First time buyer help

jayme_29

I’m a first time buyer looking to purchase using help to buy in London and I’ve been looking at a 1 bed apartment which has a yearly service charge of £2900. The amenities do include a pool, gym, communal gardens etc but should I be concerned that it’s so high it would be put off potential buyers when I come to sell? The agent shared with me the latest service charge breakdown and it has increased 15% from 2021 to this year. Obviously I’m predicting this will probably be the same if not more next year with rising energy costs. The building is also a new build. 

If I was to purchase a parking space, there’s also an additional service charge of £385 p.a. 

It seems so crazy all these additional charges with leaseholds but I wouldn’t be able to buy on the open market in London. I’m also concerned that there is a lack of properties and high demand with H2B ending. It seems the market is moving so quickly with people purchasing off-plan, which I’m struggling to commit to. I have a good salary £60k, budget of around £500k and 5% deposit plus allowing for stamp duty. I work central London 3 days a week and WFH 2 days so I can look at any area, but want to find somewhere that’s still easily commutable at night and not isolated. Most often at weekends I’m in central London so buying further out doesn’t appeal to me yet, even though my money will stretch further. Ideally I’d like a 2 bed so I have wfh space but I’ve succumb to the fact that I’m going to have to find a 1 bed in a better location. 

Any guidance welcomed! 

eddddy

jayme_29 said:

The amenities do include a pool, gym, communal gardens etc but should I be concerned that it’s so high it would be put off potential buyers when I come to sell? 

I guess it's a case of lifestyle choices. If future buyers want a pool, gym and communal gardens they'll have to be prepared to pay a service charge to cover them.

But people's attitudes can change over time - blocks with pools and gyms could become more popular, meaning it increases in value more than other properties. Or they could become less popular, meaning it doesn't do as well as other properties.

Do you know if other blocks nearby with similar facilities have a higher or lower service charge?


Also, I guess pools need major refurbishment periodically - maybe new water heaters, new tiling, re-grouting. So there might be a big bill every 10 years, or whatever.  If the refurb costs turn out to be really high, pools might go out of favour, with buyers avoiding them because of the cost. Who knows?

RelievedSheff

Just a note to say that the additional charges there are nothing to do with the flat being leasehold, they are paying for services provided. If you don't want to pay £2900pa  service charges then go and find a flat without a swimming pool, gym and communal areas.

Also worth bearing in mind that the mortgage company will include those charges in your affordability checks, so if you are already at the top end of your budget then the service charges may tip your affordability over the edge.

GentleGiant01

jayme_29 said:

I’m a first time buyer looking to purchase using help to buy in London and I’ve been looking at a 1 bed apartment which has a yearly service charge of £2900. The amenities do include a pool, gym, communal gardens etc but should I be concerned that it’s so high it would be put off potential buyers when I come to sell? The agent shared with me the latest service charge breakdown and it has increased 15% from 2021 to this year. Obviously I’m predicting this will probably be the same if not more next year with rising energy costs. The building is also a new build. 

If I was to purchase a parking space, there’s also an additional service charge of £385 p.a. 

It seems so crazy all these additional charges with leaseholds but I wouldn’t be able to buy on the open market in London. I’m also concerned that there is a lack of properties and high demand with H2B ending. It seems the market is moving so quickly with people purchasing off-plan, which I’m struggling to commit to. I have a good salary £60k, budget of around £500k and 5% deposit plus allowing for stamp duty. I work central London 3 days a week and WFH 2 days so I can look at any area, but want to find somewhere that’s still easily commutable at night and not isolated. Most often at weekends I’m in central London so buying further out doesn’t appeal to me yet, even though my money will stretch further. Ideally I’d like a 2 bed so I have wfh space but I’ve succumb to the fact that I’m going to have to find a 1 bed in a better location. 

Any guidance welcomed! 

Have you got a mortgage broker? 

a £500k budget with a 5% deposit on 60k per year is probably out of affordability for every lender. Even Habito only do 7x income which is £420k loan amount. 

bouicca21

When there is a downturn in the property market, one beds are less attractive and difficult to sell.  

Maybe you should rethink location? Look at journey times to whichever bit of central London you need to get to.  I’m out in south east London in zone 4, your budget would easily get a 2 bed round here and it’s only 25 minutes on the train to Victoria or
charing X.    My gym includes a pool (and a sauna) and costs half of that extra £150 you would be paying  in service charge.  I’d pay even less than  that if I joined the council leisure centre. The mega expensive David Lloyd gym would be about the same as your £150 but would give you way better facilities.

bouicca21

jayme_29 said:

My concern was the transport links at night from central London, having to make sure you catch the last trains etc. More so as I’m in the office 3 days a week, i tend to make plans/socialise after work. Do you find it restrictive? I’ve been looking SW as the best location due to the Northern line but I know it’s more expensive than SE

I’m way beyond clubbing into  the small hours.  Public transport is fine for most parts of London for trips to the theatre and evenings out.  I have, on the odd occasion, taken a night bus.  I suspect that anywhere that has good daytime transport links will also have reasonable night time ones, but obviously you would have to check.  

And if you do start looking further out, make sure you check the area out.  This is not about crime rates, it’s about the sort of vibe that suits you.  Think about diversity, clubs and restaurants, the type of shops, green space, etc.  Personally I would hate being somewhere with acres and acres of suburban housing and little else.  Others would think it ideal.