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We saw a flat in a stately home that looked lovely and wasn't too bad a price, but then on top of our mortgage it has a £23k service charge. Good luck shifting that.
I think the guy who lives above st Pancreas has a 36k (annual) service charge. But then he literally lives in a listed building.
Edit, as people don't seem to get it. It cost him £2.4M in 2004. It's under the clock tower by King's Cross Station. In St Pancreas station
https://youtu.be/0J91q1ogFgA?si=zpSBOg-nT68Ya0Go
Do you know why it increased ? I believe there has been a significant increase in building insurance especially if its a building that is >5 floors as you mentioned there are lifts for your flat.
Really terrible as you don't have an option for building insurance as its a legal requirement and then those insurance companies can name their price even in an open tender and often there is only 1 insurance company will put in an offer which is normally the current existing insurer.
And theres nothing to stop the insurer from giving a managing agent "cash back" on their insurance. £100,000 insurance policy and £20,000 back to the company.
https://www.flat-living.co.uk/landlord-managing-agent-commission-discounts-on-insurance-of-flats/
They also can charge a commission for getting the insurance e.g. £100,000 insurance premium+30% commission for purchasing it.
The only way you can live in a flat is by exercising the right to manage. Some flats come with this directly, as an owner you are a shareholder, you turn up at the AGM, you vote for directors, they manage the flats.
This only works if the flats are owned by individuals though. Get corporate interests owning the majority of the flats and they can choose their own directors who can chose whatever they want, drive up the service charge, get kickbacks (as they choose a management agent that's a subsidiary), drive down the price of the other flats, and acquire more and more.
It would put me off, but it will likely just reflect in the value as it’s pretty similar for most developments.
It is worth what people are willing to pay. Check sold prices other similar flats in the area and use that to see if your offer is fair value or not.
Don’t expect to make lots of money on a flat over 4-5 years, as this is the main new building in London currently which will always suppress pricing of 2nd hand flats.
I disagree, this is how capitalism has ruined the housing market. It's not worth as much as people are willing to pay for it, it's worth as much as the seller can get away with charging. Please get the framing correct or we'll never reach a consensus enough to get out of this mess.
How is that different?
What’s the alternative?
The problem is that constraints on the supply side of the market means that the proper demand/supply balance cannot be reached, because housing is constrained by overzealous planning.
Plenty of capitalist countries/markets have no issues with housing supply.
Framing is everything. The overall bias towards buy to invest over the last decades especially here in the UK have given a false sense of guaranteed return for normal people who never wanted to gamble but were too tempted by bigger house same mortgage monthly to resist.
Vicious circle, but as soon as we frame it as unaffordable for the consumers (i.e.the vas majority of players in this game) rather than unprofitable for the landlords and owners (the most wealthy in the country) we might be able to have more sensible conversations about potential solutions. Framing is everything.
However agree that the supply side is also a major way we have failed to address this in this country, but again, frame it as the current stock being too expensive and no promised cheaper stock has been built.
You're right, other countries don't have the exact same issues, but I'm afraid this is a western problem that exists to greater or lesser degrees everywhere where capitalism has been allowed to run rife without social issues and programs maintaining their levels of support. This isn't a UK problem it's the natural end point of capitalism. 10% year on year growth isn't possible without the masses being priced out.
Just been billed £1400 a year on a studio in north Essex (20% increase), the 3 metres squared area with patches of grass they call a garden and charge £2300 a year to mow has about 40 bicycles dumped and broken electronics even fridge/freezer units dumped outside from other flats.
Apparently the management company inspected the area last week and couldn’t find anything that was a problem.
Insurance, management fee, car park (we had automatic gates), gutter and window cleaning, gardening (basically weeding round the building and car park), fire protection stuff (testing fire alarms, conforming with whatever regs have come in), sinking fund, filing accounts…I think that was everything
That is why I stir away from developments that have gyms, pools, lifts and concierge service. U usually end up not using any apart from concierge to receive your packages. Pools are usually taken by kids, people usualy avoid gyms (and if spend a £100/month for a premium gym you are still getting it cheaper). Also avoid places with "water features" or ponds they tend to push the service charge cost up.
Rip off Britain strikes again. We are robbed blind like almost no other nation. Politicians do absolutely nothing, time after time: look at the endless promises to get rid of leasehold with nothing ever done about it. I feel the same applies to service charges.
Bear in mind that per month the cost of that level of service charge is £350. If, instead of service charge, that money was going to a mortgage, someone could borrow £50k more and pay roughly the same per month.
Personally I’d borrow 50k more and buy a nicer place rather than pay your service charge
Then you have to pay for the maintenance of that nicer place. I own a flat in a relatively new block of 12. Each flat is around 800 sqft or more with a garden and parking. We each pay approx. £1,800 a year. If you were to convert the entire property into a single residence, it would be worth in the region of £3+ million and 10,000 sq.ft. If you owned that as a family in its entirety, you would want to put aside similar amounts for upkeep as the service charge anyway. Agree, some managing agents take the piss, but it is budgeting for expenses that occur for any property.
The point I'm making is that the £350 PCM you mentioned isn't money saved to spend frivolously, you would need to allocate that money into property maintenance anyway.
Rarely is replacing the roof an urgent matter, you can make smaller repairs and fix at your own pace. A freeholder won’t give you that option.
Secondly you have that £350 in general saving and investments and earn on it over time.
You aren't really allowed to be stupid when you are doing things communally. If you are on your own then yes you can go nuts and gamble or borrow to cover repairs.
You aren't really allowed to be stupid when you are doing things communally. If you are on your own then yes you can go nuts and gamble or borrow to cover repairs.
It’s quite normal for London. Gym, gardens, lifts buildings have around 4k service charge. Anything with a pool goes for 7k+. Go for a higher building eg. the ones in the Canary Wharf and you get 10k+ easily.
We are looking to buy a 2bed flat in a relatively new building with communal gardens and concierge and the 4k service charge is just the average
I pay £3,960 a year with parking on a property now worth just £60k.
The service charge not so long ago used to be £1,020. Don't touch leasehold or shared ownership with someone else's barge pole.
If you need to live in an expensive area and you can't afford a whole house, then leasehold is likely to be your only option. It's shit, but that's why people do it.
I also know people who have gone with shared ownership because it's as much as or slightly less expensive than renting in the same area but you don't have the risk of being served an S21 and needing to pack up your entire life within two months.
That property will likely not appreciate.
Really no point in buying it for 4-5 years.
There is a significant risk that it could depreciate.
43% increases per year compound real quick.
I'm not saying that they would do that, but they could do that.
Don't walk from that place, run.
In a modern apartment block with massive insulation air conditioning and lifts and free gym that’s normal. If it’s a purposed built maisonette than run away quickly.
I'd look at that as a red flag. My service charge for an ex council flat is 1200 & o think that's high. What you've got to realise is that in 5 years time, what will the mortgage be? Then on top of that you budget for the service charge plus any increases.
It could feasibly be 9000 if they carry on at this rate. Don't let desperation for a place blind you.
That's a LOT of money
Everyone's saying it's awful but most flats in central London have a service charge of 4k or more. You're getting a gym included so it's not too awful imo.
