Suspiciously low service charges for leasehold flat.

uberhero

Hello all,

I recently purchased a leasehold flat and I have found many red flags that my solicitor failed to warn me. When I piece it all together I get very disappointed and thinking I made the worst choice for a first time buyer.

1. It is a block of 8 flats that sit on top of a charity church
2. the service charges are only £375 per year (+ £300 insurance)
3. No sinking fund or evidence of service charges accounts
4. The managing agent is one person as opposed to a management company

My worry is that if there is an emergency repair (roof being the most usual) where is the freeholder gonna find the money. I don't mind paying but could it be that the freeholder has no maintenance/repair plans for the building at all? Has anyone been in similar situations?

anselld

There is only one place the Freeholder can find the money if needed.  That said, plenty of places are run on the basis of ad-hoc repairs and it can potentially work out cheaper than a management company who have to service thier own fee/profit structure on top of running the site.  It should be reasonably apparent what state of repair the building is in and if you are not sure get a detailed survey.  The freeholder would also need to follow the section20 consultation requirements for any significant works ( above £250 per unit) and you have some protection through the First Tier Tribunal.

AskAsk

A lot of flats are like this, where the repairs costs are paid as and when they happen without a sinking fund.  It means more uncertainly for the leaseholder but no different in a way to owning a freehold property, where maintenance costs are also unknown.

EssexHebridean

Doesn’t sound particularly unusual. As and when any major works are needed to be done, a section 20 notice will be issued to the leaseholders and the cost of the works then gets split between the properties, as a rule. You can be fairly sure that something of that type will come along at some stage too, so I would start now ensuring that you save up ready for that eventuality.