Service charge on 1 bed flat

[Mrsmadevans]

My Dd2 along with our help is hell bent on buying a new build 1 bed flat with a service charge of 1k a year . I am really concerned this amount will rise and rise in the future especially as the lift is out of order already and it had only just started to be lived in . I am not sure how to proceed with this, is there anything l can find out that/ask will be helpful when we go tomorrow to sign on the dotted line? Thank you so much l am so worried.

If you have any doubts, don’t proceed.

How old is your DD? You are taking a lot of responsibility.

I live in a block with a service charge. Ask if they have a set charge going forward. I presume it's leasehold so look at when ground rent goes up.

Check if there's a proper contract to service the lift. Some cheeky sods just expect to call the fire brigade if someone gets stuck.

Also, keep in mind the new build warranty expires in ten years. I've been in my place longer and once the warranty expired, we had to contribute to a reserve fund to cover any repairs. I would say the charges have gone up by 20% in twelve years.

Thank you so much for your help. This has helped me so much to decide the property to go for . Thank you 😊

Find out who owns the freehold - there are 2 ways of it being set up.

1. owners all own an equal share of the buildings in the form of the freehold - this means they can jointly decide on the level of costs to meet the needs of maintaining the building and buildings insurance.

2. freehold owned and retained by the developer or a company- means they can jack up the service charge to whatever they like.

It will affect saleability of the flat in future too, so consider carefully!

I am seriously considering pulling out our money towards it tbh . The more l find out the worse it gets.

It sounds like you've made your decision

Bit if it's share of freehold, then consider carefully the pros and cons of dealing with neighbours to decide how things get done.

I am so thankful for your help 💐

Oh cross post

What have you found out? A lot of new builds have the charge fixed for a period of years. It didn't seem to be a thing in my day, sadly, but still turned out okay.

It's the lift that would put me off, they eat money. In some point in the future it will need completely replacing, and even with a reserve fund you can expect a big bill.

I wouldn't discount all leaseholds, but I'd look for one that doesn't have a lift, and that is primarily owner occupied. Leaseholders have the "right to manage", meaning you can take over the management of the block as a group, but that only really works if the owners live there (landlords aren't going to be interested in issues that don't directly affect them). I'd also stick to small blocks, less than ten units, as the larger they are the more difficult it is to control costs.

With either a share of freehold, a RTM or a RMC, it doesn't really matter what individual leaseholders think - it's to do with what the directors decide. The board can be made up of interested residents or the freeholder can retain their right to manage, but it's key to knowing who has the vested interest there. If you're an owner and it's a resident board you can apply to go on it at any AGM.

I would be wary of buying any property which doesn't have a healthy reserve fund or provisions for it. The NHBC warranty is extremely limited (only covers build defects, has a huge excess which is multiplied by the number of flats if it's a communal issue), so relying on that before collecting reserves is short sighted at best - particularly as internal and external redecorating will almost certainly need doing before the warranty runs out.

£1k per annum for a one bedroom flat does not sound excessive, particularly as the block has a lift (and it presumably includes insurance) but the thing I would be wary of is that some - not all - developers keep the initial service charges down to make the properties more attractive, then hand it over to a managing agent who then HAS to increase the charges in order to have sufficient funds to run the block in the second or third year.

I moved into a massive new build. Its relative to your area but SC started at 90, which I understand was good as just built. Then 120, then 145, then 180. Its 180 again next year so maybe its levelled out. The lift has broken 3-4 times in four years.

A friend of mine lives in an old Victorian flat and pays 300pm for maintenance.

The reason new build is good for me is that its shared ownership. I have a 2 bed whereas on the open market I could only afford a 1 bed.

The other plus side is I am a busy working professional. I don't have to worry about boiler repairs, leaks, any of that. Its also warm. My heating bill is not high.

That is quite concerning about the warranty expiration. I don't think I will be here in six years.

I think you do sort of have to focus on the here and now - is it affordable and safe?

Also SC covers building insurance.

Thank you all so much. I am so grateful to you for taking the time to read this and tell me what you think. My Dd2 has decided to go for a house instead. Thank God 🙏. I am so relieved. It seemed utter madness not to put the money towards a mortgage for a house that will serve her for many yea s and be easier to sell on . Thank you💐