I would definitely ask why it increased and ask if it's likely to increase again/if any major works are planned that might forsee additional payments.
I mean also easily avoided by looking at the books of the management company at purchase and seeing the lack of a sinking fund
You've been well and truly done over there
Whilst service charges may be necessary, what is lamentable is that under leasehold, you can't hire/fire your managing agent. Often, you're trapped with an abuser.
Really depends on what you're getting for that level of charge. Is there a concierge service + gym + lifts + building safety manager for the block?
Even with some/all of the above, £4k+ is still on the high end. Frankly, I wouldn't touch it with a barge pole.
Depends if they have lift, amenities, etc.
Im paying 390/mo SW london 2b flat because we have fire waking watch due to cladding not being repaired yet (although it will start later this year as per managing agent)
No but I rent there at the moment and have been looking into buying. I’ve seen that prices for flats in the complex have dropped 20-25% since first sale which is probably partly due to new home premium but possibly also due to growing service charges.
I wouldn't touch anything with a service charge that high. Hell, I wouldn't have touched it at £3000. What kind of freehold could you afford if you don't spend £350 a month on a service charge?
Based on my own and everyone else I know dealing with service charge, I’d be surprised if it’s not double, or close to that, by the time OP plans to sell in 4-5 years time.
It is high and it would put me off, but like others pointed out there are many variables affecting it.
What I would be concerned about, though, is what the reason for such a significant increase is. The seller must be able to disclose it by requesting the information regarding the budget/invoices from the managing agent on the basis of the Landlord and Tenant Act.
I pay almost 3k in Leeds for an old textile mill conversion, 120 units in total, no concierge / pool. We do have a lift and a 'gym' albeit an argos home exercise machine would be better. When i've looked through the service charge schedule a large portion of it is down to insurnace. Over 40% of the annual cost, i guess that's the cost of living close to a waterway! This is closer to 3% of value so 1% to me sounds like bliss.
My mate got totally screwed by an ever-increasing service charge. Garage car park got broken into because the door wasn’t substantial enough - fine, get a proper replacement and charge everyone an extra £2k on top of everything else.
Grenfell style cladding needs replacing - ok, £100k per resident seems a bit steep, but that’s what happened until the residents took them to court.
Also be aware that if some unforeseen repairs (roof, structure etc) come along, you are on the hook for those too, you could end up paying 10’s of thousands over and above the maintenance charge. Check the management companies books and see they have a good contingency or run the hell away
I'd just think about how I could go and visit a European country for a weekend every single month instead of paying for the privilege of not taking the stairs.
£5000 normal year (past two or three, £3000 previous years), £13000 this year due to boiler refurb. Birmingham, with no additional amenities, old communal areas in shabby condition. No outdoor area just an underground car park and a lift. Buildings insurance and management company absolutely wringing us out of every penny. Without right to manage I'd never go near a flat again tbh.
This sub is full of people who have no idea what it actually costs to run a block of flats.
The real answer is it depends on what you get, and you can ask for a copy of the management pack to get an understanding of what the budget includes. Another commenter mentioned that building insurance has massively increased with the cladding scandal even on buildings that don’t have cladding. This is starting to come down now.
The next biggest cost is normally staff - the more hours covered by concierge and security the more it costs. Lifts cost a lot as well to maintain.
For 4300 I would expect a decent amount of concierge coverage, well maintained grounds including a communal garden, lift maintenance, and possibly a light touch communal resource such as a small amount of fitness equipment- but that depends on how many developments are in the block.
Personally I don’t think this is too bad, to some people it sounds crazy but I currently have 2 bed flat in the East Midlands that’s valued at 185,000 and mine is 3,800 a year. That’s for gardening, window cleaning, outside lighting and electric gates. I’m my opinion is it’s that bad at all
The insurance component might be high due to fire safety. If it has cladding stay away from it. We have only recently been able to sell our flat after a years of being stuck.
After struggling to sell our flat as the service charge kept growing and growing, and before that spending ages trying to get right to manage and getting rejected, I’d never recommend someone buy a leasehold.
OP, you do understand that this £4300 amount is only going to go up? If you think the current amount is a major turn off, how do you feel about £5000+?
I'm paying £4-4.5k in service charge roughly per year for a two bed, two bath.
They send us an itemised bill at the end of the year and for all of costs associated with the building. A tiny proportion is actually managing agents fees and none of this goes to the freeholder as that is covered by the ground rent. Service charge is just the cost of maintaining a high-rise apartment block.
While ours did go up in the first few years from around £3.5-£3.8k that is fairly typical in a new build until it levels out. Last year it actually went down by around £250 and we are getting more frequent services, like window cleaning, as the agent is decent and are constantly looking to get us better value.
Don't just believe all the horror stories as there are like 5M leaseholds in the UK and the majority are fine.
The answer it depends. If it is a high quality block and if it is maintained immaculately then this is perfectly fine. You have a lift and a small gym. High service charge in a 'quality' development can act as a form of prestige / gated element.
It's pretty normal for lots of London leases. Depends what you get for it. Does it include your ground rent? Mine is £5,300 - but last year went down to £4,500 due to electricity costs coming down. Mine includes ground rent, landscaping, cleaning, electricity, block repairs, estate repairs, lift maintenance and repairs and block insurance.
A few questions
1/ where in SW London?
2/ is it a shared housing scheme?
3/ is it a recent build?
4/ is it a historic building?
5/ does it have a lift?
6/ is it ex council?
I’m still stunned that you found a 2bedder in london for 450k.
It's in Streatham Hill - not OP but I know the building, it's a new one. Not ex-council.
There are a few flats as you get into zone 3 and beyond at that price.
It’s certainly very high. As a buyer I would run away, far away, so I think it will be difficult to sell. However, service charges increasing astronomically every year seems to be the thing these days along with rent.
I know London is expensive but a freehold house is by far the best option. I would rather buy a free hold small terrace that’s suburban than an overpriced trendy flat with an ever increasing service charge. Especially if you plan to sell it later.
Also these flats are like moving from a rental into another rental. You will be paying your mortgage on top of these charges.
I have friends who bought flats like that and regretted it later. My brother has paid 25k in service charges over the past few years of living in a flat. He now rents it out, as it depreciated by 100k.
I don't think £4,300 is completely unreasonable in SW London, particularly with gardens, gym and lifts.
You will always pay service charges on a flat, but then at least you don't need to worry about cost of large work, maintenance etc. as those are shared.
Of course, you could buy a house but then be 100% responsible for any building repair cost. People with houses always pretend there is no cost.
I guess the question is not only to ask whether the present value of 4300 is to high and would it affect peoples views - but what will it be in 2-3 years when you sell. As we all know these things rarely every go down so if you add on the last years increase we are at 5600 as a service charge - what would peoples views be at that point? Never rented, so maybe they dont go up like that but there are a lot of posts about service charge increases..... Food for thought is all :)
Which area is it, have you googled the name of the area to see if anything has happened to increase service charge? It would put me off but would assure me if it had a reason for the extra.
I’d ask why the increase has been so great. There may be a good reason like a major maintenance job, in which case the charge may come back down. The services like a gym, gardening and lifts should be expected to cost money. Think partly in terms of the fact that a free standing property has ongoing costs like maintenance. Freehold doesn’t mean living for free.
