Thoughts wanted on apartment buying in England

agrinnall

I am starting to plan for a move back to England after having spent most of the last two decades in Scotland, which is where all my property buying has been done.

While my main focus is on freehold properties I'm also taking a look at apartments and I'm hoping I can get answers to a couple of questions.

• I've noticed that most, if not all, new build apartment blocks have electric heating of some sort rather than gas, and indeed the building may well not have a gas supply at all. Is this due to lower development costs or am I right to think that I've seen some mention of gas being prohibited in new developments?

The second question relates to service charges, which we tend to have less of in Scotland. It's actually two questions:

• Would you expect to be provided with a breakdown of what the service charge covers before making a purchase?

• Is there a good explanation for the widely differing service charge in properties of similar cost? For example, this one charges £2490 pa, [STRIKE]this one[/STRIKE] try this one is £1700 pa, and I found one yesterday that was not much more than £1000 pa, although I haven't managed to track it down again today. Is it simply profiteering by the management companies, or could the more expensive ones be because there is a greater likelihood of high cost work being required in the future?

bouicca21

According to the managing agents of my block the cost of buildings insurance is the main component of the service charge. They have recently added insurance against terrorism. That plus garden maintenance (a bit of lawnmowing) and cleaning the communal areas, redecorating communal areas every 5-7 years, comes up to just under £1000. At my previous rented flat (an Edwardian conversion) the service charge was more like £1500 - it was share of freehold so the freeholders were stingy so it covered insurance and gardening but no communal cleaning or redecoration.

Your links both seemed to go to the same property. I would suspect the service charge is that high because it offers a concierge service. And it seems to be well looked after.

PurplePow

agrinnall wrote: »

• Would you expect to be provided with a breakdown of what the service charge covers before making a purchase?

• Is there a good explanation for the widely differing service charge in properties of similar cost? For example, this one charges £2490 pa, this one is £1700 pa, and I found one yesterday that was not much more than £1000 pa, although I haven't managed to track it down again today. Is it simply profiteering by the management companies, or could the more expensive ones be because there is a greater likelihood of high cost work being required in the future?

I live in a leasehold flat on a large development. We receive a full breakdown of costs annually. You are entitled to receive one so if a seller doesn't have one, they should request a copy they could provide to you.

http://england.shelter.org.uk/get_advice/leaseholders_rights/service_charges

jonnytekno

I used to live in a flat which was ex local authority but I bought freehold; almost all of what was itemised on the service charge was never actually done. I found out that the service charge applied to a very wide area i.e. including other buildings not attached to that property. I don't remember how much it cost sorry

AlexMac

agrinnall wrote: »

• 1. Would you expect to be provided with a breakdown of what the service charge covers before making a purchase?

• 2. Is there a good explanation for the widely differing service charge in properties of similar cost? For example, this one charges £2490 pa, this one is £1700 pa, and I found one yesterday that was not much more than £1000 pa, although I haven't managed to track it down again today. Is it simply profiteering by the management companies, or could the more expensive ones be because there is a greater likelihood of high cost work being required in the future?

Speaking from personal experience; I wouldn't buy a property without detail and breakdown of the service charge, plus whether this includes a contribution to a 'sinking fund' for major one-off or periodic repairs (external decorations, roof-replacement...) or whether these are charged as and when they are done, split between leaseholders to a formula which is usually set out in the lease. So while it might seem logical to guess that high Service Charges mean a healthy sinking fund, that may not necessarily be the case, in which case one is tempted to fear that there is an expensive management agent in the mix (although wheter this is 'exploitative' is your call).

Yes - service charges can vary widely for similar properties, and a difficulty in making an informed choice is that Estate Agents often don't know, or are reluctant to forward information from the vendor which they (the EA) will be held accountable for. So, at worst, you won't know until having had an offer accepted, your solicitor asks the freeholder for this data in writing; as they do as standard practice. By which time, of course, you've spent time (maybe you're a month or two into the process) and more important- money on legal fees.

Freeholders or their agents can be incredibly cagey on this; I once had one Manging Afgent refuse to answer when I rang to seek this basic info before making an offer. They said they'd only respond to written enquiries via my solicitor... and would charge for these replies. I walked away, as, having also googled the property and agent, found a disputed, failed 'Right to manage' case by a group of unhappy leaseholders against said 'exploitative' freeholder.

Sinking Funds and major repairs might not seem an issue for the newish properties which you seem to be considering- but think how much mortgage £2-3k would buy you!

