Service charge question

DaveS23

I have just viewed a 2 bedroom flat 74sq meters in south east England with a service charge of around £2500 pa. The flat has a parking space , no garden and no gym or extra facilities . Does this seem too high ? 

propertyrental

Seems a lot.

What do the accounts show that money is being spent on?

bouicca21

Well, it’s substantially higher than mine for a 3 bed flat in suburban London.  My block doesn’t have a lift.  Lifts are expensive to maintain, is there one?  Look at the accounts to see just where the money is going.

diystarter7

DaveS23 said:

I have just viewed a 2 bedroom flat 74sq meters in south east England with a service charge of around £2500 pa. The flat has a parking space , no garden and no gym or extra facilities . Does this seem too high ? 

Hi

Many variables and from the ones we know of, if in London with parking, concierge, lifts, no its not high.

Look at similar places if poss in the same/similar location

Look at the history of service charges though that does not equate to what may happen in the future

An apartment block well looked after, security, cctv, door phone stems, nice plants etc etc soon adds up

Thanks

We town is it if you wish to share

eddddy

DaveS23 said:

I have just viewed a 2 bedroom flat 74sq meters in south east England with a service charge of around £2500 pa. The flat has a parking space , no garden and no gym or extra facilities . Does this seem too high ? 

Just to clarify how service charges work...

• All the bills for the year are added together to get a grand total.

• That grand total is then shared across all the flat owners (leaseholders). The lease will say what percentage of the grand total has to be paid by "your" flat.

The bills that make up the grand total will be for things like buildings insurance, maintenance and repairs, communal electricity, admin costs.

So maybe you need to find details of those bills, for example...

• How much was the buildings insurance bill?
• How much was spent on maintenance and repairs?  What type of maintenance and repairs were done?
• How much is likely to be spent on maintenance and repairs in future years? 

And maybe compare those numbers with other properties.


(And bear in mind that a modern block of flats might need a relatively small amount of maintenance and repairs each year. But an 'ornate' Victorian building might need lots of maintenance and repairs each year.) 

DaveS23

Thanks for all your responses . The flat is in Canterbury , no lift or concierge. It was a new build in 2011. I asked the estate agents and they advised there is no particular reason for the high charge other than ‘the possibility they have a healthy contingency fund’. There is also an ‘amenity charge’ of £200 and ground rent of around the same. How do I see the accounts when I am at the viewing stage (not yet made an offer) ?

propertyrental

DaveS23 said:

...... How do I see the accounts when I am at the viewing stage (not yet made an offer) ?

You can certainly ask the sellers, directly or via the agent, but they may not provide them. It is more usual for them to be provided via solicitors during the conveyancing process.

bouicca21

Could you clarify?  Is this amenity charge in addition to the £2500 service charge?  And do you mean that the ground rent is about £200?  I’d be asking the sellers about the accounts, and I’d ask to see the lease too or get it from the Land Registry.  I’d certainly be able to show you the service charge accounts for my flat.

A building that new surely doesn’t need a lot of expensive maintenance, though I do know someone whose flat was part of an area heating system and the management company were creating a huge sinking fund in anticipation of having to replace the boiler.

And is there an escalating clause for the ground rent?

NameUnavailable

DaveS23 said:

Thanks for all your responses . The flat is in Canterbury , no lift or concierge. It was a new build in 2011. I asked the estate agents and they advised there is no particular reason for the high charge other than ‘the possibility they have a healthy contingency fund’. There is also an ‘amenity charge’ of £200 and ground rent of around the same. How do I see the accounts when I am at the viewing stage (not yet made an offer) ?

The advice from the agent is useless. You need to know exactly why the service charge is that high, and from what you've said it does seem very high (essentially just normal stuff given there's no obvious money drains like gyms/lifts or porters).

Personally I think I'd be looking elsewhere.

LegallyLandlord

That seems like a huge amount and the problem is that it will only go up. If the development is 12 years old, the maintenance will start to go up.  You have no control over it.

 And there has been the recent scandal of the management companies taking kick backs from insurance companies.  Ask to see the minutes from the residents meetings. 

If you can at all afford it, do go for a freehold property. I had my fingers burned when my service charge went up from £1,400 to £2,500 for no particular reason in 2017. I since sold up. 

user1977

LegallyLandlord said:

If you can at all afford it, do go for a freehold property.

Why? Don't they have even fewer rights in relation to service charges?