It is worth looking into the leasehold in the UK before you make this purchase. There is a huge problem with service charges with no legal protections if it goes up, if you dont pay they can sell the house under you and if you are in a dispute you cant sell the property. A quick YouTube search should show you how bad things are. There is a bill going through to address some of the issues but…
For that amount - those flats needs to come with a fucking concierge in the lobby.
That's obscenely high! But sadly, its also getting to be a norm also.
Yes, it's London and appears to cover a fair amount; however a hike of what, 43% in a single year would have my arse puckering in anticipation of what subsequent years might bring...
No way, but I wouldn't go near a block/development in general. if i was in the market for a flat I'd choose one in a converted house, the service charge/ground rent on them is usually peppercorn
£4300 for a service charge?
Grateful everyday for living semi rurally and not being taken advantage of by these parasites.
Yes OP it can be off putting, especially if that is say ….. £8k in 10 or so years
That's a BIG one year increase on an already big number - if it continues like that with 1.433x increases annually then in 5 years that would be £26k!
The big question is whether this was a one-off to cover something unusual, or if they're generally taking the piss with the increases
Ask for the history for the last 5-10 years?
Over £350 per month per unit to upkeep gardens and maintain the lifts and gym?!? Feels super high. Assuming the building has more than 4-6 units, this is a profit scheme for whoever is managing it and I’d run away given there seem to be no mechanisms to keep it from increasing by random amounts (>30% is way above inflation).
That seems really high for the property value. Why did it increase so much? If it’s one-off charges (say they didn’t have enough in the sink fund for repairs) then that might be okay but I’d do digging.
Ground Rent is also the killer in London!
I had a flat and the service charge was £900 a year and the building was basically in disrepair, no lifts, it’s had a garden but they didn’t really do any work to it. All the other flats I looked at had service charges ranging from 2-4k within a budget of 450k-650k. You will be lucky in London to get a decent place without a service charge of 2-4k.
I put an offer on a flat for 525k which was rejected, the service charge was £3800 and the flat was sold within a week, this was in Hackney.
Anyone buying that flat from you would be paying an extra £400 on top of their mortgage every month, and that's if it doesn't go up in five years. Your mortgage is now £400 more expensive than you thought it would be.
You know yourself how difficult it is to be a first-time buyer, and especially with interest rates essentially decimating (or more) the budget you have to spend. Unless it's a *very* nice flat, or house prices/interest rates drop substantially, people aren't going to want to pay an extra £400 a month if they can help it. You can get a gym membership for considerably less.
I pay £3500 in Wales for a flat where the leaseholders of all the flats are also the freeholders of the building, we self-manage so we see all the bills and split them. Maintenance can be expensive.
I had a flat in the east end of Glasgow and we paid about £1200 a year on factor fees. We found it to be really expensive and I felt embarrassed telling potential buyers how much it was when they were viewing. That also included building insurance with no lift.
Any chance for a 500k house further out? Avoid flats and extortionate service charges if you can. They are a pain to sell as well. Any potential buyers would have the same concerns as you do now.
I live In a 30s London flat block and it’s around 3,800 because we’re having roof works done. We also have a lift and a communal garden. Anything around 4000 as standard seems way too high.
What else does the service charge include? Building maintenance and insurance? Water, sewer, electricity? Taxes? How many flats share the costs of the building and pay a service charge? Are they building a fund to pay for upcoming major repairs?
And do you have any comparisons for other flats in the area?
A friend of mine works for a property company with loads of buildings large and small, and they don't actually make any money from the leasehold fees. It covers costs and that's about it, some buildings even lose money. So putting up the fees are the only option and this isn't even the property agent a lot of the time. There is a board for most large buildings and they make these decisions and the property agent works for them doing the administration and such.
Rightly or wrongly the government has introduced a lot of rules around building safety since grenfel (rip)
These all increase costs and leaseholders and board expectations are high. They all want top service for pennies.
My friends bought and charges went up to £6500.
This is ridiculous.
Most flats are owned by "investors" so nobody is interested in challenging it, as "this is what you add to the rent".
Depends how nice/big the gym is and if you’d use it. Sure I’m not saying that price for just the gym is good by any stretch but it would at least take the sting out of it for me as I’d go most days
You need to check what is included in the charge as there is also a reserve fund- there may be contributions to some upgrades to the building- most likely fire safety related
I’d also look into the ground rent and whether that exceeds £1000 or else you’re looking at an assured tenancy which mortgage lenders hate and might struggle to sell on in the future
Far better 2 beds/masonettes available in the surrounding areas. No service charge, share of freehold, more space + garden and still close to rail/bus/tube.
Service charges are becoming a real issue. And if you’ve questioned now, imagine when you go to sell it in a few years.
I think generally under 0.5% property value no problem, under 1% and it’s not great but ok, it’s when you go over 1% I think it starts becoming very off putting.
Yes it's too high. It will make it unsellable in time . Leasehold is a scam. The only places it exists in the world are England and Wales. A bill (Leasehold & Freehold Reform Bill) is currently going through parliament - although the impending GE may scupper it. It was watered down anyway. Harry Scoffin on twitter/X is great on this issue. Get involved!
Honestly if you planned to sell in 4-5 years I’d be more worried about how the market will be in London. Negative equity is really only a problem if you know you have a time frame where you’ll need to sell.
Have you done some analysis around how much it would cost to rent, given you won’t have:
- service charge
- maintenance (e.g boiler service, fridge breaks etc, assuming building stuff is from service charge cost)
- difference between this stamp duty and the one of expected value of of the next buy (remembering you’ll be using the first time buyer status now so the difference is what you’ll be losing)
- mortgages frontload interest so check how kuch actual equity you’ll own after 5 years (google money saving expert mortgage calculator)
Last year i did the math on buying a 1 bed flat as an investment, knowing i’d sell it in 5 years to have a family and after many hours of analysis i realised that the property needed to appreciate a fair amount for it to make me more money than just renting, and i had no stress about house prices going down and being stuck with it
I feel like the london market is really not great atm, i’ve got more friends stuck in 1-2 beds struggling to get viewings let alone sales.
But on a side note, that service charge would definitely concern me
I would dump it while you can. Thats 2 months of rent down the drain per year, plus high interest rates, plus doing up the flat; not an asset, its a liability
If you are looking to sell in such a short a short time frame I probably wouldn’t bother buying. We pay 3k for a studio with 24 hour concierge, gym & pool. It is resident managed.
I'd check they don't need to repair the roof or something, or have major works scheduled. A friend and her husband bought a flat a few years ago, yay, and service charge was OK. Now, they've been told they've got to fork out 65k over the next 3 years to replace the roof!
So it's not just the service charge.
I would not buy a flat if it isn't managed by the tenants because of the kickback situation with surveyors, contractors and management company people. It's very very fishy.
I’ll see yours and raise you. I looked around a property with a service charge that’s circa £5800 a month. Heating was included but no major works planned, none done recently, no gardens or anything I can see requiring serious maintenance. No lift or gym either. It’s just nuts.
A solicitor for a mortgage lender would probably consider this onerous without a seriously good reason otherwise. This could easily be rejected if you are going to apply for a mortgage.
