£6k service charge on London flat?

[Hotes]

I’m considering making an offer on a flat but I’m somewhat hesitant about the service charge.

It’s £6k p.a. which includes water, heating and hot water. It’s in an immaculately kept 1970s block with two lifts and underground parking. Share of freehold so no ground rent. It’s in zone three but it’s a (relatively) expensive area.

Does the cost seem excessive? I’m concerned it would put buyers off if we came to sell in future.

It's about the same as ours - it is a lot but the fact that it includes a lot of the bills makes it more reasonable. Ours does, however, include the cost of a porter which you don't mention? That would be a big factor for me (as I actively wanted to live in a portered block and would have paid a premium for it).

I wouldn’t pay it....but I’m sure there’s many who would

@mynameiscalypso

It's about the same as ours - it is a lot but the fact that it includes a lot of the bills makes it more reasonable. Ours does, however, include the cost of a porter which you don't mention? That would be a big factor for me (as I actively wanted to live in a portered block and would have paid a premium for it).

I forgot to add it has an estate office with a Porter so can take deliveries, hold keys etc, but not a doorman as such.

What you really need to consider is:

Are there any major works in the pipeline that will burden you with a large one off payments

As importantly, look at the service managments history over 10/20 years and rates they have increased this

Aslo see if there are any clauses by how much they can raise the charges.

@Emma2021

What you really need to consider is:

Are there any major works in the pipeline that will burden you with a large one off payments

As importantly, look at the service managments history over 10/20 years and rates they have increased this

Aslo see if there are any clauses by how much they can raise the charges.

Thank you for articulating that so succinctly, going to email the agent now!

Thank you OP for taking time to let me know, appreciated.
Good luck.

Get a breakdown of how the service charge is spent. Does it look reasonable or are they charging £100 to change a light bulb? This will also identify the cost of the porter, something you want and can decide if the amount it's costing is acceptable. Lift maintenance and insurance also likely to be expensive.

What is your estimated heating & water bills, so you can estimate the other element of the service charge.

Is part of it going into a sinking fund to pay for periodic major repairs, e.g. roof, or are these additional charges when they arise?

What is the history of service charge increases over the past several years?

Speak to other owners if possible to get feedback on the satisfaction with the management company / Google them and see if anything turns up (they may manage other blocks and have online reviews).

Compare the service charge for this flat with others in the area.

Who appoints the management company - the owners of the apartments or a committee of them, as the flat comes with a share of the freehold. How does this work, are there minutes of meetings (to see if it's working well or there are disagreements)? What contract does the management company have?

Bottom line, are you getting what your paying for or is the cost excessive?

£6k is pretty steep imo - that's £500 a month on top of your mortgage... Not even sure the inclusion or water/heating etc justifies the cost.

I pay £1600 a year for a newish build (2008) in a gated development with private parking. We don't have a porter but do have nicely maintained gardens. No ground rent as I have share of freehold and this is also in a nice-ish part of zone 3 (Forest Hill).

@smallgoon

£6k is pretty steep imo - that's £500 a month on top of your mortgage... Not even sure the inclusion or water/heating etc justifies the cost.

I pay £1600 a year for a newish build (2008) in a gated development with private parking. We don't have a porter but do have nicely maintained gardens. No ground rent as I have share of freehold and this is also in a nice-ish part of zone 3 (Forest Hill).

Sibling pays in excess of that no heating for their apartment but covers the com areas, the guys at the desk, the two lifts and the car parking underground along with the excess rubbish collections, cleaning of com areas inc reception and floors cleaning of mats and servicing of double doors, entry phone systems cctv etc etc - so adds up but one to be very aware of.

Best avoided if possible but living in flats you have to pay some service charges but you need to decide if they are worth it and how this would impact on the sale of the property should you want to sell at a later date and be very aware of increases over the years.

As PP have said, ask for at least the past 3 years service charge reconciliations, copies of past budgets, any sinking fund provision and also who the managing agents are and google them for reviews as they can vary a huge amount. Guessing no cladding issues?

Sibling pays in excess of that no heating for their apartment but covers the com areas, the guys at the desk, the two lifts and the car parking underground along with the excess rubbish collections, cleaning of com areas inc reception and floors cleaning of mats and servicing of double doors, entry phone systems cctv etc etc - so adds up but one to be very aware of.

