Service Charge for flat costs nearly the same as mortgage

[sleepyhead25]

I've been looking at flat to possibly let out for short lets , the 2 bed flat costs approx 75-80k on a development I went to view I have approx 35 percent deposit I compared mortgages and it was around £150 a month awesome until the estate agent showed me the management fee £100 per month and a lease charge of £150 per year for a flat of 75k isn't this very excessive and taking the piss ? Is there anyway to negotiate on management fees I like the flat but the fees are a piss take.

Only one way to find out if you can negotiate the management fees.

You can only be told no.

I don't think there will be any negotiation I'm afraid OP, mainly because it seems more than reasonable. Is it a decent property management company?

May be worth looking at a house then and haveongn slightly less %age deposit and slightly higher mortgage, but then you have no service charge or monthly fees?

What does the £100 a month cover, usually a management fee will be a % of the cost of the service charge, so communal lighting, cleaning, grounds maintenance, insurance, audit fees etc all add up to X amount and the management fee will be an additional % (say 15%) of that cost on top. The services provided and the number of flats in the block it is shared by, will determine whether the charge is reasonable or not.

Look at the management company carefully. There are some who treat leasehold flats as an huge income generating scheme, and the result is large management charges. Does the development have a lift- that always increases service charges.
DH &I own a flat where the management company, who did not have the correct insurances in place or hold the correct qualifications were really raking it in. They had set up their own cleaning and gardening companies and sent the staff on a 100 mile round trip every week . That really put costs up - as there was travelling time and milage to pay. As for the lift- do not start me , constantly breaking down , no maintenance contract in place .
They were for some reason the directors of the development. There was a bit of a coup led by an experienced investor and they were replaced as directors and as Managers. There was a bit of work to be done but under the new management £5K was spent on sorting the lift, new cleaners and gardeners etc, communal areas decorated and service charges have stayed the same for 3 years now.
Look at the management company and who the Directors are- they should have regular meetings.
Ground rent is non negotiable and is detailed in the lease. Often this can increase at some point or points during the lease period.

The fees sound about right if you are buying a leasehold property. You can ask for the breakdown of what the charges are for Eg garden, communal electric, communal insurance etc Some charges are much more than this, you can find info on Rightmove

Won't your tenants be paying those fees for you?

This is why I wouldn't buy a new build flat. Is there anything to stop them hiking the service charges after you've bought?

No Bluelady, owner is liable for services charges and ground rent. If they don't get paid, particularly the ground rent, you could have the flat repossessed. The rent charged should cover the ground rent, and services charges- and in the case of our flat, the water charges.

OP For a 2 bed flat 100/month service charges is OK to a wee bit high but depends on what is covered. Building insurance can be high if there is a claim history.
Hopefully it will include a "sink fund" which will build up a reserve for decoration of communal and external areas. The frequency of this is specified in the lease.