Service charge substantially higher than advertised

NathanE

I guess this is a common problem but here goes...

We are on the final weeks of months of conveyancing to buy an apartment. We were told verbally and indeed the EA's documentation states "service charge approximately £4000".

However the last batch of documents to come in from my solicitor has revealed the SC has never been that low in recent years. I can see invoices going back to 2013 when it was £4200. Now in 2017 it is £4600.

I don't think it is the EA's fault - they have just been lied to by the vendor. This vendor appears to be quite well off shall we say so perhaps to him there is no material difference between 4000 and 4600.

The vendor has left the country now and also recently rejected a fairly typical request to view the property again for measurements and renovation estimates. Though he clearly wants rid of the property and was struggling to rent it out for months because of its condition.

I am considering either 1. have the vendor credit the SC account with a few K to cover the misrepresented difference for a few years into the future 2. gazundering him on the sale price by a few K 3. doing nothing and sucking it up

What does MSE suggest I do?

Thank you

LEJC

with management costs...take everything the vendor or indeed the EA say with a pinch of salt.....your solicitor will be the one to get the current figures and possibly last years figures in the management pack as part of the sale documentation....

Those are the figures you will need to be aware of ....anything before that you are told is purely indications.

At least you have some previous figures and can now get an indication of the annual percentage rise,as the costs will probably go up year on year.

Are you paying a reasonable price for the property overall that represents it's current condition...if so then its very difficult to go back and start negotiations over the service charges....if this is what is proving to be the sticking point now,it has the potential to always be your sticking point simply because you are not in charge of setting them.

You can request a contribution from the seller towards future costs in the same way that they can respond no to your request.

what do I suggest you do...either suck up the cost or pull out if you feel that strongly.

[Deleted User]

I think you have to think very carefully about this purchase.

Service charges can be whatever the Freeholder / Managing agents want to charge, yes its dependant on the works done but there is no ceiling to what they can charge.

If £600 difference is a lot to you I would suggest you could be in trouble if they were a lot higher.

When I bought my flat my Solicitor said works were planned for £6k but when I finished the purchase the Freeholder decided to do more works now all the flats were sold and £14k became the figure we had to pay.

It is very hard to budget for an expense that can be anything.

NathanE

600 is not the end of the world but in this case more the principle - and determining whether it can be used to wangle a better deal. We set ourselves a SC limit at the purchase date and 4k was meant to be about it. 4.6k is quite a bit over that "supposed limit". I read the "approximately" on the EA documents and sort of assumed that meant a +/- 100 error margin. 600 is pushing the definition of "approx" to me, I don't know about you guys?

We already have a flat close by and its SCs are half of this one. But this can be justified because the communal areas are much smaller - approximately half, there are also about 15 more flats also to spread the costs over, there is no 24hr concierge, no underground parking, no lifts, etc. So from that respect you can argue 4.6k is not too bad all considered. And for the area 4.6k is roughly about the norm for a condo of this type.

The new flat has also got works scheduled for next year including a new phone entry system and the commencement of a 4 year programme to replace the lifts (I guess that means 1 lift per year then, to spread the costs). The new flat has about a 230k in the sinking fund which seems a lot but I doubt it will go far on 4 new lifts and a phone entry system. I bet it will be easily 100-200k short. So realistically I expect the SC to be closer to 5 to 5.5k next year.

Both flats are share of freehold and I am aware of how Section 20 costs can appear almost out of nowhere. We already had to pay about 700 extra on our current flat this year to cover roof repairs. The sinking fund wasn't enough.

[Deleted User]

Its the fear of the unknown in your own home thats the problem, at any time a massive demand for money can be made and there is nothing you can do about it.

In our case it didnt end with the £14k, the Freehold was then sold on and these new people decided the works were either of poor standard or not done and redid the whole lot. It has been a nightmare.

The think I would be thinking in your shoes is not just whether you can afford the costs and uncertainty but whether any future buyer would if ever you needed / wanted to sell.

Don't think rationally about this should cost this that should cost the other these Freeholders / Managing agents are in it too make money.

davidmcn

I think you'd have trouble demonstrating that there's a material difference in the market value of a property with a £4000 service charge and one with a £4600 service charge.

Doozergirl

Given that service charges are prone to fluctuation and people don't always remember exactly how much something is, I'd say approx £4000 is about right. It's hardly a lie. If the vendor said "£4000 something" which is almost certainly what I'd say, then the EA would write "approx £4000". I don't think anyone's been lied to.

The anxiety over service charges is quite real though. I'd never buy in a large block.