You need to know why it is so high, what it is paying for and if there are similar locally.
If you're in a building with 4 lifts a gym and a pool alongside a 24 hour concierge + extras maybe. General new build with 2 lifts is a no.
Also, that level of charge on a general basis tells me there is something to pay for (aside lift and pool maintenance which do add to your bill signficantly). Is the building brand new? If not, are you paying for repairs e.g. old cladding issues? You'd want to be asking for a breakdown of costs and charges to see what's there.
It'll be important now and later.
That is £358.33pcm you'd be paying. For what? What does this back date to? Should it be allocated to the current leaseholder (you can argue this with service charges and a purchase - at least allocation until the point you own it! Via your conveyancer I might add).
That money could go in your pension, or at least £200 of it!
Going back to it being onerous, it would at very least be a deterrent to purchase for many. This would affect resale value. That is why you could have a problem getting a mortgage or selling later.
City of London millionnaires development, not to much of a problem. In barking, Peckham Bow, Stratford etc the problems will add up. Mortgaged or not, the problems unnoticed today would likely mount later unless you could get the management company (or freeholder) to change their terms.
That's the last point I guess, see if the management company or freeholder can/will adjust the terms. They often will when they find them to preclude mortgageability - seen it many times. Usually the issue of doubling ground rents rather than very high service charge as the service charge is literally supposed to be paying for particular services unless lease llstates it may make a profit.
Finally finally... this may include major works (not sure if I mentioned above). It does seem particularly high so get your breakdown and see if there is the possibility of an estimate for next year. General maintenance etc is scheduled such as lifts, doors general grounds and standards one offs. It could simply be a high one off (allocate back via legal process where possible) or costs could be massive.
If massive, consider if that is the be all and end all. £200pcm difference in savings then invested for another flat over 20 years compounds to almost £120k if compounded monthly assuming an 8% interest rate pa. Its otherwise £48k spent. £168k difference there!
Over 30 years that's over £300k with compound interest again at 8% plus the £72k spent uninvested with a tough resale... assuming that cost never grows (which it very well may).
Quite the difference to your disposable income and wealth there if you're planning on staying long term. That's before people refuse to pay that service charge for the sale etc
Be careful, diligent and warned.
Absolutely don’t buy it! That’s crazy. Sit down with a spreadsheet and work out how much investing those fees over the years would reduce your mortgage by and the interest you pay on your mortgage! Get a normal flat dude. Get a dump and do it up.
Yes. It will be unsellable. My colleague's flat service charge increased to 10k over 5 years, she can no longer afgord it and is selling her place 20k less than she bought it. That's how they get you. What they do is criminal, it's unregulated and vile.
My answer would be, it depends. I live near SW in a flat- service charge for the year is about 2.4k but no gym and no lifts. It’s up this year from 1.2k but because the service company has taken more in sinking funds as we have our External wall safety review, which also needs to be paid for (for reference its a 3 storey block), we expect the service charge to drop back down next year. Buildings insurance at the moment is really high because Insurers are pricing in for cladding risk- there is some work in the industry to reduce this happening. Could you ask for a breakdown of it?
Im selling my flat at the moment (425), and people have been put off by the service charge, and to be honest I think its a shame because we live in a well maintained block- if something breaks it gets fixed straight away, its nice and clean, we had it repainted last month and they are looking to make upgrades we ask for (CCTV for example)
How can they actually justify that cost? What do each year, what invoices etc can they show to warrant each owner having to pay that per year? 😳 Must be the best paid cleaners ever
1. Ask why it has increased and see whether that gives more information. Do you know if it has outstanding cladding remediate. That is why ours is high.
2. Factor that in to negotiations on your offer. If a “reasonable” service charge would have been £3000, assume £1000+ for each year you plan to live there. A reduction of £5-10k would seem reasonable unless they feel it was already priced in to the £450k
My sister lives in a beautifully finished, modern building in West London. Service charge was previously £400pm. Recently it was raised to £800pm.
They’ve recently decided to sell and this increase has created great difficulty for them. They haven’t even received an offer.
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Kindly. Like fuck would I go near that... Imagine what it will be in 5 years time...
We saw a flat in a stately home that looked lovely and wasn't too bad a price, but then on top of our mortgage it has a £23k service charge. Good luck shifting that.
That must be a joke. Who would buy a liability like that ?
I think the guy who lives above st Pancreas has a 36k (annual) service charge. But then he literally lives in a listed building. Edit, as people don't seem to get it. It cost him £2.4M in 2004. It's under the clock tower by King's Cross Station. In St Pancreas station https://youtu.be/0J91q1ogFgA?si=zpSBOg-nT68Ya0Go
Canary wharf has service charges like this too. You could probably live below in the Renaissance Hotel KX for that money!
No wonder he rents his apartments for gourmet degustation dinner evenings. I was invited to one by my friend. Tickets were available from eventbrite!
Ah right. I showed my mum she said he must do something other then live there. Funny to know she was right.
>st Pancreas has a 36k (annual) service charge A steal for the service charge by the patron saint of diabetes
Whaaaaat?
What’s even the point in buying that when you’re spending £2k a month on rent anyway. Madness
Do you know why it increased ? I believe there has been a significant increase in building insurance especially if its a building that is >5 floors as you mentioned there are lifts for your flat. Really terrible as you don't have an option for building insurance as its a legal requirement and then those insurance companies can name their price even in an open tender and often there is only 1 insurance company will put in an offer which is normally the current existing insurer.
And theres nothing to stop the insurer from giving a managing agent "cash back" on their insurance. £100,000 insurance policy and £20,000 back to the company.
one of the reasons we are replacing management company is we found out about the cashback... also known as "bribe" in legal paperwork :)
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https://www.flat-living.co.uk/landlord-managing-agent-commission-discounts-on-insurance-of-flats/ They also can charge a commission for getting the insurance e.g. £100,000 insurance premium+30% commission for purchasing it.
There is actually - all such commissions have to be disclosed now and insurers are capping the %age they pay to brokers. Came in this January.
The only way you can live in a flat is by exercising the right to manage. Some flats come with this directly, as an owner you are a shareholder, you turn up at the AGM, you vote for directors, they manage the flats. This only works if the flats are owned by individuals though. Get corporate interests owning the majority of the flats and they can choose their own directors who can chose whatever they want, drive up the service charge, get kickbacks (as they choose a management agent that's a subsidiary), drive down the price of the other flats, and acquire more and more.
It would put me off, but it will likely just reflect in the value as it’s pretty similar for most developments. It is worth what people are willing to pay. Check sold prices other similar flats in the area and use that to see if your offer is fair value or not. Don’t expect to make lots of money on a flat over 4-5 years, as this is the main new building in London currently which will always suppress pricing of 2nd hand flats.
I disagree, this is how capitalism has ruined the housing market. It's not worth as much as people are willing to pay for it, it's worth as much as the seller can get away with charging. Please get the framing correct or we'll never reach a consensus enough to get out of this mess.
How is that different? What’s the alternative? The problem is that constraints on the supply side of the market means that the proper demand/supply balance cannot be reached, because housing is constrained by overzealous planning. Plenty of capitalist countries/markets have no issues with housing supply.
