Purchasing a leasehold with no service charge and ground rent

FTB_199395

Hi All,

We are FTB who recently had an offer accepted on a flat, however I am concerned with this being a leasehold. 

At first I thought the idea was brilliant, no service charge and ground rent but when thinking about this I am wondering if this all sounds too good to be true. I have spoken to estate agent to get more info on this and they advised, that due to the flat being upstairs of a converted house there is no communal areas there is no service charges, the only part we'd need to pay is the building insurance which were told verbally is £280 a year which would cover major issues such problems with the roof. Any small maintenance would be split 50/50 with the flat downstairs. They never went into details with this, other than advising the solicitor would go through this once they have have the management pack from the freeholder. The lease is over 150 years so there's no concerns there either.

I may be overthinking this because we stretched our budget and the vast majority of our savings will be going on this and the mortgage will be around 36% of our take home. So concerned we may get whacked with a huge bill later down the line for upkeep when we are trying to rebuild our savings.  On the otherhand, we love the flat and the location it's in. 

Has anyone else encountered a similar set up before? Does this sound like a major redflag? 

bryanb

Building insurance does NOT deal with maintenance issues..

Brambling

Building insurance will not cover wear and tear on the property, so i,m assuming it will be in the legal pack that the two flats will split any maintenance fees as and when they occur?  Are the bottom floor your freeholders?  The age of the property may give you a clue on what may start going wrong ie new roof . 

I would want to know what has been the previous costs over the last few years and do you have a say on who carries out any work on the property, I know the ex housing association flats here (4 in a block)  have no annual maintenance charge and therefore they had no emergency/slush fund and for one year they were wanting about 9k which included replacing the communal front door at 4K  the work was being carried out by the HA.  

user1977

There might not be any shared stairwell etc but there are still going to be communal parts of the building with responsibility for maintenance being shared (roof, structural walls, any shared service media etc). No service charge just means you'll be paying for things purely on an ad hoc basis. Not particularly unusual or something to run away from. But as above, don't listen to estate agent chat about the insurance paying for everything - it would only pay for e.g. storm damage to the roof, not normal wear and tear.