Service Charge, No Sinking Fund- Should I be worried?

Faradayadele

Please, I have been greatly disturbed and would need advice under a very short period of time. 

The flat we want to buy has 

1) £100 annual ground rent & £650 annual service charge. 

Q1? Is that fair amount on a one bedroom?

2) There is no sinking fund/Reserve. Though the last two years have a deficit of £1000 service charge in the account statement but the present service charge is still £650.

Am I thinking too much about the service charge and not having sinking funds. Property is 132,500 Chatham Kent.

3) Should service for leasehold be an issue if one even considers that with a Freehold, you get to take care of these things too (singlehandedly in most cases) even though at a fairly reasonable rate- you still have to pay service charge one way. 

I need your constructive objective analysis!

Yorkie1

How big is the block of flats?
Do you know when the roof or lifts (if any) were last replaced?

DullGreyGuy

Faradayadele said:

Please, I have been greatly disturbed and would need advice under a very short period of time. 

The flat we want to buy has 

1) £100 annual ground rent & £650 annual service charge. 

Q1? Is that fair amount on a one bedroom?

2) There is no sinking fund/Reserve. Though the last two years have a deficit of £1000 service charge in the account statement but the present service charge is still £650.

Am I thinking too much about the service charge and not having sinking funds. Property is 132,500 Chatham Kent.

3) Should service for leasehold be an issue if one even considers that with a Freehold, you get to take care of these things too (singlehandedly in most cases) even though at a fairly reasonable rate- you still have to pay service charge one way. 

I need your constructive objective analysis!

1) Ground rent is whatever it is. Service charge depends on what's included, size of the development, apportionment. In our building 1 or 2 bed you pay the same charge, in our last building it depended on the size of each flat in sq m. Our current flat is about £2,400 and the last flat was £8,500 but the had concierge, swimming pool, 16 lifts and were building a reserve for the issue mentioned in 2 below.

2) Just means you will get a very big bill if the roof needs a lot of work or the lifts need replacing. It does make buying/selling easier though as some try to claim credit for what they've paid into but not used of a sink fund. The prior building was on the cusp of needing new roof and all the windows changing, the quote for the scaffolding alone was over £1m 6 years ago

3) The service charge is predominately the freeholder passing back the cost of what they have to do like lighting in the communal areas, insurance, cleaning, gardening etc. As long as there is a decent lease and the freeholder/agent follows the rules almost nothing is paid by the freeholder themselves

Age of the building, what the communal items are etc all make a difference to what the service charge is now and what is likely to happen to it as time goes on. Lifts all need major works at time, same with roofs, swimming pools etc etc