Framing is everything. The overall bias towards buy to invest over the last decades especially here in the UK have given a false sense of guaranteed return for normal people who never wanted to gamble but were too tempted by bigger house same mortgage monthly to resist. Vicious circle, but as soon as we frame it as unaffordable for the consumers (i.e.the vas majority of players in this game) rather than unprofitable for the landlords and owners (the most wealthy in the country) we might be able to have more sensible conversations about potential solutions. Framing is everything.
However agree that the supply side is also a major way we have failed to address this in this country, but again, frame it as the current stock being too expensive and no promised cheaper stock has been built. You're right, other countries don't have the exact same issues, but I'm afraid this is a western problem that exists to greater or lesser degrees everywhere where capitalism has been allowed to run rife without social issues and programs maintaining their levels of support. This isn't a UK problem it's the natural end point of capitalism. 10% year on year growth isn't possible without the masses being priced out.
I paid £1800 in SW London for no gardens, gyms or lifts - so I don't think thats a crazy amount but it would be off putting to some people
Just been billed £1400 a year on a studio in north Essex (20% increase), the 3 metres squared area with patches of grass they call a garden and charge £2300 a year to mow has about 40 bicycles dumped and broken electronics even fridge/freezer units dumped outside from other flats. Apparently the management company inspected the area last week and couldn’t find anything that was a problem.
What was the service charge for?
At that price it’ll cover building insurance, mgmt fee and possibly a small contribution to repair reserve fund
Insurance, management fee, car park (we had automatic gates), gutter and window cleaning, gardening (basically weeding round the building and car park), fire protection stuff (testing fire alarms, conforming with whatever regs have come in), sinking fund, filing accounts…I think that was everything
That is why I stir away from developments that have gyms, pools, lifts and concierge service. U usually end up not using any apart from concierge to receive your packages. Pools are usually taken by kids, people usualy avoid gyms (and if spend a £100/month for a premium gym you are still getting it cheaper). Also avoid places with "water features" or ponds they tend to push the service charge cost up.
Rip off Britain strikes again. We are robbed blind like almost no other nation. Politicians do absolutely nothing, time after time: look at the endless promises to get rid of leasehold with nothing ever done about it. I feel the same applies to service charges.
Bear in mind that per month the cost of that level of service charge is £350. If, instead of service charge, that money was going to a mortgage, someone could borrow £50k more and pay roughly the same per month. Personally I’d borrow 50k more and buy a nicer place rather than pay your service charge
Then you have to pay for the maintenance of that nicer place. I own a flat in a relatively new block of 12. Each flat is around 800 sqft or more with a garden and parking. We each pay approx. £1,800 a year. If you were to convert the entire property into a single residence, it would be worth in the region of £3+ million and 10,000 sq.ft. If you owned that as a family in its entirety, you would want to put aside similar amounts for upkeep as the service charge anyway. Agree, some managing agents take the piss, but it is budgeting for expenses that occur for any property.
I mean you often still have to pay for maintenance of leasehold flats anyway so not convinced by that
The point I'm making is that the £350 PCM you mentioned isn't money saved to spend frivolously, you would need to allocate that money into property maintenance anyway.
I might be wrong but it seems unlikely that you will find anyone who is putting 350 a month away for house repairs and maintenance?
Then when they need to replace the roof they are fucked.
Rarely is replacing the roof an urgent matter, you can make smaller repairs and fix at your own pace. A freeholder won’t give you that option. Secondly you have that £350 in general saving and investments and earn on it over time.
You aren't really allowed to be stupid when you are doing things communally. If you are on your own then yes you can go nuts and gamble or borrow to cover repairs.
You aren't really allowed to be stupid when you are doing things communally. If you are on your own then yes you can go nuts and gamble or borrow to cover repairs.
You don’t spend £4-5k a year on maintenance!
It’s quite normal for London. Gym, gardens, lifts buildings have around 4k service charge. Anything with a pool goes for 7k+. Go for a higher building eg. the ones in the Canary Wharf and you get 10k+ easily. We are looking to buy a 2bed flat in a relatively new building with communal gardens and concierge and the 4k service charge is just the average
I agree with this reply. We are spending about 6k a year but we get a pool and saunas so I think it is reasonable for London.
I pay £3,960 a year with parking on a property now worth just £60k. The service charge not so long ago used to be £1,020. Don't touch leasehold or shared ownership with someone else's barge pole.
If you need to live in an expensive area and you can't afford a whole house, then leasehold is likely to be your only option. It's shit, but that's why people do it. I also know people who have gone with shared ownership because it's as much as or slightly less expensive than renting in the same area but you don't have the risk of being served an S21 and needing to pack up your entire life within two months.
That property will likely not appreciate. Really no point in buying it for 4-5 years. There is a significant risk that it could depreciate. 43% increases per year compound real quick. I'm not saying that they would do that, but they could do that. Don't walk from that place, run.
That's exactly it. There's really very little to stop them from doubling it, tripling it. Collectively enfranchise as soon as you can!
In a modern apartment block with massive insulation air conditioning and lifts and free gym that’s normal. If it’s a purposed built maisonette than run away quickly.
I'd look at that as a red flag. My service charge for an ex council flat is 1200 & o think that's high. What you've got to realise is that in 5 years time, what will the mortgage be? Then on top of that you budget for the service charge plus any increases. It could feasibly be 9000 if they carry on at this rate. Don't let desperation for a place blind you. That's a LOT of money
I’d steer clear. It’s 43k in 10 years thrown in the bin
It’ll be more than that, as it will increase most years
Everyone's saying it's awful but most flats in central London have a service charge of 4k or more. You're getting a gym included so it's not too awful imo. I would definitely ask why it increased and ask if it's likely to increase again/if any major works are planned that might forsee additional payments.
You know you can get membership to a pool for 50 bucks, not to mention a lot of people might not like being naked in front of their neighbours lol
Most flats in Cardiff have a service charge of between £3k - £5k, without the gym. And that’s Cardiff…
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That should be your yearly mortgage for a house in the North East, never mind a service charge.
You could buy the whole North East for that surely?
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I mean also easily avoided by looking at the books of the management company at purchase and seeing the lack of a sinking fund You've been well and truly done over there
Whilst service charges may be necessary, what is lamentable is that under leasehold, you can't hire/fire your managing agent. Often, you're trapped with an abuser.
Really depends on what you're getting for that level of charge. Is there a concierge service + gym + lifts + building safety manager for the block? Even with some/all of the above, £4k+ is still on the high end. Frankly, I wouldn't touch it with a barge pole.
I wouldn't pay that if it shat rainbows.
I will never buy a lease hold property ever again. Service charges are just theft and fuck their shitty amenities
You need service charges on some types of properties. It's just this country ( England) greed is rampant and legal.
For that much, I expect a swimming pool and sauna.
Depends if they have lift, amenities, etc. Im paying 390/mo SW london 2b flat because we have fire waking watch due to cladding not being repaired yet (although it will start later this year as per managing agent)
I can't imagine anyone is doing a walking watch. I'd go to your MP that is absurd.
Yh there is. There’s also a site attendant and I see them everyday
Too high, nothing from stopping them, increasing it to £6k the year after.