@Emma2021

I receive all of the above as part of my service charge, aside from guys onsite/porter etc. We have a management firm that does everything for us and we provide the approval for all purchases/works to be carried out (since we all have a share of the freehold). I've received an annual rebate twice too... Service charges needn't be as expensive as they are. Perhaps I lucked out, but I can't see the justification in £6k fees unless people are living in central London.

We pay around £200 per month. It covers cleaning of the common parts, the garden, minor maintenance and the lighting in the hallway, front door and garden. So if yours includes hot water and heating, it’s probably not excessive.

I pay 2500 pa in Z2 for gated car park, ground rent, water and maintenance/cleaning of communal areas. For a 2 bed I then pay approx £400 pa for heating.

Yours seems excessive to me

@Hotes

I’m considering making an offer on a flat but I’m somewhat hesitant about the service charge.

It’s £6k p.a. which includes water, heating and hot water. It’s in an immaculately kept 1970s block with two lifts and underground parking. Share of freehold so no ground rent. It’s in zone three but it’s a (relatively) expensive area.

Does the cost seem excessive? I’m concerned it would put buyers off if we came to sell in future.

Mine is about 4K but with lots of extra costs during the year for capital works etc. 200 for a doorbell I don’t want for example. It’s a pain but that’s flats for you.

Sounds like London pricing to me. You need to consider that these costs can go up each year. Can you afford £6k upwards on top of your bills?

Following

Less that us - and you get more...

Seems steep but portering is really expensive.

We pay £3500 and only have an AM porter.

Bloody hell, someone somewhere must be making a tidy little profit out of all these "service" charges.

I suppose it boils down to if you can easily afford it and I suspect it's designed to keep the riffraff and paupers out.

But I too would want a full breakdown of how my £500 is spent each month but your choice ultimately will be either suck it up or buy elsewhere.

Lifts are expensive when they go pear shaped.
Smarting as someone had a sofa delivered, but the delivery men rammed it in the lift and then got stuck in it, which required a call out.
Unfortunatly the guys that turned out did not notice where the chaps went when released, and the Managing Agent could not find the person with the new sofa.
Cost the development £3K in repairs between 50 of us which is bloody annoying.

@Hotes

Seems normal to me especially as it includes heating. It's the lift which causes the SC cost to rocket.

Do you need a lift for access purposes? Is your flat on the 19th floor? If you don't need one I would seriously consider purchasing a property without a lift: they're extremely expensive to maintain and often need fixing (which is super annoying if you never use them).

£6k seems the right price, but I still wouldn't pay it

If you choose to purchase it, ask to see previous years reconciliation reports - your solicitor should ask, but you should too just to see what's in the sinking fund (rainy day fund) and how the budget looks

@THisbackwithavengeance

Bloody hell, someone somewhere must be making a tidy little profit out of all these "service" charges.

I suppose it boils down to if you can easily afford it and I suspect it's designed to keep the riffraff and paupers out.

But I too would want a full breakdown of how my £500 is spent each month but your choice ultimately will be either suck it up or buy elsewhere.

The fellow residents are very well to do so I think there could be some truth in the riff rag observation

It’s affordable (for me) and I don’t mind paying it as it immaculately kept. Conversely our current building in a super prime location is in a complete state because all of the other freeholders are too cheap to pay for anything more than the bare minimum in terms of the upkeep.

It’s really the potential issue it might cause with resale that’s making me hesitate. So it’s interesting to hear the mixed views here!

[quote csectionmumma]@Hotes

Seems normal to me especially as it includes heating. It's the lift which causes the SC cost to rocket.

Do you need a lift for access purposes? Is your flat on the 19th floor? If you don't need one I would seriously consider purchasing a property without a lift: they're extremely expensive to maintain and often need fixing (which is super annoying if you never use them).

£6k seems the right price, but I still wouldn't pay it

If you choose to purchase it, ask to see previous years reconciliation reports - your solicitor should ask, but you should too just to see what's in the sinking fund (rainy day fund) and how the budget looks [/quote]
Currently live in a 4th floor walk up so am not bothered about living somewhere with a lift at all But we are looking at reno projects so a lift would be useful for that.

The cost does seem a bit excessive and personally I would not pay it.
I realise there are some that will, but it adds a very significant amount on top of a mortgage. If you stayed for 10 years it's an extra £60k.

1970s block and zone 3 it seems high. Where in Zone 3?

I used to be a director of a management company and lifts are extremely expensive to maintain and you need to put by a fund for replacement. Blocks without lifts generally have lower service charges.