Thoughts on a service charge that includes all electricity and gas useage WITHIN the flats?

t1redmonkey

Just looking at various properties to view, saw one I liked and asked the estate agent what details they had on the lease.  So he mentioned it was £1800 service charge per year, which I thought was quite high, because it's basically just a converted house, no gym/elevators or any extra facilities.  Then he mentioned it covers all electricity and gas as well.  I obviously thought he meant the communal areas, but then he said no it's the gas and electricity usage across all the flats in the building because they never separated out the meters (there's about 10 flats in total I believe).

Not sure how I feel about this, on the one hand I guess it's good in that you don't worry about your usage at all, but I think in reality what would end up happening is the leaseholder would adjust the following year's service charge if everyone goes crazy with their usage, so you probably wouldn't see much benefit there.  The other thing is that the flat I was looking at, I think is probably the smallest one in the building, so theoretically you should have low heating bills for it because it's a smaller space to heat.  But that isn't reflected in the flat fee that's being charged.

Would this be a massive red flag to you if you were viewing a leasehold flat that contained this within the service charge?  Or would it be a good thing in your eyes? 

Slithery

I wouldn't want my energy payments to be dependant on anyone else's usage.

eddddy

t1redmonkey said:

But that isn't reflected in the flat fee that's being charged.

Are you sure it's a flat fee? That would be very, very unusual for a leasehold flat's service charge (Unless perhaps it's a social housing landlord.)

Normally, you pay an estimated service charge in advance - and then there's an adjustment at the end of the year.

So if everyone uses more gas and electricity than expected and/or the price of gas and electricity goes up more than expected - you'll have a shortfall to pay at the end of the year.

macman

Converting to 10 flats but not separating out and metering the individual properties smacks of a horribly cheapskate conversion. What else might they have bodged?

t1redmonkey

True, I'll probably not bother with it.

HampshireH

It will only be a hassle later down the line 

£1800 to include the gas and elec now but prices have just doubled so who covers that cost? And again when they go up next time?

If you don't walk away make sure your lease is very specific covering exactly what's payable 

TripleH

What happens when prices fall? Will the responsible party bother to shop around for the best deal?

We lived in a block where only 1 supplier was available for electricity. They proved the inefficiencies of a monopoly. 8 months in they realised they had undercharged / messed up meter readings so sought to try and recover the underpayments from tenants. Problem is the building provided 6 month rentals so a good number of people had moved on and those who had moved into their flats were chased for amounts they didn't owe.