Thoughts wanted on apartment buying in England

benjus

We bought a flat last year in Greater London - it's a former orphanage complex, build in the early 1900s and converted to residential use in the 1980s. Our flat is in a building containing 6 flats, which the residents now manage via a management company (no share of freehold though).

Annual expenses for the entire building are: insurance £1400, electricity for communal areas: £500, gardening: £2160, cleaning: £840, general repairs: £500, reserve fund: £2000. We pay 17.65% (not all flats are the same size), so just over £100 per month.

We got some details before purchase, but perhaps because the transfer to the residents' management company was still in progress at the time we didn't get a full breakdown of the service charge. I understand that while it was still being managed by the previous management company (one of the major national property management companies) the service charge was about double what it is now.

Fraise

benjus wrote: »

We bought a flat last year in Greater London - it's a former orphanage complex, build in the early 1900s and converted to residential use in the 1980s. Our flat is in a building containing 6 flats, which the residents now manage via a management company (no share of freehold though).

Annual expenses for the entire building are: insurance £1400, electricity for communal areas: £500, gardening: £2160, cleaning: £840, general repairs: £500, reserve fund: £2000. We pay 17.65% (not all flats are the same size), so just over £100 per month.

We got some details before purchase, but perhaps because the transfer to the residents' management company was still in progress at the time we didn't get a full breakdown of the service charge. I understand that while it was still being managed by the previous management company (one of the major national property management companies) the service charge was about double what it is now.

Why are you paying a different amount to the other leaseholders, because your flat is bigger? Maintenance charges are for the outer building and communal areas - it's nothing to do with the interior of your flat.

What's in the communal areas that's costing £500 a year in electricity?

And what does the cleaning involve and how frequently is it done?

The general repairs are only £500 - less than the cleaning. Is that right?

If the property is in good condition and has a good roof etc, except for the outside decorating in accordance with your lease, £2000 a year towards a sinking fund seems excessive. What do they envisage they'll need that money for? Except for a new roof or gutters there's not much that can go wrong with a building, it only needs keeping clean and in good decorative order, and in the event of a massive storm ripping the roof off (which is almost zero) you have insurance for accidental damage to the exterior....whatever that may be.

I think it sounds a lot.

I owned a house for over 20 years, and except for replacing the back gutters on one occasion and having the drain unblocked, I never needed any repairs. I decorated the outside occasionally, but that wasn't very expensive, either.

These management companies sound like they're raking in money for nothing. If you were living in a large estate you'd need a company to arrange repairs etc, but for just a 6 flat house it seems odd that you can't self-manage it. It only takes a few phone calls to local builders to get 3 quotes....ll

bouicca21

If fraise's flat is where I think it is - there can't be that many orphanage conversions in greater London - it might be in one of the original buildings, with higher maintenance expenses than a new build.

benjus

Fraise wrote: »

Why are you paying a different amount to the other leaseholders, because your flat is bigger? Maintenance charges are for the outer building and communal areas - it's nothing to do with the interior of your flat.

What's in the communal areas that's costing £500 a year in electricity?

And what does the cleaning involve and how frequently is it done?

The general repairs are only £500 - less than the cleaning. Is that right?

If the property is in good condition and has a good roof etc, except for the outside decorating in accordance with your lease, £2000 a year towards a sinking fund seems excessive. What do they envisage they'll need that money for? Except for a new roof or gutters there's not much that can go wrong with a building, it only needs keeping clean and in good decorative order, and in the event of a massive storm ripping the roof off (which is almost zero) you have insurance for accidental damage to the exterior....whatever that may be.

I think it sounds a lot.

I owned a house for over 20 years, and except for replacing the back gutters on one occasion and having the drain unblocked, I never needed any repairs. I decorated the outside occasionally, but that wasn't very expensive, either.

These management companies sound like they're raking in money for nothing. If you were living in a large estate you'd need a company to arrange repairs etc, but for just a 6 flat house it seems odd that you can't self-manage it. It only takes a few phone calls to local builders to get 3 quotes....ll

Just to be clear, this management company is run by us residents, and does not make a profit. Anything taken in service charges and not spent goes into the sink fund.

The sink fund is almost empty because we've just spent a load of it - gutter clearance, roof maintenance, tree pruning, contribution to the replacement of all windows in the building, redecoration and replacement of all floor coverings in communal areas. So I think getting a few thousand in there is prudent in case of an emergency. I think this will tail off once there's a reasonable amount in there, but that's for all of us to decide together.

