Freeholders not revealing service charge/ground rent

Pupnik

Very strange, the EA asked us about our flat costs and included them in the property listing so it was all clear to potential buyers, and I believe that information was included on the document we and the EA signed saying the information was accurate.

Edited to add - I would be concerned going into a purchase where the vendor doesn't even know what those costs are for a leasehold property, they obviously don't keep track of these things - what else might they have neglected to pay attention to? Eg any section 20 notices?

Ogriv

I've thought more about the situation, and you know what it is?

It's that these are totally new leases being created. So it's a good sign from the point of view of the length. But it means there is no precedent in terms of amounts. I know there are some legal restrictions on monthly service charges, but an unscrupulous person could just pluck a sum from thin air.
So yes, it's because these are brand new leaseholds that the people "can't say" the service charge amount. But you'd think they would be able to tell me roughly, even so?

AlexMac

Ogriv wrote: »

... Am I being paranoid? At the moment it is enough to put me off making an offer on places.

Not paranoid at all; as others say, I wouldn't buy without some idea on likely continuing cost. And if it's a new or recent build, Service Charges could be toppy, even without major pending maintenance bills (which you'd hope would not apply to a block in good repair- although there might be a sinking fund contribution against future cyclical jobs like external decor). And new build freeholders, or those who have bought the freehold as a money-making long term investment tend not to be Charities.

Our friends pay an eye-watering £5k-£6k pa service charges. Admittedly that includes Concierges, landscapes and a gym... but that almost 3 times my annual mortgage!

The problem, as you say, is that some EAs are too incompetent to realise this is something prospective buyers need a handle on- or frightened to ask on your behalf in case they get it wrong and get accused of misrepresentation. I've also experienced the contrary position; good replies from an EA who had accurate info readily available on Service Charges, recent maintenence history, planned future communal maintenance jobs and the extent to which existing sinking funds would cover these (we bought that one!).

I also tend to do as much research as I can myself before offering; I try to identify the freeholder, google 'em and do a Companies House search, and/or ring 'em. Reactions vary. One told me to p155 off as they would only respond to solicitors' questions...for a fat fee. That freeholder turned out very ugly; they had defended and beaten off a leaseholders "Right to Manage" legal action too.... so I walked away from that one.

So do your homework and apply common sense.

But after all, if you really like the flat, and offer anyway, tell your solicitor to restarin legal costs by getting the freeholders responses and advising you on tenure, SCs etc before paying for other searches?

Ogriv

Thanks AlexMac
I've pulled out of the second viewing, having received no answer from them. I indicated my reasons. These are not the kind of people I want to be dealing with.
You are right about researching the freeholder. In one case I googled the guy, and the top result was a newspaper article about him connecting leaseholders to an illegal water supply. I withdrew my offer.
In the town where I am looking, the least trustworthy sellers seem to be clustered near the station. They must think they can make a quick buck from commuters.

[Deleted User]

Another search worth doing on any Freeholder is checking Leasehold Tribunal Decisions. They give an indication as to what a Freeholder is like because it means a Leaseholder has had no option to go down that route.

Ogriv

BBH123, that is very useful and I will be adding it to my "spot the !!!!!!" armoury.

So, after I cancelled my second viewing on the property, the vendor finally messages me an answer to the question I sent him via Purplebricks two days ago. It clearly took my cancellation for him to respond.
He has told me the ground rent and service charge, but hasn't indicated whether the sums (£750 each) are to be per month or per year. I know it's probably per year but I have become very cynical of late.