To be really worried about selling my flat?

[Goodvibes12]

I currently live in a lovely 2- bed flat in a good area of London in a period block on a quiet cul-de-sac. No plans to sell at present but I will want to in the next year or so. Estate agents have valued the place at more than I bought it for, which is good - but I'm really worried buyers will be put off by the high service charge.

The service charge is £3,400 per year. This includes (in addition to all the usual things like common area upkeep) all heating and hot water, a live-in caretaker, off-street parking and bike storage and nice, well-maintained communal gardens which you can actually sit in and use for drinks, barbecues etc. However, even with all of that I'm aware that it is still high. The increases from year on year are very small but the problem is that it is already at a high level.

In addition to that, there are also bills for major works every few years, partly because it's an old building but I can't help feeling that with the service charge so high the management company should pay for some of it. I haven't had to pay any since I've been here but I've heard that they can be in the region of £3K - £8K.

Flats in the building do still sell (I believe 4 have in the past 18 months or so, including mine), and the estate agents who valued the property did feel that the service charge was high but didn't seem think it would hold back a sale - but that might just be their patter.

Any views/similar experiences would be really welcome!

I'm in Brighton - service charges are £4000 a year. It covers water but not heating. There is no caretaker/concierce service.
Ie - I'm paying more than you and getting less.
I don't think you're paying a lot, especially for London

@Lincslady53 it's true but I remember when I was telling a friend this, she told me that with a house, you can just not do anything. Hence she is not buying a flat but instead renting. Certainly that has been my MIL's approach, she hasn't fixed anything in decades.

£3400 isn’t a high service charge by London standards, especially as the water and heating are included. Some mansion blocks in Kensington have a £8k a year charge and that is without a communal garden and concierge. New builds with concierge, gyms, underground car parks are extortionate charges too, yet people still live in them.

Thanks everyone, very helpful comments. I do agree that some of this is coming from a place of unreasonable anxiety but getting others' perspectives really helps.

[quote onlychildhamster]@Lincslady53 it's true but I remember when I was telling a friend this, she told me that with a house, you can just not do anything. Hence she is not buying a flat but instead renting. Certainly that has been my MIL's approach, she hasn't fixed anything in decades.[/quote]
You can but this will eventually come back to haunt you - if you don't fix issues for long enough you'll come up against one that either makes the house unsafe/uninhabitable, or which it's actually your legal obligation to fix because it creates hazards for others. You can neglect a house for a while, if you're lucky, but not indefinitely.

My flat has been on the market for nearly a year now. The service charge puts people off.

You can neglect a house for a while, if you're lucky, but not indefinitely.

And the longer you leave things, the more they will cost you to fix in the end.

@EishetChayil what is your service charge if you don't mind me asking?

The price wouldn't necessarily put me off I would be more inclined to scrutinise the accounts to see how much is saved annually into the sinking fund, it should be around 10% of the income.
The fact that your heating,building insurance etc. are included do explain the perhaps slightly higher cost.

Mine is roughly the same as yours OP - and it doesn't include my own heating or hot water. It does include the sinking fund for the building, and I was given a copy of the accounts for this before I bought the apartment.
I was also given a copy of how the service charge was spent in the year before (breakdown for the sinking fund, the cleaning company used for communal areas, heating in communal areas, gardening, repairs, building management fees etc). And I was given a projected list of major works and when they might happen (eg expect to paint the building again in 2025; plan to install solar roof panels in 2023 etc.) Most things to do with a building have a shelf life and can be anticipated. For emergencies there should be an overflow and of course insurance.

For me, the charge would be fine provided I could see exactly where it was going and the numbers made sense. A friend of mine pays double that - but it includes the maintenance and servicing of the indoor and outdoor pools. It really does depend on what you are getting for the money, just like anything else.

You bought it.

Other flats have sold.

Clearly there is demand for these flats

@DameAlyson

You can neglect a house for a while, if you're lucky, but not indefinitely.

And the longer you leave things, the more they will cost you to fix in the end.

And there is the risk that if an insurable peril like a storm occurs and the storm causes damage to the house structure, if it is evident to the assessor surveying the damage that the property has been neglected the insurers will likely decline the claim and declare the policy null and void.

The terms and conditions of building insurance policies always indicate that the householder will maintain the property properly. It doesn't matter that the storm damage would be covered ordinarily, if you are in breach of the terms of the contract, they will not pay out.

I think the value of the flat is relevant here, someone spending 1.5 million on a flat is less likely to be put off than someone spending 750,000.

It is important to have a good number of years left on the lease too.

My SC is around 2800 (if I add heating & hot water) and we don't have a garden, caretaker or parking! Not in London, either.

You are entitled to know how much is in the sinking fund and how much you have contributed to it.

£3400 for nice surroundings and safe in London is a small price- it’s a small percentage of the flats value I’m sure.

Having outside space that you can use socially is a bonus- perhaps market the flat in spring or summer where people could really sense the benefit of it

I have a flat in London, and also know the service charges of some other flats near me. £3,400 is not high.

I don't live in London. I'm in NW so house prices etc much less but for heating, water, caretaker, carparking and good gardens I think the amount sounds reasonable. It wouldn't put me off for a London flat

I have found out that there is no sinking fund, that any major works are collected on a pay as you go basis. However, I think some smaller things are budgeted for in advance and swept up in the overall charge for the year to come.