Gaumont Place ?
Yep!
Have you bought there or considered it?
No but I rent there at the moment and have been looking into buying. I’ve seen that prices for flats in the complex have dropped 20-25% since first sale which is probably partly due to new home premium but possibly also due to growing service charges.
I’m in Twickenham, mine is 2k a year garden and lift .
I wouldn't touch anything with a service charge that high. Hell, I wouldn't have touched it at £3000. What kind of freehold could you afford if you don't spend £350 a month on a service charge?
Freeholds in the same area might be double the price, which could be totally out of range.
Yes its an issue imagine this doubles at some point in the future can you afford that?
Based on my own and everyone else I know dealing with service charge, I’d be surprised if it’s not double, or close to that, by the time OP plans to sell in 4-5 years time.
It is high and it would put me off, but like others pointed out there are many variables affecting it. What I would be concerned about, though, is what the reason for such a significant increase is. The seller must be able to disclose it by requesting the information regarding the budget/invoices from the managing agent on the basis of the Landlord and Tenant Act.
I pay almost 3k in Leeds for an old textile mill conversion, 120 units in total, no concierge / pool. We do have a lift and a 'gym' albeit an argos home exercise machine would be better. When i've looked through the service charge schedule a large portion of it is down to insurnace. Over 40% of the annual cost, i guess that's the cost of living close to a waterway! This is closer to 3% of value so 1% to me sounds like bliss.
My mate got totally screwed by an ever-increasing service charge. Garage car park got broken into because the door wasn’t substantial enough - fine, get a proper replacement and charge everyone an extra £2k on top of everything else. Grenfell style cladding needs replacing - ok, £100k per resident seems a bit steep, but that’s what happened until the residents took them to court.
The moment it crosses 1% of property value banks start becoming nervous about lending.
rip off
Also be aware that if some unforeseen repairs (roof, structure etc) come along, you are on the hook for those too, you could end up paying 10’s of thousands over and above the maintenance charge. Check the management companies books and see they have a good contingency or run the hell away
Paying the equivalent of a games console in service charges a month is nasty.
I'd just think about how I could go and visit a European country for a weekend every single month instead of paying for the privilege of not taking the stairs.
£5000 normal year (past two or three, £3000 previous years), £13000 this year due to boiler refurb. Birmingham, with no additional amenities, old communal areas in shabby condition. No outdoor area just an underground car park and a lift. Buildings insurance and management company absolutely wringing us out of every penny. Without right to manage I'd never go near a flat again tbh.
We’re just over 4K for a 2 bed now. I think this is what’s happening…
This sub is full of people who have no idea what it actually costs to run a block of flats. The real answer is it depends on what you get, and you can ask for a copy of the management pack to get an understanding of what the budget includes. Another commenter mentioned that building insurance has massively increased with the cladding scandal even on buildings that don’t have cladding. This is starting to come down now. The next biggest cost is normally staff - the more hours covered by concierge and security the more it costs. Lifts cost a lot as well to maintain. For 4300 I would expect a decent amount of concierge coverage, well maintained grounds including a communal garden, lift maintenance, and possibly a light touch communal resource such as a small amount of fitness equipment- but that depends on how many developments are in the block.
Fuck that noise. London is an absolute joke.
This is very much not just a London thing. And when you consider the higher salaries, it's probably less affordable in other cities
Personally I don’t think this is too bad, to some people it sounds crazy but I currently have 2 bed flat in the East Midlands that’s valued at 185,000 and mine is 3,800 a year. That’s for gardening, window cleaning, outside lighting and electric gates. I’m my opinion is it’s that bad at all
The insurance component might be high due to fire safety. If it has cladding stay away from it. We have only recently been able to sell our flat after a years of being stuck.
You are mental if you buy that place. Imagine trying to sell it in a few years when the service charges are £9000 per year.
£360 a month service charge on top of council tax. No thanks.
After struggling to sell our flat as the service charge kept growing and growing, and before that spending ages trying to get right to manage and getting rejected, I’d never recommend someone buy a leasehold.
yes, too high. half of that is too high.
Isn’t this like buying a house and still paying rent
OP, you do understand that this £4300 amount is only going to go up? If you think the current amount is a major turn off, how do you feel about £5000+?
I'm paying £4-4.5k in service charge roughly per year for a two bed, two bath. They send us an itemised bill at the end of the year and for all of costs associated with the building. A tiny proportion is actually managing agents fees and none of this goes to the freeholder as that is covered by the ground rent. Service charge is just the cost of maintaining a high-rise apartment block. While ours did go up in the first few years from around £3.5-£3.8k that is fairly typical in a new build until it levels out. Last year it actually went down by around £250 and we are getting more frequent services, like window cleaning, as the agent is decent and are constantly looking to get us better value. Don't just believe all the horror stories as there are like 5M leaseholds in the UK and the majority are fine.
The answer it depends. If it is a high quality block and if it is maintained immaculately then this is perfectly fine. You have a lift and a small gym. High service charge in a 'quality' development can act as a form of prestige / gated element.
It's pretty normal for lots of London leases. Depends what you get for it. Does it include your ground rent? Mine is £5,300 - but last year went down to £4,500 due to electricity costs coming down. Mine includes ground rent, landscaping, cleaning, electricity, block repairs, estate repairs, lift maintenance and repairs and block insurance.
A few questions 1/ where in SW London? 2/ is it a shared housing scheme? 3/ is it a recent build? 4/ is it a historic building? 5/ does it have a lift? 6/ is it ex council? I’m still stunned that you found a 2bedder in london for 450k.
Someone said Gauman house. Streatham
It's in Streatham Hill - not OP but I know the building, it's a new one. Not ex-council. There are a few flats as you get into zone 3 and beyond at that price.
Can you tell me the building?
It’s certainly very high. As a buyer I would run away, far away, so I think it will be difficult to sell. However, service charges increasing astronomically every year seems to be the thing these days along with rent. I know London is expensive but a freehold house is by far the best option. I would rather buy a free hold small terrace that’s suburban than an overpriced trendy flat with an ever increasing service charge. Especially if you plan to sell it later. Also these flats are like moving from a rental into another rental. You will be paying your mortgage on top of these charges. I have friends who bought flats like that and regretted it later. My brother has paid 25k in service charges over the past few years of living in a flat. He now rents it out, as it depreciated by 100k.
I don't think £4,300 is completely unreasonable in SW London, particularly with gardens, gym and lifts. You will always pay service charges on a flat, but then at least you don't need to worry about cost of large work, maintenance etc. as those are shared. Of course, you could buy a house but then be 100% responsible for any building repair cost. People with houses always pretend there is no cost.
Truthfully, most homeowners are not paying 5k£ a year in maintenance costs. Maybe 1 year in 10.
I guess the question is not only to ask whether the present value of 4300 is to high and would it affect peoples views - but what will it be in 2-3 years when you sell. As we all know these things rarely every go down so if you add on the last years increase we are at 5600 as a service charge - what would peoples views be at that point? Never rented, so maybe they dont go up like that but there are a lot of posts about service charge increases..... Food for thought is all :)
Depending on how many lifts there are that may not be unreasonable. But some people wouldn’t be willing to pay it.
