Misinformed about service charge :(

ilikepancakes

Hi all,
I am looking to buy a flat that was on the market for "offers over £250k".
I have offered £250 but was immediately declined, then I made offer of £255k which was accepted. During the viewing of the flat I was told that service charge is £2000 per year.

It was at the beginning of May, I have instructed solicitor and today, just week before we want to do mortgage application I have received paperwork from my solicitor which says that service charge is £2400 per year :mad::mad::mad:

You can't believe how mad I am about this as there were and are couple diffrent flats in the same location which we let go because we wanted this one so we made an offer.

I really don't want this flat with the service charge of £2400 because first of all it is £400 more per year and second, it will be more difficult to sell the flat in the future :mad:

What would you do?

I can offer £250k for the flat which will make our mortgage payment lower by £240 per year. But £240 is still not £400 and then it still will be more difficult to sell the flat.

I don't want the agent or seller think I want to gazunder! Even with price of £250k I would feel I'm overpaying to what was agreed at the beginning.

Comms69

ilikepancakes wrote: »

Hi all,
I am looking to buy a flat that was on the market for "offers over £250k".
I have offered £250 but was immediately declined, then I made offer of £255k which was accepted. During the viewing of the flat I was told that service charge is £2000 per year.

It was at the beginning of May, I have instructed solicitor and today, just week before we want to do mortgage application I have received paperwork from my solicitor which says that service charge is £2400 per year :mad::mad::mad:

You can't believe how mad I am about this as there were and are couple diffrent flats in the same location which we let go because we wanted this one so we made an offer.

I really don't want this flat with the service charge of £2400 because first of all it is £400 more per year and second, it will be more difficult to sell the flat in the future :mad:

What would you do?

I can offer £250k for the flat which will make our mortgage payment lower by £240 per year. But £240 is still not £400 and then it still will be more difficult to sell the flat.

I don't want the agent or seller think I want to gazunder! Even with price of £250k I would feel I'm overpaying to what was agreed at the beginning.

Option 1: pay £255
Option 2: Offer less
Option 3: walk away


Those are your options

Crumble2018

Is that average for service charges in the area? As even £2000 a year seems steep!

muhandis

In your place, I would have absolutely no compunction in revising my offer (or "gazundering" as you term it).

The service charge proved to be 20% higher than what the vendor/EA told you, so you are perfectly within your rights to revise your offer to reflect that. The vendor might or might not accept it, but that's another matter.

ilikepancakes wrote: »

I don't want the agent or seller think I want to gazunder! Even with price of £250k I would feel I'm overpaying to what was agreed at the beginning.

ilikepancakes

I will probably offer £250k but I really want to let them know that I'm !!!!ed off and it is not me who is undermining the sale of the flat.

I can say it is average service charge as we have seen 3 more flats in this common area, on with £1800 service charge, another £2200 and third one £2600 and to be honest it was a big factor for us to have the service charge £2000.

davidmcn

You do realise that service charges can vary that much from year to year anyway? And it could legitimately increase during the course of a conveyancing transaction.

edgex

ilikepancakes wrote: »

I will probably offer £250k but I really want to let them know that I'm !!!!ed off and it is not me who is undermining the sale of the flat.

I can say it is average service charge as we have seen 3 more flats in this common area, on with £1800 service charge, another £2200 and third one £2600 and to be honest it was a big factor for us to have the service charge £2000.

Unless they are all in the same building & get the same services, the different service charges are irrelevant.


When you say "told", what does that mean?
Surely you had it in writing on the lease etc?

need_an_answer

I've yet to buy a leasehold property where the service charge quoted,if at all by the EA/Vendor has actually matched the same price when the property information pack has been received from the solicitor.

I very much doubt that the vendor will drop £5k but I guess stranger things have happened in property purchases/sales.


The situation you face is that yes you are peeved that you were not given the correct figure until now but by making such a stand as to drop the price significantly the vendor can easily walk away too...are you really prepared to lose the property and what you have paid in fees to date for around £34 a month?

