Apartment with sitting tenant

Slithery

I don't know why you're asking the agent all of these questions as you can't rely on their answers even if they can answer.
You need to do your own research - Read a copy of the tenancy agreement, read a copy of the lease etc...

young_investor_2021

Slithery said:

I don't know why you're asking the agent all of these questions as you can't rely on their answers even if they can answer.
You need to do your own research - Read a copy of the tenancy agreement, read a copy of the lease etc...

It's because I'm trying to save money having to hire a lawyer for every detail that would sway me from buying. The idea that estate agents can just say whatever they want I think can be challenged under the Consumer Protection from Unfair Trading Regulations 2008 – also more snappily known as Consumer Protection Regulations (CPRs) – he/she must disclose any pertinent information about a property which might influence a prospective buyer’s decision. According to the Property Ombudsman“pertinent” information is information considered material to a consumer’s decision to enter into a transaction and it should be disclosed at the earliest opportunity. To put it another way, if a reasonable person would take a piece of information as a negative factor in the decision-making process, then it should be disclosed. Pertinent information includes, among a whole host of other things, the reasons why previous sales have fallen through and problems highlighted in previous surveys. Providing misleading information or failing to mention something that is relevant can result in criminal charges being taken against the seller or estate agent.

If they lied in an email in writing, I would submit a complaint to the property ombudsman to recover the legal cost (or even more). Which is probably also why she didn't want to answer one way or another. If there's something incorrect about my thinking please do challenge it.

canaldumidi

young_investor_2021 said:

1. When asking if all bills are paid for: Yes, as far as we are aware it’s all paid. If there is any unpaid bills from the owner side, he would be liable and solicitors would deal with it, so it wouldn’t be your responsibility. (The agent also deals with the current letting on the premises)
2. When asking if and by how much the service charge and ground rent will increase:

They can increase however the frequency and %ge is contained within the lease which is deciphered by your solicitor as part of the conveyancing.
I insisted to be told by how much and she kept saying I'll find out during conveyancing. To me it seems essential for the overall yield, and to how much I offer, and it would seem inefficient to pay a lawyer just to find out that information. Am I excessive to ask this before making an offer?

Yes.

Both replies seem reasonable. And yes: "I'll find out during conveyancing" is correct.

1. The EA cannot guarantee 'all bills are paid'. The only way to be sure is to look at all bills due, and payments made, as part of your due diligence when buying.

2. EAs are not lawyers and cannot answer legal queries. If you want to know what the lease says prior to instructing a solicitor, then get a copy as you've been previously advised back on page 1 (10th post).

saajan_12

young_investor_2021 said:

Slithery said:

I don't know why you're asking the agent all of these questions as you can't rely on their answers even if they can answer.
You need to do your own research - Read a copy of the tenancy agreement, read a copy of the lease etc...

It's because I'm trying to save money having to hire a lawyer for every detail that would sway me from buying. The idea that estate agents can just say whatever they want I think can be challenged under the Consumer Protection from Unfair Trading Regulations 2008 – also more snappily known as Consumer Protection Regulations (CPRs) – he/she must disclose any pertinent information about a property which might influence a prospective buyer’s decision. According to the Property Ombudsman“pertinent” information is information considered material to a consumer’s decision to enter into a transaction and it should be disclosed at the earliest opportunity. To put it another way, if a reasonable person would take a piece of information as a negative factor in the decision-making process, then it should be disclosed. Pertinent information includes, among a whole host of other things, the reasons why previous sales have fallen through and problems highlighted in previous surveys. Providing misleading information or failing to mention something that is relevant can result in criminal charges being taken against the seller or estate agent.

If they lied in an email in writing, I would submit a complaint to the property ombudsman to recover the legal cost (or even more). Which is probably also why she didn't want to answer one way or another. If there's something incorrect about my thinking please do challenge it.

Yes, it'll always be a question on what constitutes pertinent, what they reasonably believed etc until it gets to court. 

However its irrelevant if they don't know. They can't lie, but if they tell you they don't the service charges / ground rent, then that's not misleading. If you choose to go ahead then legal costs would be your own. If you choose to walk away then you don't have a loss. 

young_investor_2021

canaldumidi said:

young_investor_2021 said:

1. When asking if all bills are paid for: Yes, as far as we are aware it’s all paid. If there is any unpaid bills from the owner side, he would be liable and solicitors would deal with it, so it wouldn’t be your responsibility. (The agent also deals with the current letting on the premises)
2. When asking if and by how much the service charge and ground rent will increase:

They can increase however the frequency and %ge is contained within the lease which is deciphered by your solicitor as part of the conveyancing.
I insisted to be told by how much and she kept saying I'll find out during conveyancing. To me it seems essential for the overall yield, and to how much I offer, and it would seem inefficient to pay a lawyer just to find out that information. Am I excessive to ask this before making an offer?

Yes.

Both replies seem reasonable. And yes: "I'll find out during conveyancing" is correct.

1. The EA cannot guarantee 'all bills are paid'. The only way to be sure is to look at all bills due, and payments made, as part of your due diligence when buying.

