High service charges before buying

mickybar

Hi,
I am looking to buy a property in central London and it seems a daunting experience. I have just viewed a very nice property, that fits my budget and it's very well kept.

The EA came out saying that the service charge is £2600 per year, which includes maintenance costs and water costs.

This is an exceptionally high figure considering that:

• The block is recent (11 years old)
• It doesn't have a lift
• It doesn't have a concierge
• It doesn't have a video entry system
• It doesn't have a key fob system
• It doesn't have any amenity like a gym, swimming pool etc.

Comparable figures can be found on some very new developments having all of the above. I asked the EA to provide me the breakdown of how the Service Charge money was used in the previous years to justify the amount, but they didn't come back to me yet. I could accept that figure in case they had to go through some exceptional maintenance work, but at that point I would like to know where they spent the money.

Is there anything I can do to go deeper on this? I really like the property and I would go for it, but I don't want to be charged that much for expenses that have no justification. It could even be a problem for a possible future resale.

Thanks

LEJC

Walk away if the management charges are higher than you see reasonable or want to pay....and yes if you feel they are high now its very likely to be a deal breaker for someone else in the future too.


you could try and get accounts for the previous year etc but these are usually only given over once you are a little of the way into the buying process and not normally handed out as part of the EA usual spiel.

Gonzo1987

Service charge figure is unlikely to change, EA is unlikely to be able to give you a breakdown of this any time soon, it would require the leaseholder asking the freeholder for the info and may take some time to get this back for you.

PlutoinCapricorn

Is this just for running costs, or does it include a contribution to a sink fund for future major works?

mickybar

Gonzo1987 wrote: »

Service charge figure is unlikely to change, EA is unlikely to be able to give you a breakdown of this any time soon, it would require the leaseholder asking the freeholder for the info and may take some time to get this back for you.

The owner (he is living in the flat since it was built) should probably know, shouldn't he?

mickybar

PlutoinCapricorn wrote: »

Is this just for running costs, or does it include a contribution to a sink fund for future major works?

Not specified, quoting the EA "The charge includes just the water and the maintenance of the building".

Gonzo1987

mickybar wrote: »

The owner (he is living in the flat since it was built) should probably know, shouldn't he?

Not unless the managing agent provide him with a yearly budget, or he has asked for the accounts to be sent to him. You'd be surprised how many people just pay the service change when asked and don't look into it any further.

Just like you'd be surprised how many leaseholders don't have a copy of their head lease.

benjus

You should get a copy of the accounts via your solicitor if you proceed with an offer (and it's accepted) - but you'll end up out of pocket if you decide to pull out after reading them.

If there are a number of interested buyers the agent is unlikely to go to any lengths to get you more information at this stage - but if not you might get somewhere with "I'm thinking of making an offer but I'm put off by the service charge - can you give me any information to explain why it's so high".

happylucky

I've paid in excess of this, but in same ball park for central London service charge on apartment.

How many square metres?

Mine included lift, concierge, video entry, key fob etc. Also secure parking etc. Water too.

Does it come with share of freehold?

Has mgmt company changed recently and done backlog repairs? Your solicitor will or should get at least last 3 years full accounts and service charge records. Your seller should also be able to provide you with these answers IMHO if it's a deal breaker.

The figure you quote seems high for the services you quote; I would certainly be wary of this. Good luck.

PlutoinCapricorn

I would not commit to anything without an itemised breakdown. This could include building insurance, contract cleaning, window cleaning and electricity for the common areas.

mickybar

benjus wrote: »

If there are a number of interested buyers the agent is unlikely to go to any lengths to get you more information at this stage - but if not you might get somewhere with "I'm thinking of making an offer but I'm put off by the service charge - can you give me any information to explain why it's so high".

This is what I did already. The property is on the market since 5 days only, so it's likely that someone will view it and offer despite this. Fair enough. The EA not replying can have two reasons: they are waiting for the owner to come back with some documentation or they are waiting for someone less fussy than me to place an offer