Buying flat, apartments

Cpu2007

Hello everyone
I am trying to do some research on buying a house/flat and would like some help regarding charges that usually are not mentioned but you realize that you need to pay them once you already bought the house.
I read the article from this forum on buying a property and found it very informative.

What I found is that houses don't have costs of service,maintenance like flats where you have to pay yearly/monthly for some services (lift,cleaning etc.).
Now I'm not sure what these charges are called and how do I find out about them.

For example I made a query about a ground floor apartment and asked the agency whether there are some extra charged but they said there are not other charged;
What sort of questions should I ask the agency in regards to some other charges that I might have to deal with once I buy the property?

Thank you in advance.

Pixie5740

Where are you looking to buy? In Scotland, flats usually have factors looking after communal areas to there are factors fees to pay. In England flats tend to be leasehold so you have to pay leaseholder fees.

Cpu2007

Thank you, I should have mentioned that I'm looking to buy in manchester England

This place is classified as an apartment.
But isn't the leasehold something you pay after 50-80 years. How do I find out about the leasehold and how can I workout how much I need to pay?

If is a flat, then there will be other costs as well right? I heard service costs end up being very expensive as the manager of the building usually take the most expensive services but I don't remember how this work.

agrinnall

They are service charges, I would expect your solicitor to establish what these are but you may not be able to find out unless you have made a serious offer for the property.

princeofpounds

There are typically two charges.

One is ground rent. This is basically just a rent, nominally for use of the ground which the freeholder still technically owns even if they don't have use of it.

The other are service charges. These are the fees for maintaining common facilities, including insurance etc. and sometimes including also an administration fee.

The lease agreement will specify how these are charged. It can and does vary.

As for the leasehold reversion rights - once the lease runs up you theoretically have to give the property back to the landlord. However, you also have a right, after a period of time, to extend your lease so in practice this reversion rarely ever happens.

These days, the charges for extending a long lease, over 80 years, are pretty small. The shorter a lease gets, the more it costs. The logic behind this is a little complicated but basically a little money paid now will be worth a lot of money in 80 years' time.

More information in the link below:

http://www.moneysavingexpert.com/mortgages/extend-your-lease

Cpu2007

Thanks a lot princeofpounds

so if I ask for the lease agreement, will I be able to get information such as the ground rent, facilities charges and lease expiry date?
Can I ask the lease agreement for to the agent or find it my self?
What are the costs to get these information?

agrinall stated that unless I make a serious offer it will be hard to get information about these fees.

My concern is that I don't want to spend money to find out these things as I want to look at multiple properties so it will be better if these costs can be avoided.

I have a few properties that I like, I have just seen pictures of these.
My next step will be checking the area and choose which properties I like depending on the area.
The step after that will be viewing the place myself and choose which one I like.
The next viewing will be to use someone professional for a survey; this way I will be paying for the survey only on the properties that I am very likely to buy.

Do you guys think this approach is good or am I missing something?

AlexMac

While it is true that you may not get definitive answers until your Solicitor asks the vendor's solicitor for the legally binding replies,
a good Estate Agent will have asked and may be able to give you some of the essential info you need before you can decide whether to waste time on an offer, and money on your solicitor's legal and search fees, etc..

Things like
- how long is the lease - anything less than about 83 years can be an expensive problem - see the relevant pages of this forum http://www.moneysavingexpert.com/mortgages/extend-your-lease
- how much is the annual 'service charge' and what does this cover; it usually covers some or all of insurance of the building (not your contents), maintenance of the building's exterior, windows, roof and communal areas, or grounds, gardens or estate roads, communal electricity and the fees of any managing agent if the leaseholders do not manage their own block(s), any 'maintenance sinking fund' - a pot of money for future major work like roofing, external paintwork (and how often?)
- if there is a sinking fund, how much is in it and what work is planned.
- if no sinking fund, how are costs of major one-off items like roof repairs or external decorations funded.

I say good agents should know this (the one I bought a flat from this summer did, as did the EAs for other flats we looked at) but obviously not all do, especially as they don't want to be accused of misrepresenataion if they get it wrong or the vendor is wooly about this info.