2. EAs are not lawyers and cannot answer legal queries. If you want to know what the lease says prior to instructing a solicitor, then get a copy as you've been previously advised back on page 1 (10th post).

Thanks for the reply. I wanted to get in sync with what exactly to expect from each party, which will be used in future purchases. I did not overlook your post, I was just trying to get that information faster from the EA, but I guess it’s probably better to have a look at the lease myself next time.

young_investor_2021

saajan_12 said:

young_investor_2021 said:

Slithery said:

I don't know why you're asking the agent all of these questions as you can't rely on their answers even if they can answer.
You need to do your own research - Read a copy of the tenancy agreement, read a copy of the lease etc...

It's because I'm trying to save money having to hire a lawyer for every detail that would sway me from buying. The idea that estate agents can just say whatever they want I think can be challenged under the Consumer Protection from Unfair Trading Regulations 2008 – also more snappily known as Consumer Protection Regulations (CPRs) – he/she must disclose any pertinent information about a property which might influence a prospective buyer’s decision. According to the Property Ombudsman“pertinent” information is information considered material to a consumer’s decision to enter into a transaction and it should be disclosed at the earliest opportunity. To put it another way, if a reasonable person would take a piece of information as a negative factor in the decision-making process, then it should be disclosed. Pertinent information includes, among a whole host of other things, the reasons why previous sales have fallen through and problems highlighted in previous surveys. Providing misleading information or failing to mention something that is relevant can result in criminal charges being taken against the seller or estate agent.

If they lied in an email in writing, I would submit a complaint to the property ombudsman to recover the legal cost (or even more). Which is probably also why she didn't want to answer one way or another. If there's something incorrect about my thinking please do challenge it.

Yes, it'll always be a question on what constitutes pertinent, what they reasonably believed etc until it gets to court. 

However its irrelevant if they don't know. They can't lie, but if they tell you they don't the service charges / ground rent, then that's not misleading. If you choose to go ahead then legal costs would be your own. If you choose to walk away then you don't have a loss. 

I agree, I wasn’t going to complain about them not answering, but if they answered that can be extra information that they can be held accountable for. However I should go the harder route of acquiring that information myself. 

eddddy

young_investor_2021 said:

1. When asking if all bills are paid for...

If that's the actual question you asked - it's not really a necessary  question.

If service charge bills have been issued and/or new service charge bills are issued before completion
Your solicitor will ensure they are paid out of your purchase money


If work has been carried out before completion, but no bill has been issued
You will become responsible for the bill, but the standard conditions of sale would say that you can claim the money back from the seller. Your solicitor would usually arrange a retention to make this simpler.

young_investor_2021 said:

2. When asking if and by how much the service charge... will increase:

Perhaps you've misunderstood how service charges work.

Your service charge is your share of the insurance cost, repairs/maintenance costs and admin costs. Each year the bills are all added together and the total divided amongst the leaseholders.

If there are very little repairs and maintenance in a particular year, there will not be many bills, so your the service charge will be low.

If there are lots of repairs and maintenance in a particular year, there will be lots of big bills, so your service charge will be high.

And, if for example, there are some insurance claims - that will increase insurance premiums, so your share of the premium will be more expensive, etc.

young_investor_2021 said:

2. When asking if and by how much the... ground rent will increase:

That will be stated in the lease, and it's a reasonable question to ask.

young_investor_2021

eddddy said:

young_investor_2021 said:

1. When asking if all bills are paid for...

If that's the actual question you asked - it's not really a necessary  question.

If service charge bills have been issued and/or new service charge bills are issued before completion
Your solicitor will ensure they are paid out of your purchase money


If work has been carried out before completion, but no bill has been issued
You will become responsible for the bill, but the standard conditions of sale would say that you can claim the money back from the seller. Your solicitor would usually arrange a retention to make this simpler.

young_investor_2021 said:

2. When asking if and by how much the service charge... will increase:

Perhaps you've misunderstood how service charges work.

Your service charge is your share of the insurance cost, repairs/maintenance costs and admin costs. Each year the bills are all added together and the total divided amongst the leaseholders.

If there are very little repairs and maintenance in a particular year, there will not be many bills, so your the service charge will be low.

If there are lots of repairs and maintenance in a particular year, there will be lots of big bills, so your service charge will be high.

And, if for example, there are some insurance claims - that will increase insurance premiums, so your share of the premium will be more expensive, etc.

young_investor_2021 said:

2. When asking if and by how much the... ground rent will increase:

That will be stated in the lease, and it's a reasonable question to ask.

