Reasonable fees for leaseholder

JuzaMum

I have been looking at leasehold flats to buy. These all have annual fees for maintenance, ground rent etc. Some have been as much as £3600 a year! That is too much for me. What fees are 'normal' or 'reasonable'? What do other people pay?

niceguyed

There's a lot of variables to consider and of course value is different to price. For example, blocks with lifts, large communal areas, secure gates, cleaning schedules all sucks up money. Plus the managing agent fees can vary wildly. 

Sometimes a lower per annum fee may be because not enough is being put away for a sink fund for large one off repairs and cyclical decoration. So a lower monthly charge may mean a section 20 landing on your doormat if the sink fund doesn't cover it.

I've often thought right to manage is the way to go to get more control of expenses and drive a harder bargain with tenders and contractors. 

I was paying £116 PM when I sold my flat (block of 57) early this year. £12 PA ground rent.  The managing agent got caught out in the early years of the development by not charging enough to build up the sink fund. 

So £3600 PA sounds very expensive, maybe there's a concierge and gym! 

When looking at leasehold you want to see the accounts to get a feel for what the money is being spent on. 

hb2

Normal and reasonable depend on what the fees have to cover. A development we looked at included landscaped gardens, a pool, gym etc and cost a total £1000 per month for ground rent and management - which was way more than we could afford but was clearly being paid by the residents.

AdrianC

The service charge is simply your flat's share of what's spent on the common areas and the infrastructure of the building.

If there's a shedload of facilities, somebody's got to pay for 'em! That's the leaseholders...

Also - service charges are going up a LOT. We've got a flat we let - the service charge has gone from <£400/qtr six or seven years ago, to £550/qtr last year... to nearly £1,300/qtr this year, thanks to EWS, fire alarm, and a big bill for the lift.

NameUnavailable

Ground rent is set out in the terms of the lease. It may be 'peppercorn' or a fixed amount or an amount that increases over time - beware of any with doubling ground rents as they can cause issues with lenders (as well as becoming very expensive over time).

The service charge covers basic maintenance and the buildings insurance - by basic I mean lighting bills for the communal areas, gardening (if any) cleaning communal areas etc. In most cases it won't cover anything major that might need doing such as redecoration inside or outside, roof repairs, damp etc. - you will be served with notices for major works and additional bills.

If there is a management company that looks after the building (not a residents company) then a large chunk will be paying their fees.

Properties with Right To Manage are good - where the residents are responsible for the management so saving the fees of a separate company and being able to choose who you employ to do the work. Some have 'as and when' maintenance, i.e. no regular charges just a requirement to pay your share for any work required. The problem with this arrangement is that regular stuff can be neglected and you store up a lot of little jobs that suddenly amount to quite a lot of work (cost).

Always think about the property - does it have features that will require lots of expensive maintenance - painted facades, large communal grounds, lifts. Also does it look like it's well maintained - if you see lots of things needing attention then ask yourself why (and as the vendors!).