All in all I prefer 'shared freeholds' - especially those on small, self-managed blocks. My current BTL has a service charge of £35 per month- and healthy balances towards the pending external decs.

My own last 'self-managed ' shared freehold; a 2-bed flat in a prime London area had an annual service charge of £1,300; which included a contribution to well-landscaped roads and gardens and a big sinking fund. So I'd be asking big Qs about a £2-3k charge; but I bet I'd struggle for replies.

Good luck

agrinnall

Thanks for the comments so far, it's making me think that buying a house is a more sensible idea.

bouicca, I've put the correct link in my OP now.

chanz4

I just see them as renamed flats, with higher costs and always come with a lease

Mobeer

New flats can have gas supplied - the fact that some do have this shows it is not illegal. But for the builder it is cheaper to just install electric rather than both electric and gas; this can apply to a whole development including houses.

A breakdown of service charge numbers might not be available in advance for a new build, but you should at least know what is covered and what is not.

My impression of service charges is that they start low to encourage buyers, then increase to allow for maintenance as a property ages. If you know that in advance then the future changes are more predictable, but it's always good to ask if any works are planned, or any money saved.

Fraise

AlexMac wrote: »

Speaking from personal experience; I wouldn't buy a property without detail and breakdown of the service charge, plus whether this includes a contribution to a 'sinking fund' for major one-off or periodic repairs (external decorations, roof-replacement...) or whether these are charged as and when they are done, split between leaseholders to a formula which is usually set out in the lease. So while it might seem logical to guess that high Service Charges mean a healthy sinking fund, that may not necessarily be the case, in which case one is tempted to fear that there is an expensive management agent in the mix (although wheter this is 'exploitative' is your call).

Yes - service charges can vary widely for similar properties, and a difficulty in making an informed choice is that Estate Agents often don't know, or are reluctant to forward information from the vendor which they (the EA) will be held accountable for. So, at worst, you won't know until having had an offer accepted, your solicitor asks the freeholder for this data in writing; as they do as standard practice. By which time, of course, you've spent time (maybe you're a month or two into the process) and more important- money on legal fees.

Freeholders or their agents can be incredibly cagey on this; I once had one Manging Afgent refuse to answer when I rang to seek this basic info before making an offer. They said they'd only respond to written enquiries via my solicitor... and would charge for these replies. I walked away, as, having also googled the property and agent, found a disputed, failed 'Right to manage' case by a group of unhappy leaseholders against said 'exploitative' freeholder.

Sinking Funds and major repairs might not seem an issue for the newish properties which you seem to be considering- but think how much mortgage £2-3k would buy you!

All in all I prefer 'shared freeholds' - especially those on small, self-managed blocks. My current BTL has a service charge of £35 per month- and healthy balances towards the pending external decs.

My own last 'self-managed ' shared freehold; a 2-bed flat in a prime London area had an annual service charge of £1,300; which included a contribution to well-landscaped roads and gardens and a big sinking fund. So I'd be asking big Qs about a £2-3k charge; but I bet I'd struggle for replies.

Good luck

Very informative and helpful answer !

Out of curiosity, may I ask what your service charge of £1,300 on your last flat actually nclude do, besides gardeners and sinking fund? We're there communal areas,, parking, lifts, or any other services?

Gingernutty

Mobeer wrote: »

New flats can have gas supplied - the fact that some do have this shows it is not illegal. But for the builder it is cheaper to just install electric rather than both electric and gas; this can apply to a whole development including houses.

It's a convenience thing and a safety thing.

If there's one incompetent/suicidal/lunatic occupier in the block, then surrounding occupiers are at risk.

A gas supply has to be to the whole block, not just a single apartment.

bouicca21

When the London bubble pushed me into buying a flat rather than a house, I was disappointed. Now I realise that at my age and with no practical skills and no handy list of tradesmen, not having to worry about maintenance, albeit at a cost, is something of a relief.

I found the idea of shared freehold very attractive and was a bit disappointed that I couldn't find a suitable shared freehold place. But experience is changing my mind. I saw two flats on large share of freehold estates that seemed to be managed well, I am not so sure about smaller blocks/converted houses. In my rented flat the service charge seemed high, and the service (contracted out to a major firm) not wonderful, but part of the problem was getting the various owners to make decisions. The communal areas were horrible, shabby and never cleaned (except by me). Finally someone took the lead and the communal areas were redecorated and new carpet laid. Total transformation. In three other shared freehold places that I know well, it is difficult to get decisions, essential repairs can be blocked by the awkward squad, and no one wants to pay enough to create a sinking fund.