I was up to date with the service charge, and my questions were suggested by the government "How to lease" guide. The service charges can be fixed or variable, and this is stated on the lease. Asking this is useful (or reading it off the lease). Similarly, changes in service charge in the near future would probably be announced in advance, and not changed from one day to the next. So the owner would know if such a change may happen in the near future. What I would not want is to buy an apartment two months before the service charge doubles. Citing from lease-advice.org: "When considering buying a leasehold flat, it is important to find out what the current and future service charges are likely to be." 

eddddy

young_investor_2021 said:

 The service charges can be fixed or variable, and this is stated on the lease. Asking this is useful (or reading it off the lease). Similarly, changes in service charge in the near future would probably be announced in advance, and not changed from one day to the next. So the owner would know if such a change may happen in the near future. What I would not want is to buy an apartment two months before the service charge doubles. Citing from lease-advice.org: "When considering buying a leasehold flat, it is important to find out what the current and future service charges are likely to be." 

I think you're still confused about how service charges work.

As I explained, the service charge is your share of the bills - it's impossible to "fix" that payment, because you don't know in advance how much those bills will be. (But you pay an estimate in advance.)



I think you've misunderstood the advice from lease-advice.org. What they mean is:

"Look at previous service charge bills, future service charge estimates, future planned works etc - to get a feel for the amount of service charges you might have to pay."

For example: 

• If it's an old Victorian property that has needed lots of expensive repairs and maintenance in the past, it might continue to need lots of expensive maintenance and repairs

• If it's a modern purpose built block, it's probably had few repairs and maintenance in the past, and hopefully it will continue to be like that - so the service charge will stay low

• If it has large communal grounds, large communal areas, a lift etc, it has probably had high service charges in the past, and it's likely to have high service charges in the future

• If the building is in poor condition, it might need lots of expensive repairs in the near future - which you will to pay for

Typically, the freeholder (or their management company) estimates at the beginning of the year what the think your service charge will be for the year - let's say they estimate £2400.

At the end of the year, they add up what the actual bills came to...

• If it works out that your actual service charge is £2200 - you will get a £200 credit

• If it works out that your actual service charge is £3200 - you will get a bill for £800

Depending on the lease (and/or the managing agent) you may have to:

• Pay the estimate of £2400 in one payment at the start of the year
• Pay the estimate of £2400 in two payments - at the start of the year and after 6 months
• Pay the estimate of £2400 in monthly instalments - i.e. £200 per month

young_investor_2021

eddddy said:

young_investor_2021 said:

 The service charges can be fixed or variable, and this is stated on the lease. Asking this is useful (or reading it off the lease). Similarly, changes in service charge in the near future would probably be announced in advance, and not changed from one day to the next. So the owner would know if such a change may happen in the near future. What I would not want is to buy an apartment two months before the service charge doubles. Citing from lease-advice.org: "When considering buying a leasehold flat, it is important to find out what the current and future service charges are likely to be." 

I think you're still confused about how service charges work.

As I explained, the service charge is your share of the bills - it's impossible to "fix" that payment, because you don't know in advance how much those bills will be. (But you pay an estimate in advance.)



I think you've misunderstood the advice from lease-advice.org. What they mean is:

"Look at previous service charge bills, future service charge estimates, future planned works etc - to get a feel for the amount of service charges you might have to pay."

For example: 

• If it's an old Victorian property that has needed lots of expensive repairs and maintenance in the past, it might continue to need lots of expensive maintenance and repairs

• If it's a modern purpose built block, it's probably had few repairs and maintenance in the past, and hopefully it will continue to be like that - so the service charge will stay low

• If it has large communal grounds, large communal areas, a lift etc, it has probably had high service charges in the past, and it's likely to have high service charges in the future

• If the building is in poor condition, it might need lots of expensive repairs in the near future - which you will to pay for

Typically, the freeholder (or their management company) estimates at the beginning of the year what the think your service charge will be for the year - let's say they estimate £2400.

At the end of the year, they add up what the actual bills came to...

• If it works out that your actual service charge is £2200 - you will get a £200 credit

• If it works out that your actual service charge is £3200 - you will get a bill for £800

Depending on the lease (and/or the managing agent) you may have to:

• Pay the estimate of £2400 in one payment at the start of the year
• Pay the estimate of £2400 in two payments - at the start of the year and after 6 months
• Pay the estimate of £2400 in monthly instalments - i.e. £200 per month

I think maybe you didn’t read about fixed service charges. Have a look at 

https://ovh.org.uk/understanding-service-charges/

”Fixed and variable service charges

Your tenancy agreement confirms if your service charge is fixed or variable.

Fixed Service Charge: This charge is fixed at the start of the year, based on an estimate of the service cost.

If the actual cost of the service at the end of the year is higher or lower than the estimate, the charge cannot be changed. However, the charge may be changed the following year to ensure that the full cost of the service is recovered from customers.

Variable Service Charge: This charge can vary and is set at the start of the year, based on an estimate of the service cost.

Unlike a fixed service charge, if the cost of the service increases or decreases, the charge can be changed accordingly to ensure that customers pay the true cost of the service. In these cases, surpluses/deficits will be dealt with in accordance with your tenancy agreement.

I also recommend reading the Service charge section from lease-advice.org:

“ Some old leases still allow a fixed charge to be charged, regardless of the actual costs to the landlord.”

You say that even in this case the landlord credits the difference. However in the websites I’ve suggested it’s not obvious this is always the case.