How high service charges work out for buyers of leasehold

RHemmings

propertyrental said:

RHemmings said:

propertyrental said:

You are missing the point. Whether a service charge is 'reasonable' or not depends on the service being provided.

£1300 pa might be unreasonably cheap if maintenance work is being left undone.

£4 or 5 or 6000 pa might be reasonable if the building is old/needs repairrs and/or has shared facilities as explained above.

My last house was a freehold, 1851 building which required constant repairs. Was expensive to insure, and had a big garden so I employed a gardener.  I easily spent £2K pa.  And any one off major costs of improvements (eg (eg roof)I added elecrtic doors to the garage) or repairs were mine and mine alone.  No one to shatre the costs with. Plus I had all the responsibility and hassle of managing contractors (nightmare!) myself.

But, this 'point' is exactly the question in my OP. I'd like to hear from people for whom the £5000 or so was reasonable and why it was reasonable. If, e.g., there was a gardener covered and that was something they wanted and otherwise would have paid for (as you did), then that's the kind of thing I was asking for in my OP. 

I'm aware that freeholders such as myself have to pay for repairs such as roofs. 

I don't see how this is helpful.

When considering a particular leasehold flat, look at

* the average service charge over the last few years

* what the annual accounts show it was spent on

* what facilities the building has

and then decide if you think it's reasonable, and either buy, or don't.

Other people's experiences are subjective. Only you can decide what is 'reasonable' (and hence acceptable) to you.

But, in this case, I wanted to hear about the subjective experiences of other people. That's exactly why I posted my OP. 

El_Torro said:

I live in a 1 bedroom flat. The communal spaces have no communal garden to speak of, no concierge, no gym, etc... Yet I am paying roughly £3k a year in service charges. This £3k does include the water bill, plus all the other things that one would expect to be included in a service charge. The lifts need to be maintained, the cleaners for the communal areas paid for, the building insurance covered, etc...

Ultimately I am happy living in a flat. There is less to worry about and owning a 1 bedroom flat means my mortgage payments are lower than if I had bought a house. 

I'm not sure if this answers your question, mainly because I'm not too sure what your question is. There are pros and cons to leasehold vs freehold. You can look at it by comparing leasehold service charges to freehold maintenance costs. These are not the only factors at play here though. Especially if you are comparing living in a block of flats to living in a terraced (or semi detached, or detached...) house.

Yes, this does answer my question. I just wanted to hear of other people's experiences, and you have told me of your experience. Given what I've seen, I would personally categorise £3k per year in the 'moderate' service charge category. Though, including the water bill is a bonus. 

In your post, you mention 'there is less to worry about'. Clearly you mention a lower mortgage as the property is cheaper. Would you include the maintenance being arranged and done by other people as part of what reduces the worry? And, do you feel that responsibility that would otherwise be on your shoulders is now handled by other people? 

bouicca21

Friend’s daughter has a flat with a £4K + service charge.  They get the usual stuff plus lift maintenance (for some reason modern lifts are incredibly unreliable), a concierge service, gym and a pool.  She thinks that’s fine.  I’d run a mile, very quickly.

GDB2222

bouicca21 said:

Friend’s daughter has a flat with a £4K + service charge.  They get the usual stuff plus lift maintenance (for some reason modern lifts are incredibly unreliable), a concierge service, gym and a pool.  She thinks that’s fine.  I’d run a mile, very quickly.

I also would not want to pay for a concierge service, but it may be useful for people out all day and working long hours. 

RHemmings

bouicca21 said:

Friend’s daughter has a flat with a £4K + service charge.  They get the usual stuff plus lift maintenance (for some reason modern lifts are incredibly unreliable), a concierge service, gym and a pool.  She thinks that’s fine.  I’d run a mile, very quickly.

Thanks. I have never lived anywhere with a concierge service. I don't know what they do apart from keep an eye on the front door. I would hope that they would sign for packages. If I was somewhere with a gym and a pool I would make considerable use of those. For me, it would be worth wildly approximately £40 a month for those, and that's £480 a year or more than 10% of the service charge just for that. 

El_Torro

RHemmings said:

In your post, you mention 'there is less to worry about'. Clearly you mention a lower mortgage as the property is cheaper. Would you include the maintenance being arranged and done by other people as part of what reduces the worry? And, do you feel that responsibility that would otherwise be on your shoulders is now handled by other people? 

Yes, I meant that if the roof needs fixing, or something else, it's up to the management company to sort out, rather than me. I still have to pay for it as part of the service charge of course, though I don't need to find tradesmen to get it done. 

BungalowBel

RHemmings said:

I agree with what is said above. And, I've seen properties where the service charge is say £1300 per year. And, that seems reasonable to me and not like paying rent. And, I know what the service charge is for.

But, when the service charge gets to £4000 per year, £5000 per year, £6000 per year. Then given my location that feels a bit more like paying rent to me personally. It's not paying a service charge in itself that I'm asking about. It's paying what looks to me to be a very high service charge. 

For the £9.5 million flat in central London, I guess the £60k would be chump change for someone who can afford that. And, they'd be looking for luxury in the services supplied. I'm more interested in hearing from someone more similar to me financially who has paid a relatively high (compared to others local to me) service charge, and what more they got for it. 

The service charge on my son's flat is around £1500 per year, There is a caretaker to look after the communal gardens, see to the rubbish disposal, organise repairs and there are cleaners for the communal parts.

On our BTL flat it is about the same.  The development doesn't have communal gardens but it does have a gated car park with allocated parking.

I think that is value for money personally.  

Couldn't tell you anything first hand about higher priced developments, except I know that the McCarthy and Stone ones are high but then you get a lot more for it.

RHemmings

One thing I thought of - for some people the concierge may help them feel safer. In some buildings with high service charges there may be 24/7 concierge service. So, for example, if someone follows them home at night, or harasses them outside the building, there is someone there. I'm not saying that the concierge would act as a bodyguard, but just there being another person there can help in some situations. 

dander

I think you're wildly undervaluing the gym and pool. You wouldn't even get membership of your local council leisure centre for that. Having those clean quality facilities in your building where you don't have to fit in around kids swimming lessons etc is more like a £140 value per month, if not more.

eddddy

FWIW, I was speaking with somebody who has a 9am to 5pm concierge for his block of flats. (A fairly prestigious block in central London.)

He was questioning the value. He said the only tangible benefit he could see was that the concierge accepted deliveries, and kept them safely.

But perhaps the intangible benefits include:

• Prestige - it might impress visitors that you have a concierge
• Deterring 'bad people' - it might put off intruders, vandals, mischief makers from trying to get into the block
• (And maybe they do minor helpful things like tell visitors where the lift or the stairs are.) 

But only between 9am and 5pm.

ThisIsWeird

Especially if it's an older property, then there's a good chance that part of that service charge will be placed in a sink fund to cover major repairs in the future - the roof, replacement windows, that sort of stuff.

Part of the purchasing process will be to find all that stuff out, to see what you will be contributing towards.

Once bought, you then keep an eye on the management co. to ensure they are seeking out the best value for such work.