice on what to do next. I'll be calling my solicitor in the morning to see what they say.

Thanks!!

hcb42

no annual service charge would be highly unusual?

highway123

Perhaps - I'm new to the house buying game (!) but have viewed a fair few conversion properties where the service charges were as and when or very minimal (e.g. £100/yr) and you then pay extra when work needs doing.

I'm more annoyed about the fact that this was completely misrepresented by the agent and led to me putting an offer in and incurring costs, so wondering if there is any complaint I could make against the agent for doing so?

tim123456789

If you really wouldn't have proceeded if he had given this information then the agent has (or rather would have) committed an offence under the property misdescription act which entitles you to be compensated for your losses.

However, this has been replaced by a requirement for agents to conform to "The Consumer Protection from Unfair Trading Regulations 2008" and I've no idea whether this entitles you to compensation.

So by all means complain, whether it will do any good, I don't know

hazyjo

The EA will probably just say that's what the vendor told them. Can't see them getting anywhere with a claim, but it might be worth trying/making a formal complaint.

Have you actually got your mortgage offer, or just an AIP? You didn't mention paying for a survey/valuation, the latter you would definitely need for a mortgage. Just trying to work out what fees/expenses you have incurred so far.

Jx

NervousHomeowner

It could be the agent didn't know and was just going on what the vendor was telling them? I know any information we got from the EA was always put across as 'This is just what the vendor is telling us, your solicitor will have to check it is correct'. It even says it on the details we were given at our first viewing. I imagine the agent in your case would have something similar in place.

I doubt the agent will offer to cover your costs as they will just say that they were only telling you what the vendor had told them and it was your duty to double check the information given. And to be fair, it kind of was your duty to do that if you knew there was the possibility that something like a service charge would be a deal breaker.

richardw

So is the service charge £1200 and the ground rent £200, or the service charge £1000 and the ground rent £200?

propertyman

The as and when is £1200 pa.

Its a bit daft to think that the communal expenses would be insignigicant just because the timing was informal and ill defined.

Clearly when looking at a building its obvious that you would have have to pay for at least the regular cleaning gardening utilities repairs to communal areas and insuring the building.

highway123

Thanks all for the replies.

The service charge is £1200/year and ground rent £200.

I have mortgage offer in place but this was fee free (no arrangement/valuation charge) so no expenses there. Just my own survey, solicitor and searches.

Totally agree it would be my duty to check, which has been done through the solicitor - there would have been no way of me checking independently before this. I've probably put too much faith in people being honest - the agent was most likely going off information from the vendor, so they've been deliberately misleading as I specifically asked about service charges.

I know there would have been regular payments for electricity, gardening, insurance, maintenance etc. - but at around £5000 per year it seems seriously excessive! Especially when the paperwork states that the last maintenance was done in 2009 (internal and external redec and repairs).

The reason I asked about the service charges specifically initially is because I really disliked the idea of a maintenance company overcharging for everything (the buildings insurance charge on the statement I've been sent is absolutely ridiculous) - quite happy to pay for things that are needed but not to be paying for maintenance that hasn't happened for 4 years!

The service charge also doesn't include any significant items of expenditure - so no cover / sinking fund in place for when/if things go wrong!

PlutoinCapricorn

There are actually two kinds of service charges: day to day running and major works. There are rules about itemisation and presentation of the statements, and you are entitled to check that they have found the best deal.

buzzyzoe

On the plus side, if work hasn't been done for 5 years, a good sink fund/reserve should have been built up, meaning if work does need doing soon, a lot of the cost is likely to be covered by the people who've been living there for that time.

Is this arrangement necessarily worse than having to suddenly pay 1/4 of say £10,000 if something needed doing to the roof for example?

I would say if you can't afford an extra £100 a month for the service charge, you would have been putting yourself at considerable risk if work had needed doing in the next few years and you were jointly responsible, and had to pay a big sum all in one go.

Do you know exactly what is included in the service charge as well? They often include buildings insurance, for example, so you could potentially save on this.

Absolutely agree that you should have been told about this at the beginning of the whole process, but you may not be worse off financially having to pay a service charge.