We looked at flats where the service charge varied from £2,000 pa (and it wasn't obvious waht they were spending it on other than the Managing Agent's fees given the awful state of the building) to £450 pa for a really well-maintained 'self-managed' shared freehold (guess which one we bought? Yup!

Alternatively, the vendor might not want you to know this stuff til you have comiteed to buy- but that's not the way I like to do business.

The info is sometimes spelled out in the lease, which the vendor might share with you if they are sensible, but not always; hence the need for Solicitors to send off their 'freeholder enquiries' The freeholder or their agent may cahrge to provide this info- sometimes a token few quid, sometimes a lot more. I did once try getting this info out of the managing agent on a previous purchase I was contemplating, but the agent said a) they would only deal with my solicitor after I committed to buy and b) they'd chareg a hunded quid or so. So I told the vendor to stuff it and bought elsewhere. When I was treasurer of a small shared freehold block I used to provide the info free (we managed it ourselves so costs were low).

Good luck- Agents... doncha' luvvem!

enthusiasticsaver

You will have ground rent and service or maintenance charges on leasehold properties and these charges will be available from the sellers solicitor who needs to produce usually 3 years accounts from the management company. It pays to do some research on the management company itself as some have a tendency to charge more than others. We are selling a one bed flat in Coventry and the service charges through Peverel or OM Management company works out at around £600 for the year and covers exterior maintenance, insurance for the buildings and other services like grounds and communal area maintenance, pest control, rubbish removal etc etc. One thing to consider is that there will also be charges when selling. We have paid more to the management company to deal with the buyers queries than we have paid our solicitors!

Snakey

The estate agent should already know the lease length and the service charge. Most people won't view a flat without a rough idea of those two things.

Ground rent is often just a tenner a year or even "a peppercorn" (i.e. they don't really collect it) so don't necessarily panic if he doesn't have that information.

Lease extensions might not be something that anyone knows, as it's a question of valuations, you wouldn't know the current cost unless one of your neighbours had recently done it although you could probably estimate it if you knew the lease length.

Be careful because service charges vary from year to year, so you need to check the costs for the last three years or so and you also need to know whether there are any major works planned and whether the money for that has already been collected. This level of information probably won't be available until you've had an offer accepted.

As for being ripped off, there are some horror stories out there but it really does depend. If you live in, say, a converted house you may find that the management company (which deals with all of that) is owned by all of the leaseholders and obviously that will be run as efficiently as possible because the people making the decisions are the ones paying for it. Otherwise, it's sometimes true that the larger the block the better the deal will be.

Lifts, gardens, 24-hour porters and communal heating/hot water are the things that cost the money, oh and at the top end you have things like gyms and swimming pools. So if you want a cheap service charge you are going to have to look at more "basic" blocks - you get what you pay for.

Don't forget you do get some things for that money which you would otherwise have to pay yourself, such as buildings insurance and exterior lighting and perhaps even heating/hot water, along with the things you might not be too bothered about like having a concierge. Personally I put quite a premium on the knowledge that if the roof needs repairing it won't be my problem (even though I'll have to pay my share, the fact that I won't have to take time off work, ring round for quotes, negotiate, supervise etc is a weight off my mind). And not having to mow the lawn, for that matter.

Cpu2007

Thank you very much guys. All your comments have been very helpful. I just realize that there are several things that I'm missing when trying to buy a property. I'll try to keep these in mind while doing my search.

I understand that flats usually are on leasehold and houses on freehold. Is it possible to have flats on leasehold; if yes, can that be convenient?
For example, if I decide to buy a ground floor flat and I don't use the lift; will I still be required to pay this service?

Errata

Cpu2007 wrote: »

Thank you very much guys. All your comments have been very helpful. I just realize that there are several things that I'm missing when trying to buy a property. I'll try to keep these in mind while doing my search.

I understand that flats usually are on leasehold and houses on freehold. Is it possible to have flats on leasehold; if yes, can that be convenient?
For example, if I decide to buy a ground floor flat and I don't use the lift; will I still be required to pay this service?

As explained by other posters, flats ARE leasehold.