Flat's Service Charge includes utility bills

Robin9

One I came across - a Churchill Living Home - £225k
"Service Charge Service charge of £3,600pa which includes insurance, cleaning and gardening services, care line, electricity, a lodge manager five mornings a week, weekly functions, hot water, water rates and 24/7 central heating"

AlexMac

I've never bought a flat in a block where the freeholder or their agent decide on and arrange insurance, maintenance and services, preferring smaller so called "shared freehold" blocks where we (the other leasehold owners and me, acting as members or Directors of the Freehold Company) take a DIY approach to insuring,  deciding, planning and commissioning repairs. 

Your proposed £3k a year Charge seems toppy, until you consider that as well as utility bills of around £1k pa for energy and £250-£350 pa for water, I used to pay SCs ranging from £450pa (for a one bed flat in a block of six flats), through £1100 (in a conversion of 1 units) to £1,300 pa (in a larger conversion flat on a private estate where we had to pay towards roads and landscaping). Two were listed 19th Century buildings and the other was a seafront property so very maintenance intensive, but we used to accumulate a healthy surplus each year into a sinking fund for major repairs like roofing and external decs.   So your deal seems OK if it really does include insurances, repairs, 

If the block does need cyclical repairs like these, or if the lifts or fire doors and sprinklers ever fail, you could be faced with hefty one-off contributions, so I tend to avoid blocks which look expensive!  I also have two small ex-local authority BTL flats , deliberately chosen in low rise blocks of conventional  construction of brick with pitched tile roofs, with no cladding and no lifts to go wrong!  Their SCs only cost £800-900 pa, but as repairs are charged as one-offs I get hit with about £4-5k every ten years for new double glazing, decor or balcony remedials.  Any similar likely one-off costs for your block, as your solicitor will only uncover those which have already been advised in statutory notices?

So while £3k pa  is bearable it could get worse?  I had mates who used to pay £5-6k pa in a ritzy Docklands flat (for gyms, concierge etc) but thought that mad.  £6k pa would pay off an additional 300k- £400k mortgage!

eddddy

Robin9 said:

One I came across - a Churchill Living Home - £225k
"Service Charge Service charge of £3,600pa which includes insurance, cleaning and gardening services, care line, electricity, a lodge manager five mornings a week, weekly functions, hot water, water rates and 24/7 central heating"

So that's a property on a retirement development. The freeholder/management company provide many more services for the retired leaseholders than you'd get in other leasehold properties - like a lodge manager, an emergency alarm system that is monitored 24/7, a lift, etc.

BUT... you'll often find that the £3,600 pa you mention isn't the full service charge contribution. You'll often find that there are "Event fees" or "deferred service charges" as well. Often, they arise when you sell the property - you have to pay a percentage of the selling price to the freeholder/management company as a service charge.

Sandtree

AlexMac said:

So while £3k pa  is bearable it could get worse?  I had mates who used to pay £5-6k pa in a ritzy Docklands flat (for gyms, concierge etc) but thought that mad.  £6k pa would pay off an additional 300k- £400k mortgage!

Our last rental we considered buying but found out that for a 2 bed 95sqm flat the service charge was £8k which seemed bad until the concierge pointed out that the penthouses were paying over £35,000.

What I never fully understood is that the service charge covered half the carpark, half the swimming pool, a 24/7 porter and all the normal things. The building next door paid the other half of the carpark, swimming pool etc, they had their own 8-8/7 porter plus a gym and yet their service was around £4k (plus they had much less units to share the costs over).

The flat we were rented was share of freehold too so not some freeholder creaming lots off but they were in the process of refurbishing the 8 lifts, there were major works needed on the roof and the scaffolding quote alone was crazy and the windows were all coming to the end of their life.