Service Charge misquoted - should I pull out of purchase?

SR24

I would be concerned about an already large service charge getting larger. If the correct service charge had been a available at the time of offer, it would have likely been something that might have put you off. 

If it was me I wouldn’t take on a flat with that level of service charge, it is likely to affect resale, and if you work out the expenditure over say 5 years… what else could you do with that money… could you afford a different type of property. 

There are a couple of properties in large block of Art Deco flats near me, 4 storey high with lovely gardens, they are very nice but they have been on the market for so long, the asking prices are reasonable (if one can say that in the current market) but the service charges of 3.5k are likely to be the issue when compared to other properties. Raising energy costs will only inflate those charges. 

GDB2222

Just make sure that you are pulling out for the right reason. £1k -> £3k is a huge increase. On the other hand, £1k going into the reserve fund is not really a cost. Think of it more as compulsory saving up for future bills.  Similarly, heating and hot water is worth quite a bit.

OTOH, £600 for insurance sounds very, very high.

bouicca21

One you take the energy costs and reserve fund out,the service charge doesn’t look quite so frightening. 

 My questions would be about the management company - who owns the freehold?  What say would you have in what the management company does?

Moving on from that, I’d want to know why the reserve fund needs to be so large.  Are major works anticipated?  That district heating boiler is going to be expensive to replace but £110k a year would more than cover it.  Is the reserve being built up for a specific purpose and is it anticipated that it will fall back when that purpose is fulfilled?  I don’t know where your block is but I do know of some potentially stunning Art Deco blocks in London that are badly in need of some (expensive) tlc.  Is yours one of them? 

Have you read the lease to see what is and is not covered? 

Sandtree

paulandchain said:

Other flats in other buildings I saw in the area had a service charge around what I was originally quoted (although the buildings weren’t as nice, and didn’t have a communal garden).

Speaking to friends who live in equally desirable areas of London, the highest service charge I’ve heard is about £180 / month, but those are new builds which feel like fancy hotels! I’m guessing no heating and hot water though, and not sure about a reserve fund.

Your friends are either very lucky or arent telling you the truth.

When were looking in SE London, zone2 most buildings were around £2k-£3k for service depending critically on how many lifts are in the building and any extras like pools, concierge or gyms. The flat we rented at the time was almost £8k but they were in a programme of refurbishing the 10 lifts and building up a fund for major works on the roof and windows for which the quote for the scaffolding alone had been north of £1m 

The average London price is £1,900 according to various presses but that will be the extreme of simple house conversions charging next to nothing and the £30k plus that the penthouse in our rental place was paying

robatwork

Sandtree said:

paulandchain said:

Other flats in other buildings I saw in the area had a service charge around what I was originally quoted (although the buildings weren’t as nice, and didn’t have a communal garden).

Speaking to friends who live in equally desirable areas of London, the highest service charge I’ve heard is about £180 / month, but those are new builds which feel like fancy hotels! I’m guessing no heating and hot water though, and not sure about a reserve fund.

Your friends are either very lucky or arent telling you the truth.

When were looking in SE London, zone2 most buildings were around £2k-£3k for service depending critically on how many lifts are in the building and any extras like pools, concierge or gyms. The flat we rented at the time was almost £8k but they were in a programme of refurbishing the 10 lifts and building up a fund for major works on the roof and windows for which the quote for the scaffolding alone had been north of £1m 

The average London price is £1,900 according to various presses but that will be the extreme of simple house conversions charging next to nothing and the £30k plus that the penthouse in our rental place was paying

Finally a voice of reason. London prices are astronomical. You didn't mention lifts as a lift repair/replacement can put a few k on  a yearly sinking fund easily so worth finding out its age if there is one. If you want trendy boho art-deco living you need to be able to stomach the prices as well as the top knots.