Buying a studio flat?

GDB2222

"For new build properties there’s no track record for service charges. Are you sure that the figure you have been given is reasonably accurate?

New leasehold so this is in the contract."

 I am a bit confused by this. Are you saying service charges are fixed?

eddddy

snowqueen555 said:

....bills would be £925 and take up 50% of my take home pay. 

snowqueen555 said:

£925 is a pretty specific figure. How protected is that against increases? For example, interest rate rises?

For new build properties there’s no track record for service charges. Are you sure that the figure you have been given is reasonably accurate?

New leasehold so this is in the contract. I'm pretty good with budgeting, so I would have £900 left of which £400 will cover living expenses giving me £500+ left over each month.

I don't think your contract will say what your electricity bill, gas bill and water bill will be fixed (plus there's council tax).

Are you saying that your service charge will be fixed? (A few Housing Associations have fixed service charges, but it's very unusual.)


Or are you saying that the Service Charge is variable, but the builder is offering you an incentive by capping the service charge at £925 - maybe for the first year?

If so, you'll probably have to pay the full service charge in future years, so you should find out what the full uncapped charge is for the first year - and bear in mind that service charges are likely to increase in future years as the building gets older.

snowqueen555

eddddy said:

snowqueen555 said:

....bills would be £925 and take up 50% of my take home pay. 

snowqueen555 said:

£925 is a pretty specific figure. How protected is that against increases? For example, interest rate rises?

For new build properties there’s no track record for service charges. Are you sure that the figure you have been given is reasonably accurate?

New leasehold so this is in the contract. I'm pretty good with budgeting, so I would have £900 left of which £400 will cover living expenses giving me £500+ left over each month.

I don't think your contract will say what your electricity bill, gas bill and water bill will be fixed (plus there's council tax).

Are you saying that your service charge will be fixed? (A few Housing Associations have fixed service charges, but it's very unusual.)


Or are you saying that the Service Charge is variable, but the builder is offering you an incentive by capping the service charge at £925 - maybe for the first year?

If so, you'll probably have to pay the full service charge in future years, so you should find out what the full uncapped charge is for the first year - and bear in mind that service charges are likely to increase in future years as the building gets older.

Hi,

Service charges is another way to say management fees? They are fixed £83pm. They are always fixed, don't know if there is any confusion here? They can go up in time though, just like anything else.

I've budgeted energy, council tax, service charges, insurance, mortgage, internet, water all into the £925 figure, no-one has given me that figure.

snowqueen555

GDB2222 said:

"For new build properties there’s no track record for service charges. Are you sure that the figure you have been given is reasonably accurate?

New leasehold so this is in the contract."

 I am a bit confused by this. Are you saying service charges are fixed?

Yeah they are fixed, when are they ever not for leaseholds? I've never known them to be variable?

GDB2222

snowqueen555 said:

GDB2222 said:

"For new build properties there’s no track record for service charges. Are you sure that the figure you have been given is reasonably accurate?

New leasehold so this is in the contract."

 I am a bit confused by this. Are you saying service charges are fixed?

Yeah they are fixed, when are they ever not for leaseholds? I've never known them to be variable?

Service charges cover the cost of maintaining the block, together with any other services, such as maintaining the grounds and heating and lighting the corridors. As this is a new build, they have probably just put in a nominal figure for much of that.

It obviously helps with sales if they estimate the service charges on the low side initially. They may even absorb some of the costs within the marketing budget. Then, once all the flats are sold, the leaseholders pay all the costs.

Ground rent is £nil, I hope?

snowqueen555

GDB2222 said:

snowqueen555 said:

GDB2222 said:

"For new build properties there’s no track record for service charges. Are you sure that the figure you have been given is reasonably accurate?

New leasehold so this is in the contract."

 I am a bit confused by this. Are you saying service charges are fixed?

Yeah they are fixed, when are they ever not for leaseholds? I've never known them to be variable?

Service charges cover the cost of maintaining the block, together with any other services, such as maintaining the grounds and heating and lighting the corridors. As this is a new build, they have probably just put in a nominal figure for much of that.

It obviously helps with sales if they estimate the service charges on the low side initially. They may even absorb some of the costs within the marketing budget. Then, once all the flats are sold, the leaseholders pay all the costs.

Ground rent is £nil, I hope?

Yeah it is nil, ground isn't allowed anymore for any new leases. 

Yeah the quoted figure £83 should be good, if that changes during the conveyancing period it'll be picked up. 

I'm still not sure what I'm doing, probably need to give an answer early next week 🤦🏼‍♀️ 

My calculations have shown even if prices went down 20%  the corresponding rise in rates would make it more expensive in the short term.

I would ideally like a bigger flat but I've been waiting around for many years now, I am in my mid 30's, can I be waiting around for another 2-3 years hoping conditions get better?

GDB2222

Some companies parcelled out the leases to a subsidiary before the July deadline, so that they could get the ground rent in place.

 I don’t think that the conveyancing process will tell you anything about the long term service charges.

You seem pretty decided on this purchase, and I hope that it works out well for you.  

eddddy

ssnowqueen555 said:

Service charges is another way to say management fees? They are fixed £83pm. They are always fixed, don't know if there is any confusion here? They can go up in time though, just like anything else.

snowqueen555 said:

Yeah the quoted figure £83 should be good, if that changes during the conveyancing period it'll be picked up. 

I don't know if you're confused here?

Service charges comprise of things like:

• Management Fees
• + Buildings insurance
• + Communal electricity charges
• + Communal area maintenance and repairs (including cleaners, gardeners. 'handymen' etc)

So I don't know if you mean the management fee for the first year will be £83 per month, or the estimated service charge breaks down to £83 per month for the first year.

• If £83 is just the management fee, they'll be other service charges to pay

• If £83 is the estimated service charge per month, it may be an underestimate (or overestimate)  - so you might have to pay a chunk of money at the end of the year to cover a shortfall. 

(As GDB222 says, they may be purposely estimating low, to make the property seem good value - meaning you'll have a lot to pay at the end of the year.)

The conveyancing process won't really help you predict what service charges will be. You need to do your own assessment.


 

GDB2222

The OP has said on another thread that she has decided not to buy at the moment. 

kaych

Our service charge was less than £1000 when we first bought it (we bought 10 years ago). The management company has changed over the years. We now pay around £200 a month. This is not something you can control either. Personally I would not buy a flat in a large block (over 10 units) ever again, just because big building = lots of issues and maintenance cost. We have two lifts in the building and they keep breaking down in the past couple of years. Also there is a potential large cost to replace the eixsing fire system, we have been told it would cost around £200k...