Buying a Flat- service charge doubled in the last 4 years

masisu

Thank you and my apologies for copy/paste the reply email from the management company. The Q and A edit below..

I have few queries regarding of how these properties are being charged for services by your management company.
I have seen the accounts for 2015, 2016 and 2018.
The issues with this:
Q: management fees seem to vary 30%-60% of the total fees -In 4 years the service charge has doubled

A: I checked the Management fee and its still around the 30% and for 2018 its 25%, the SC expenses increase is according to the cost increase in general in the UK

Q: there is no garden area, therefore gardening as charge it is not justified;

A: I didn!!!8217;t see in the budget any cost for gardening

Q: water charge for 2018 is £1000- are the water rates paid through the service charge instead of billing individual properties?

A: Yes usually when you have one meter for a few flats the water company will send to the property management one bill and they will have to charge the flats

Q: electricity of £900, for 4 lighting bulbs

A: You have 2 meters LL Supply and the budget was according to the bills we received I will forward to the property manager to check if we have other thinks beside the bulbs anyway for 2018 the budget is £600

Q: there is no sinking fund. If there is, then it's not clearly outlined, as how much and for what period of time it has been accrued.

A: The plus in the accounts is auto going to a sinking fund

The flat is in Penzance. Can't post a link(as new user)- on RightMove , Penzance , St Philip Street.


PS: EA was bewildered as of how much info I have, and literally told me "we can't help you with anything, as you know more than we do and you've done your homework well and beyond ". But I'm not interested in a praise.
Yes you're right guys about flats and leaseholds, and I'm trying to pick the best apple from a rotten apples basket. I can't go for a house, and rents over there are beyond a mortgage rate- nevertheless the "lets" that are more affordable don't allow kids(I've got a 7 yr old one)- I've lost count of how many properties lets I've viewed and said "no" when heard about children.
To user "THAT" I'm really sorry for you, I really hope you get out of that situation- or at least I hope you can afford to live decently. This is exactly what I'm trying to avoid, as I am a person who settles onto something for very long time(I don't do changes often). It's either a flat or living in a motorhome for me and my boy

that

I would approach (A) and ask how much to extend the lease?

The council are still often more socially responsible than private companies, and often offer extended payments on large bills. If there is a big bill, will you be forced to sell at a reduced price? Living in an ex-council flat, I have found that nearly all my neighbours work, and the ones that do not are retired

The problem with bad property is that you may have problems to find another buyer, leaving you stuck with the property for ages.

is this it?
http://www.rightmove.co.uk/property-for-sale/property-53111115.html
This has been sold https://www.kerbappealz.co.uk/properties/7-st-philip-street-penzance-cornwall.-tr18-2dn/
you could have post a partial link just leave off http://www.

masisu

Hey THAT
Thank you for links...
The first link on rightmove(Miller Countrywide)it's the property I'm on about. No bathroom window on this one.
The second link(Kerb Appealz)is about another flat in the same building that was sold before. This one has a bathroom window.
Option A) seemed good , except my personal reasons above and extra below:
- found 4 flats (ex council), all under 80years on lease
- lease extending would cost £10k-£12k(I've inquired)
- they all needed some degree of renovating(they've all got mould on walls - bedrooms, bathrooms etc)- and high really I don't have the immediate extra money for it. The non council flats do not need extra work, (not in the foreseeable future), all pretty well maintained(inside the flats).


I can't thank enough you especially and all others, for just..free advice and time to help me and others on this/other posts. You're all kind people

masisu

Any more opinions?
What I'm a bit worried about is that the service charge will go up so much, that the property will become unsaleable. I'm not thinking of selling but live there for the rest of my life. Though, should I need to move for unforeseen reasons, will I be able to sell it?
At a rate of £100 extra a year, in 7-8 years, the service charge for this flat or couple of others similar in the same area will be well over £1600/ year. While this might not sound high for ..say London or Oxford, for Penzance is.
The management company says this

At a ROUGH estimate, the service charge may increase to around £825 for next year. I won't know a proper figure until we finalise the budget in November.

But they also say

. 1) The repair may already be covered by the money we have for the redecoration work. I will check further. Please contact our contractor Axxx on 074xxxxxx for further details.

2) The service charge usually increases according to the expenses we have had in the previous year. To give you an idea, please see below the annual cost of the service charge per year;

2015 £422.78

2016 £595.55

2017 £694.11

2018 £791.12

The property has a December Year End, meaning the budget isn't calculated until we invoice in November. I can't tell you a figure until for 2019 until then.

I need to move down there desperately for my little one..

NeilCr

Who owns the freehold?

As indicated above do you get a share of the freehold when you buy? Or is it owned by a private company/the builder?

If the residents own the freehold then you/they have more control of the service charges.

Beyond that it is almost impossible to answer your question re service charges. I suppose, in the end, it is how marketable the flat/flats are. I had a flat in London where the service charges were much higher than this but it was in a superb position transport wise for Docklands and was easy to sell. My mate bought it but the estate agent themselves would have done as a buy to let.

You do say a flat is what you can afford so there may well be others in the same position later on. I don't know what the property market is like in Penzance.

And it depends on the freeholder. Some freeholders are fine - others push the management company to increase the service charges a lot.

You might get some sense from talking to other residents to see how they feel about the way the block is run.

masisu

Hey NeilCR

Thank you for your post.
I have inquired and it's the management company that owns the freehold.
Market seems alright in Penzance regarding houses(from what I've seen in the past 18 months). They get bought and sold fairly well, might be because they are being bought as holiday homes - therefore no strings attached(leasehold).
One bedroom flats don't particularly move well, unless something "quirky" about them e.g flat in a old historical building with huge communal grounds(even with under 60-70 years left on lease), or retirees flats.
The 2 bedrooms get sold pretty fast(in less than 2 months).
Thank you for the positive outlook

so there may well be others in the same position later on

I guess the 1 bedrooms aren't popular as many families(if not all) with lots of children over here- favourite hobby

NeilCr

Sorry.

Just not sure what you mean by management company owning the freehold

Who is the management company? Is it comprised of residents or is it run by the freeholder who may be the original builder. You need to understand who owns the freehold of the land the block is built on.

masisu

NeilCR the management company owns the freehold, at least that's what Miller countrywide told me about when called them today. It doesn't sound right?
This management company is a London based property management co, with telephone number and it's called: Moreland Estate Management.
I hope this helps

NeilCr

Then I am a bit confused

http://www.morelandestate.co.uk

These guys manage estates on behalf of the freeholders by the look of them

masisu

That is them
God damn it..so this means the estate agent is incompetent? (actually 3 persons from Miller I've dealt with).
Obviously I am as well as I don't know what to ask for- you may say a solicitor is good for these.. but I wanna find out these things before spending £500 and then deciding it's not worth it.
Should I speak with the owner of the flat?(at my request the agency got him to call me and we spoke lightly regarding price etc). Should I wait until Monday and call the management company- that's if they wanna give away any details