£500 for electricity in communal areas does sound a bit high, but then they do have electric heating and it's a pretty large space to heat. Cleaning is 1 hour a week, so £500 sounds about right to me. We've spent little on general repairs over the last year or so - IIRC just getting an electrician in to fix the lights in the communal areas, so it's been given a low estimate.

Bear in mind that the management company has only been running for a year or so, so it may take a while to refine the estimates.

benjus

bouicca21 wrote: »

If fraise's flat is where I think it is - there can't be that many orphanage conversions in greater London - it might be in one of the original buildings, with higher maintenance expenses than a new build.

The Hollies - is that where you were thinking? And yes, it is one of the original buildings.

Fraise

benjus wrote: »

Just to be clear, this management company is run by us residents, and does not make a profit. Anything taken in service charges and not spent goes into the sink fund.

The sink fund is almost empty because we've just spent a load of it - gutter clearance, roof maintenance, tree pruning, contribution to the replacement of all windows in the building, redecoration and replacement of all floor coverings in communal areas. So I think getting a few thousand in there is prudent in case of an emergency. I think this will tail off once there's a reasonable amount in there, but that's for all of us to decide together.

£500 for electricity in communal areas does sound a bit high, but then they do have electric heating and it's a pretty large space to heat. Cleaning is 1 hour a week, so £500 sounds about right to me. We've spent little on general repairs over the last year or so - IIRC just getting an electrician in to fix the lights in the communal areas, so it's been given a low estimate.

Bear in mind that the management company has only been running for a year or so, so it may take a while to refine the estimates.

Oh sorry, I misunderstood what you wrote re your prices.

You put:

"Annual expenses for the entire building are: insurance £1400, electricity for communal areas: £500, gardening: £2160, cleaning: £840, general repairs: £500, reserve fund: £2000. We pay 17.65% (not all flats are the same size), so just over £100 per month."


I thought the cleaning was £840. Maybe I read it wrong....

It's much better you're self-managing it and have cut out the greedy managing agent. Total waste of money for small blocks or houses.

I still don't understand why you pay more service charge just because your flat is bigger. The SC is for the exterior, so what exactly are you paying extra for? I'm just curious....

benjus

Fraise wrote: »

I thought the cleaning was £840. Maybe I read it wrong....

It's much better you're self-managing it and have cut out the greedy managing agent. Total waste of money for small blocks or houses.

I still don't understand why you pay more service charge just because your flat is bigger. The SC is for the exterior, so what exactly are you paying extra for? I'm just curious....

Sorry, think I got my number mixed up when I was typing it in. It's a good point about the flat size though. I'll raise it with the management company secretary (lives in the flat below me) and see what he says.

AlexMac

Fraise wrote: »

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?

Hi Fraise- and apologies that I just noticed your supplementary Q;

the annual Service Charge was split across the six flats pro-rata to their differing size and RV, and our share (which I just rechecked and which had risen to £1.45k p.a. for our flat by the time I'd left in 2011) covered:
- Buildings Insurance; about £3k p.a for the block- also split 6 ways
- communal lighting; exteriors, stairs and hallways,
- routine minor repairs/maintenance
- a contribution to the sinking fund (as I was company Treasurer I aimed to nurse this up by £2-3k p.a to reach £15k by the time I left or so it covered the major pending job; the 5-7 year cyclical external decs)
- a contribution of about £800-£1k pa for the block towards the large and well-maintained private estate on which we lived (resurfacing of roads, grass-cutting, tree-management and replacement, other landscaping and staffing of gates which were controlled at rush-hours to prevent rat running ).

There were no lifts in thie early 19th Centiry building, and also no management or accounting fees as we self-managed and filed annual accounts online with Companies House. But we were really miserly. A similar block just up the road had service charges twice ours!

agrinnall

Thanks for the breakdown Alex. Did you ever try to find cheaper insurance? £3K for 6 flats works out to £500 per property - I've never had to pay anywhere near that for an entire house (including contents) so I wonder why buildings insurance for a block of flats would be so expensive.

Fraise

agrinnall wrote: »

Thanks for the breakdown Alex. Did you ever try to find cheaper insurance? £3K for 6 flats works out to £500 per property - I've never had to pay anywhere near that for an entire house (including contents) so I wonder why buildings insurance for a block of flats would be so expensive.

Someone's being ripped off.....