Services charges on an over 55's flat

Thomas_Holding

https://forums.moneysavingexpert.com/discussion/comment/81986819#Comment_81986819

Fortunately their is 24 years old, so hopefully the vendors have lost this money not them. Personally I would rather get a stairlift in my house if I couldn't get up the stairs than buy one of these.

gm0

https://forums.moneysavingexpert.com/discussion/comment/81986914#Comment_81986914

What matters is the lease. And how the "running costs". (this year, heat, light, cut the grass) and "fixing stuff long term - roofs, lifts etc. Are handled. Some have a low service charge. But they will drop big bills on all leaseholders randomly in a given year. Some have a high service charge and a sinking fund builds up over 20 years + so that the lift replacement bill isn't crippling in a single year. Retirement leases can sometimes roll up a liability - particularly for sinking fund / medium term costs element. So this is not paid along the way (which suits retirees on fixed incomes - actually). And IS paid when they die and the lease is sold on as a capital contribution of x% per year of occupation. As others have said - these flats are hard to sell with age and "retirement only" leases. And not worth what an unencumbered one is worth. And heirs/relatives tend to not like the difference between buy and sell price and then the sting in the tail from the lease of deferred (but real) costs. Yes there is profit. Developers have done well out of these and can as others say afford expensive marketing.

As a method to have a suitable environment in declining years - at the cost of some capital - with known - from the lease obligations (revenue or capital). They have a place. But a strong strong dose of caveat emptor

Family member has a "normal" flat with a high service charge at 26-30 years old. It's normal. A development of 20 or 40 or 60 has different economics on splitting the bill - blocks/lifts/gates/car parking etc. etc.

I would not buy one of these personally and cannot foresee circumstances where I will change my view.

I) for communal - someone else controls this. And with an external freeholder (not a share of freehold democracy (with it's own issues) you don't control the cycle of repair. Usually people are angry that it's not often enough and others are angry that it's too often. Go figure.

ii) a managing agent can shop around and any with integrity will (shop around for capital works - to a short list of suitable - and insured contractors. No "uncle ted uninsured working innappropriately at heights and falling on granny sarah" - that cost saving is off the table. And they tend to have pet contractors for the sites they manage. As you would - if you were them. As hiring a random can just bite them even more than usual. Construction project management is not in the freehold managing agent skill set. Perhaps it should be. But then the management fee would likely increase. So there is that. You are correct though. Defensible quote process. Job happens. Is their incentive. Not seeking lowest possible cost for leaseholders.

Thomas_Holding

https://forums.moneysavingexpert.com/discussion/comment/81986934#Comment_81986934

Thanks for that. In theory a company that has lots of leaseholders should have knowledge about finding reliable tradesmen because they do it often and get lower prices.

In practice I fear this does not always happen.

Albermarle

https://forums.moneysavingexpert.com/discussion/comment/81986916#Comment_81986916

The fact that it is not new is a definite advantage from a sale price point of view. As others have said regarding the service charges, a careful study of the small print of the lease is needed.

Bigphil1474

If you search on here you will find some horror stories about these sorts of places ,particularly resale on deceased people's properties. Estates have to continue to pay the fees even while probate is being carried out, and then can take a long time to sell on top of that. If the buyer isn't too bothered about leaving anything to their family, not so much a problem. I did have an Auntie who had one down south and fortunately the solicitor managed to sell it without too much of a loss.

TroubledTarts

Service charges just seem like the biggest con these days.

Thomas_Holding

https://forums.moneysavingexpert.com/discussion/comment/81987288#Comment_81987288

That is very true.

Thomas_Holding

Actually I think shared ownership is even worse.

I heard on a BBC programme about a policeman who had a 50/50 flat in Croydon (in the past a policeman could afford the luxury of a flat in Croydon).

He wanted to buy the other half when he retired so he would stop paying rent (because his income was dropped) - they asked for £x - which he didn't have.

So he tried to sell it and had to settle for less than £x.

With that £x he couldn't buy anything in London and had to retire to Blackpool I'm sure a lovely place but he had an elderly mum in London.

MyRealNameToo

Irrespective if its retirement or normal leasehold you need to understand the service charge and how it's shared. Some every unit pays an equal share, some every unit pays a share proportional to the size of the unit, some can have more complex rules.

Many people dont read it and then get annoyed when it bites, for example we have a lift in the building but our entrance is on the ground floor and the carpark is also ground so I will never use the lift but I still pay 1/34 of its running and maintenance cost and in the future, its replacement. Another poster here recently complained they were being asked to contribute to the lift(s) on the estate despite their building not having any lifts.

There can be different strategies too… our old place was having ever increasing bills for fixing the roof, it probably really needs replacing along with all the windows but the quote for the scaffolding lone was over £1m. They have by far the highest service charge of the neighbourhood but they are building a sink fund in preparation for that and the 8-10 lifts that all need a major refits. Ours is a tiny percentage of theirs, in part thats because we dont have a 24/7 concierge nor the swimming pool but we also have almost no sink fund so we can get big bills some years when major works are needed.

Depending what facilities/services the retirement development offers you may be much more exposed to wage inflation or regulation changes than most leasehold properties. That said, many developments that previously didnt have staff now find themselves paying for a fire watchman… a block near us its just been introduced after the freeholder replaced the cladding on their building (at their own expense) to subsequently realise the newly issued fire certificate doesnt correspond to the changes they made.

You still have the protection that the fees must be reasonable with tribunals to challenge them but that doesnt mean they have to be the cheapest. Undoubtedly you can always find a cheaper builder etc but professional managing agents will typically have minimum standards and your mate doing something for cash in hand probably won't meet them.

Leasehold isnt all bad though… as the poster above said, in their freehold they can choose if and when they do stuff. That can be a problem if you are the neighbour of such a property and their run down property is causing you problems. In principle the freeholder can take certain measures to ensure the problems are fixed rather than leaving it to you to try and get your neighbour to do stuff.

Thomas_Holding

https://forums.moneysavingexpert.com/discussion/comment/81987823#Comment_81987823

As a former flat owner - flats have a bigger downside than houses. It is much harder for idiots in a row of terraces to flood their neighbours than in flats.

Happened to me.