Really if you are genuinely unhappy about fluctuating service charges going forward then you need to consider if leasehold is the right type of property purchase, perhaps opting instead for freehold where you are more in control if spending

Cynical_Monkey

Service charges are a massive con. Sorry, just had to get that off my chest.


Your options are dependant on your position;


If you're not selling anything, you form the part of the chain with the strongest hand. Your vendor is likely buying something so if you walk away, they lose the property they want. In reality, this situation suggests that you should allow for the £400 for the 10 years that you'll probably live there and take a minimum of £4k off your offer. If it was me and I was in no rush to move, I'd take £8,000 off and offer £247,000 using the logic of increased costs over a prolonged period.

MEM62

ilikepancakes wrote: »

During the viewing of the flat I was told that service charge is £2000 per year.

Excessive in my opinion.

ilikepancakes wrote: »

You can't believe how mad I am about this.

That mad over £400? Really?

ilikepancakes wrote: »

What would you do?

Firstly, I wouldn't buy a flat with that level of service charge. The service charge on mine (West London / Heathrow area) is £780 per year.

However, having said that, if you are prepared to accept £2k I see no reason why £2.4K should invoke such a reaction. The £400 difference is hardly going to make the property unsaleable. You should also be aware that service charges can vary anyway, by much more than 20%, depending on what work is needed at any given time.

The bottom line is that you are talking £400 per year difference in overall cost. If it bothers you that much just walk away and defuse your angst.

ilikepancakes

edgex wrote: »

When you say "told", what does that mean?
Surely you had it in writing on the lease etc?

During the viewing I was verbally informed that the service charge is £2000 per year. Now, 3 month later I have received management pack and the lease agreement from my solicitor (my solicitor received it 2 weeks ago) and it says that service charge is £2400 per year

need_an_answer wrote: »

The situation you face is that yes you are peeved that you were not given the correct figure until now but by making such a stand as to drop the price significantly the vendor can easily walk away too...

To be honest I think it is a dealbreaker for me and if the seller don't want £250k than I'm not going to pay more.

need_an_answer wrote: »

are you really prepared to lose the property and what you have paid in fees to date for around £34 a month?

Really if you are genuinely unhappy about fluctuating service charges going forward then you need to consider if leasehold is the right type of property purchase,

It is easy to say "only £34 a month". £2000 is already massive and this is our maximum budget (I was prepared it will be maybe £2100 but not £2400).
I am happy with fluctuating service charges but I really prefer to have my starting point at £2000 than £2400. If it goes up £400 then having £2800 will be painful.

And it is not only about £34 a month, it will be much more difficult to sell the flat with higher service charge.

Cynical_Monkey wrote: »

If you're not selling anything, you form the part of the chain with the strongest hand. Your vendor is likely buying something so if you walk away, they lose the property they want. In reality, this situation suggests that you should allow for the £400 for the 10 years that you'll probably live there and take a minimum of £4k off your offer. If it was me and I was in no rush to move, I'd take £8,000 off and offer £247,000 using the logic of increased costs over a prolonged period.

I am not selling and our vendor is buying, everybody is waiting for me. I thought about offering £247k but I think it is too low, I am ready to take a hit (part hit) and I really want to give them my maximum without going back and forward at this stage.

MEM62 wrote: »

Excessive in my opinion.

That mad over £400? Really?

It has swimming pool and gym exclusive to the residents of the estate, private park, overal really nice place.

MEM62 wrote: »

However, having said that, if you are prepared to accept £2k I see no reason why £2.4K should invoke such a reaction. The £400 difference is hardly going to make the property unsaleable. You should also be aware that service charges can vary anyway, by much more than 20%, depending on what work is needed at any given time.

The bottom line is that you are talking £400 per year difference in overall cost. If it bothers you that much just walk away and defuse your angst.

I can afford that but it really pi*ses me off as I was misinformed. If it is no such a a big deal then it should not be a massive deal to drop the price, right?