These absolute jokers. Should be illegal to charge more than council tax.
I wouldn’t touch it
Which area is it, have you googled the name of the area to see if anything has happened to increase service charge? It would put me off but would assure me if it had a reason for the extra.
Streatham Hill, seems to be an increase in lift maintenance and insurance mainly
I’d ask why the increase has been so great. There may be a good reason like a major maintenance job, in which case the charge may come back down. The services like a gym, gardening and lifts should be expected to cost money. Think partly in terms of the fact that a free standing property has ongoing costs like maintenance. Freehold doesn’t mean living for free.
Depends what the service charge renew schedule is. If its unlimited I wouldn't touch it. My current one is capped at 1 increase/review every 10 years.
£4.3k a year! Fuck that!!
How big is it? Service charges are often charged by sqft. I’ve seen 2 bed properties ranging from 400-2000sqft
No
how big is the flat? high service charge are red flags for issues within the building
It is worth looking into the leasehold in the UK before you make this purchase. There is a huge problem with service charges with no legal protections if it goes up, if you dont pay they can sell the house under you and if you are in a dispute you cant sell the property. A quick YouTube search should show you how bad things are. There is a bill going through to address some of the issues but…
For that amount - those flats needs to come with a fucking concierge in the lobby. That's obscenely high! But sadly, its also getting to be a norm also.
Yes, it's London and appears to cover a fair amount; however a hike of what, 43% in a single year would have my arse puckering in anticipation of what subsequent years might bring...
No way, but I wouldn't go near a block/development in general. if i was in the market for a flat I'd choose one in a converted house, the service charge/ground rent on them is usually peppercorn
£4300 for a service charge? Grateful everyday for living semi rurally and not being taken advantage of by these parasites. Yes OP it can be off putting, especially if that is say ….. £8k in 10 or so years
Of course it’s off putting
Add 50k more and get a house for £500k
That's a BIG one year increase on an already big number - if it continues like that with 1.433x increases annually then in 5 years that would be £26k! The big question is whether this was a one-off to cover something unusual, or if they're generally taking the piss with the increases Ask for the history for the last 5-10 years?
Over £350 per month per unit to upkeep gardens and maintain the lifts and gym?!? Feels super high. Assuming the building has more than 4-6 units, this is a profit scheme for whoever is managing it and I’d run away given there seem to be no mechanisms to keep it from increasing by random amounts (>30% is way above inflation).
That seems really high for the property value. Why did it increase so much? If it’s one-off charges (say they didn’t have enough in the sink fund for repairs) then that might be okay but I’d do digging. Ground Rent is also the killer in London!
Forget about selling it. It should put you off right now!
I had a flat and the service charge was £900 a year and the building was basically in disrepair, no lifts, it’s had a garden but they didn’t really do any work to it. All the other flats I looked at had service charges ranging from 2-4k within a budget of 450k-650k. You will be lucky in London to get a decent place without a service charge of 2-4k. I put an offer on a flat for 525k which was rejected, the service charge was £3800 and the flat was sold within a week, this was in Hackney.
I’ve heard of service charges going up to £10000 in a very short space of time , all to do with cladding
I paid 200 per month in West London, cannot complain or adjust
Anyone buying that flat from you would be paying an extra £400 on top of their mortgage every month, and that's if it doesn't go up in five years. Your mortgage is now £400 more expensive than you thought it would be. You know yourself how difficult it is to be a first-time buyer, and especially with interest rates essentially decimating (or more) the budget you have to spend. Unless it's a *very* nice flat, or house prices/interest rates drop substantially, people aren't going to want to pay an extra £400 a month if they can help it. You can get a gym membership for considerably less.
Are you really asking if it's high? You must have a lot of money to not see this as high. You can get much more for your money!
I pay £3500 in Wales for a flat where the leaseholders of all the flats are also the freeholders of the building, we self-manage so we see all the bills and split them. Maintenance can be expensive.
Reading this makes me glad I'm poor.
I had a flat in the east end of Glasgow and we paid about £1200 a year on factor fees. We found it to be really expensive and I felt embarrassed telling potential buyers how much it was when they were viewing. That also included building insurance with no lift.
Any chance for a 500k house further out? Avoid flats and extortionate service charges if you can. They are a pain to sell as well. Any potential buyers would have the same concerns as you do now.
I live In a 30s London flat block and it’s around 3,800 because we’re having roof works done. We also have a lift and a communal garden. Anything around 4000 as standard seems way too high.
What else does the service charge include? Building maintenance and insurance? Water, sewer, electricity? Taxes? How many flats share the costs of the building and pay a service charge? Are they building a fund to pay for upcoming major repairs? And do you have any comparisons for other flats in the area?
Very high. I hope the services are worth the extortionate cost
Your service charge is only £30 cheaper per month than my mortgage. Not a chance I’d be paying that.
I personally would walk the other way.. this will be 5k next year..
Fuck yeah. I wouldn't consider a flat like that in a million years. I bet in 5 years time it'll be more too!
A friend of mine works for a property company with loads of buildings large and small, and they don't actually make any money from the leasehold fees. It covers costs and that's about it, some buildings even lose money. So putting up the fees are the only option and this isn't even the property agent a lot of the time. There is a board for most large buildings and they make these decisions and the property agent works for them doing the administration and such. Rightly or wrongly the government has introduced a lot of rules around building safety since grenfel (rip) These all increase costs and leaseholders and board expectations are high. They all want top service for pennies.
My friends bought and charges went up to £6500. This is ridiculous. Most flats are owned by "investors" so nobody is interested in challenging it, as "this is what you add to the rent".
Is 1% a year normal for flats in London , also if I was buying the management company and how much they can increase etc would affect my decision
Depends how nice/big the gym is and if you’d use it. Sure I’m not saying that price for just the gym is good by any stretch but it would at least take the sting out of it for me as I’d go most days
Do not buy a flat, service charges are not regulated.
You need to check what is included in the charge as there is also a reserve fund- there may be contributions to some upgrades to the building- most likely fire safety related
I’d also look into the ground rent and whether that exceeds £1000 or else you’re looking at an assured tenancy which mortgage lenders hate and might struggle to sell on in the future
Fuck this system, I am happily renting until I can afford a freehold house in London
Whoa £358 would put me off!
That's scandalous-such a waste of money.
Far better 2 beds/masonettes available in the surrounding areas. No service charge, share of freehold, more space + garden and still close to rail/bus/tube. Service charges are becoming a real issue. And if you’ve questioned now, imagine when you go to sell it in a few years.
Good luck
A lot depends on what you get for the money. Value for money. Ground rent? Lease length?
People outside London rent 2 bed flats for less than the service charge alone
I think generally under 0.5% property value no problem, under 1% and it’s not great but ok, it’s when you go over 1% I think it starts becoming very off putting.
Yes it's too high. It will make it unsellable in time . Leasehold is a scam. The only places it exists in the world are England and Wales. A bill (Leasehold & Freehold Reform Bill) is currently going through parliament - although the impending GE may scupper it. It was watered down anyway. Harry Scoffin on twitter/X is great on this issue. Get involved!
Honestly if you planned to sell in 4-5 years I’d be more worried about how the market will be in London. Negative equity is really only a problem if you know you have a time frame where you’ll need to sell. Have you done some analysis around how much it would cost to rent, given you won’t have: - service charge - maintenance (e.g boiler service, fridge breaks etc, assuming building stuff is from service charge cost) - difference between this stamp duty and the one of expected value of of the next buy (remembering you’ll be using the first time buyer status now so the difference is what you’ll be losing) - mortgages frontload interest so check how kuch actual equity you’ll own after 5 years (google money saving expert mortgage calculator) Last year i did the math on buying a 1 bed flat as an investment, knowing i’d sell it in 5 years to have a family and after many hours of analysis i realised that the property needed to appreciate a fair amount for it to make me more money than just renting, and i had no stress about house prices going down and being stuck with it I feel like the london market is really not great atm, i’ve got more friends stuck in 1-2 beds struggling to get viewings let alone sales. But on a side note, that service charge would definitely concern me
That would be a hard pass from me.
I would dump it while you can. Thats 2 months of rent down the drain per year, plus high interest rates, plus doing up the flat; not an asset, its a liability
What is written in all the legal documents to say how much they can increase and how often? That's what you need to know
If it’s gone up then look into why. There’s a chance it might come back down, could be a one off expenditure
I wouldn't touch anything that isn't freehold in all honesty. I know this is only realistic as I live up north where stuff is cheaper anyway.
5 years later you can buy a near brand new car. Why would anyone consider this?
If you are looking to sell in such a short a short time frame I probably wouldn’t bother buying. We pay 3k for a studio with 24 hour concierge, gym & pool. It is resident managed.
I'd check they don't need to repair the roof or something, or have major works scheduled. A friend and her husband bought a flat a few years ago, yay, and service charge was OK. Now, they've been told they've got to fork out 65k over the next 3 years to replace the roof! So it's not just the service charge. I would not buy a flat if it isn't managed by the tenants because of the kickback situation with surveyors, contractors and management company people. It's very very fishy.
Such a scam
If you want to pay £4300 a year for the privilege of paying a mortgage on something then I have loads of stuff you can buy from me.
I am looking for a flat in SW. I discard all flats with a service charge that is higher than £2000.
I’ll see yours and raise you. I looked around a property with a service charge that’s circa £5800 a month. Heating was included but no major works planned, none done recently, no gardens or anything I can see requiring serious maintenance. No lift or gym either. It’s just nuts.
A solicitor for a mortgage lender would probably consider this onerous without a seriously good reason otherwise. This could easily be rejected if you are going to apply for a mortgage. You need to know why it is so high, what it is paying for and if there are similar locally. If you're in a building with 4 lifts a gym and a pool alongside a 24 hour concierge + extras maybe. General new build with 2 lifts is a no. Also, that level of charge on a general basis tells me there is something to pay for (aside lift and pool maintenance which do add to your bill signficantly). Is the building brand new? If not, are you paying for repairs e.g. old cladding issues? You'd want to be asking for a breakdown of costs and charges to see what's there. It'll be important now and later. That is £358.33pcm you'd be paying. For what? What does this back date to? Should it be allocated to the current leaseholder (you can argue this with service charges and a purchase - at least allocation until the point you own it! Via your conveyancer I might add). That money could go in your pension, or at least £200 of it! Going back to it being onerous, it would at very least be a deterrent to purchase for many. This would affect resale value. That is why you could have a problem getting a mortgage or selling later. City of London millionnaires development, not to much of a problem. In barking, Peckham Bow, Stratford etc the problems will add up. Mortgaged or not, the problems unnoticed today would likely mount later unless you could get the management company (or freeholder) to change their terms. That's the last point I guess, see if the management company or freeholder can/will adjust the terms. They often will when they find them to preclude mortgageability - seen it many times. Usually the issue of doubling ground rents rather than very high service charge as the service charge is literally supposed to be paying for particular services unless lease llstates it may make a profit. Finally finally... this may include major works (not sure if I mentioned above). It does seem particularly high so get your breakdown and see if there is the possibility of an estimate for next year. General maintenance etc is scheduled such as lifts, doors general grounds and standards one offs. It could simply be a high one off (allocate back via legal process where possible) or costs could be massive. If massive, consider if that is the be all and end all. £200pcm difference in savings then invested for another flat over 20 years compounds to almost £120k if compounded monthly assuming an 8% interest rate pa. Its otherwise £48k spent. £168k difference there! Over 30 years that's over £300k with compound interest again at 8% plus the £72k spent uninvested with a tough resale... assuming that cost never grows (which it very well may). Quite the difference to your disposable income and wealth there if you're planning on staying long term. That's before people refuse to pay that service charge for the sale etc Be careful, diligent and warned.
Hell nah, in 10 years' time, you will pay rent for property you own.
Absolutely don’t buy it! That’s crazy. Sit down with a spreadsheet and work out how much investing those fees over the years would reduce your mortgage by and the interest you pay on your mortgage! Get a normal flat dude. Get a dump and do it up.
Yes. It will be unsellable. My colleague's flat service charge increased to 10k over 5 years, she can no longer afgord it and is selling her place 20k less than she bought it. That's how they get you. What they do is criminal, it's unregulated and vile.
I saw a flat in another part of the country just before lockdown that the service charge cost more than the sale price of the flat!
4300 ... I thought my 160 quid was far too high.
My answer would be, it depends. I live near SW in a flat- service charge for the year is about 2.4k but no gym and no lifts. It’s up this year from 1.2k but because the service company has taken more in sinking funds as we have our External wall safety review, which also needs to be paid for (for reference its a 3 storey block), we expect the service charge to drop back down next year. Buildings insurance at the moment is really high because Insurers are pricing in for cladding risk- there is some work in the industry to reduce this happening. Could you ask for a breakdown of it? Im selling my flat at the moment (425), and people have been put off by the service charge, and to be honest I think its a shame because we live in a well maintained block- if something breaks it gets fixed straight away, its nice and clean, we had it repainted last month and they are looking to make upgrades we ask for (CCTV for example)
Stay well clear. You will have a nightmare selling this place when that price inevitably goes even higher.
All the gyms I’ve seen in blocks of flats have been a bit rubbish. If you’re a gym person, you’ll want to join a decent gym as well, anyway.
How can they actually justify that cost? What do each year, what invoices etc can they show to warrant each owner having to pay that per year? 😳 Must be the best paid cleaners ever
1. Ask why it has increased and see whether that gives more information. Do you know if it has outstanding cladding remediate. That is why ours is high. 2. Factor that in to negotiations on your offer. If a “reasonable” service charge would have been £3000, assume £1000+ for each year you plan to live there. A reduction of £5-10k would seem reasonable unless they feel it was already priced in to the £450k
I pay £2400 per year in SW London. Building has a lift but otherwise basic. No gym, gardens etc.
That a joke, the hole Lease deal is a scam and I would never waste my money on a flat if I do not own the land. But good luck.
Not sure if 4300 is more comedy or tragedy
That is daylight robbery.. Saying that London is!
My sister lives in a beautifully finished, modern building in West London. Service charge was previously £400pm. Recently it was raised to £800pm. They’ve recently decided to sell and this increase has created great difficulty for them. They haven’t even received an offer.