Buying a flat - downsides? Please critique

[78thcat]

I can only afford a flat but I'm aware there are lots of downside to buying one. I THINK I've found the perfect flat with none of the usual downsides. What have I missed?

New flat has:
-999 new lease and a share of the freehold with 3 other flats in block, no management company, no service charge or ground rent
-Own front door
-A garden
-Top floor flat so no noise from above
-Not high rise, only one flat below (detached block of 4 purpose built flats).
-Modernish, 1970s build in v good condition so not much shared maintenance
-Single quiet person below and to the side. Have also spoken to all the neighbours - all very lovely and friendly! All single people in 50s and 60s, no kids.
-Own garage and parking

What are the other downsides I might need to be aware of? I know I have no control over who moves in below, but it feels as though everyone is quite settled and content and most people have lived there for years and years and they all get on.

I did the same and bought somewhere very similar to yours.
the only issues I've had so far are that the other owner pushed for us to fix something that I would probably have left! It did need doing but not urgently. As we own the freehold together and I want to keep good relations I agreed to do the work.
also the other potential drawback is that we have to have a joint buildings insurance policy. It's not been a problem so far and I pay for it and she gives me half but there are potential issues there especially when you add more people into the mix.
In general though I have all the benefits of a house with the ££ of a flat.

No service charges is always a red flag to me. Every property requires maintenance, yes you will split it with 4 other flats but collecting monthly service charges makes that a lot less painful than suddenly each flat has to stump up thousands for some work. You should have an annual schedule of works needed (communal fire alarms etc....) and bi annualy checks such as asbestos checks etc...... this all costs.

Also buildings insurance should be paid between you and added to the service charge.

People think no service charge is a plus, its not, its a way of you not being able to budget for any works/insurance that may be required in the future.

You'd be sensible to ask if there is any outstanding maintenance or imminent jobs in the block that have been identified as needing work. (Such as roof/sewerage/fire alarms) Is there a communal repair fund and is it at a healthy balance? What annual maintenance is carried out, who maintains or cleans shared gardens and hallways? I live in a flat and it's great but we did each have to shell out £800 recently as our sink fund didn't cover costs of compulsory new fire doors and alarms.

It does sound great, I think buying a flat in a very small block or as a maisonette means you don't get a lot of the downsides of flat ownership. Things to consider would be how building maintenance is organised. You don't want it to be neglected but you don't want to always have to be paying for something new either that comes out of the blue. Maybe try to find out how the owners manage maintenance or bigger jobs.

The other thing is that being upstairs you might have to be mindful of being noisy (especially if you have kids) but hopefully your potential neighbours are reasonable about everyday noise.

No service charge would be a huge red flag to me. Buildings need maintenance and having to get everyone on board to pay up when an issue arises, which it inevitably will, with no money in reserve to tap into is at best going to be a lengthy hassle and at at worst going to be a huge fall out if you don’t all agree or have the money.

Thanks all. I'll try and get clarity on the plan for the service charge /sinking fund. The flats have only just bought the freehold together so I think it's somewhat to be decided. In any case I will be aiming to set aside a certain amount of money each month for maintenance.

Is that how service charge works though? I've heard about people being asked to pay £££ for work on top of paying service charge!

No service charge is common in Scotland as a lot of flats are freehold. It can be a nightmare trying to get works done as there isn’t always a management company so all the owners have to agree/arrange works!

Well run freeholds should have a service charge account for the yearly maintenance and also a sinking/reserve fund account for any additional work that may crop up. Occasionally an urgent and expensive piece of maintenance may come up and that will need to be paid for and their may not be enough in the service charge/reserve fund for this to be fully funded so extra funds from leaseholders will be required.

Sadly a lot of freeholds are not well run and people think it's really good if no service charge is paid...... until something happens and they get a massive bill!

I'm an ex freeholder and getting money out of leaseholders was hell even with a set monthly service charge. I can not imagine how bad it would be trying to get them all to pay up massive amounts as and when work is needed. Freeholders also have some strict criteria they have to keep to including keeping the building safe, this has to be paid for by the leaseholders but they don't like paying for it!

Your flat sounds ideal OP. If the freehold is shared by 4 flats in total, I assume there is a management company and if so you can possibly look at the accounts online? There doesn't necessarily need to be a service charge - many joint freeholders do works to the structure of the building on an "as and when" basis.

There is no management company. The freeholders will manage it themselves.

No service charge or sinking fund is a red flag as is not having a shared property insurance policy . You may save for future maintenance but there is no guarantee the other flats will do likewise . Maintenance costs are likely to be significant over time as they are with any house .

Have you looked at shared ownership houses if you are on a limited budget ?

@OhhhhhhhhBiscuits is exactly right. No service charge would make me nervous and I'd consider it an amber flag (maybe not red but...) Sounds like a recent enfranchisement and the owners haven't fully thought things through yet or are being a bit naive.

As an example, what happens when the roof leaks? Does everyone have the money available to pay their share to get it fixed? How much is covered by building insurance? How is the building insurance premium paid if there's no service charge? Will the ground floor flats refuse to pay a share since it doesn't affect them directly?

Is the garden shared / communal?

We once rented a flat in a converted house. The garden was supposedly communal but the upstairs neighbours were very garden-proud and fussy about it and it was very awkward trying to use it.

It sounds like a nightmare waiting to happen. We live in a similar block, but we have a bank account with proper accountant oversight that we pay into monthly that pays communal building insurance and maintanence. We also have a legal agreement about voting for work. E.g. if it needs a new roof, 80% have to vote in favour. If you get one tight arse you might never be able to do any repairs.

Btw, living in a flat is great! No stairs, much better use of space, often better built so warmer and quieter than a terrace, big windows, easier parking spaces, a view...

So who pays for the roof repairs etc?

All the flat owners pay together

All the flat owners pay together
What happens if Doris from the downstairs flat refuses or can’t afford it?

How? This is the whole point. It isn't as simple as "they all pay together". @StamppotAndGravy is right. There needs to be a clear legal agreement (and defined next steps in case of breach).

I love my new build flat even though I pay service charges - its a big building though with many flats. I have a balcony too which helps and got the cladding certificate needed as otherwise the bank would not release the mortgage. But I’m not sure the cladding stipulations would apply to your flat as the building appears smaller.

I do know that people have struggled to sell without one of buildings of a particular size so I’m glad I got the new one.

Most neighbours are nice except I did report the noisy tv/ music neighbour to the building management - that was the only thing that was not enjoyable - it took them months to sort it out however since then it has been noticeably quieter.

my monthly service charge has gone up but not too bad and they refunded me overpaid service charges from 2 years ago ( which I didn’t realise I had) so at least they do that if I end up paying too much.

I find it easier to clean and maintain and actually realised I don’t need lots of space. I’m a bit obsessed with the tiny homes page on Facebook. I’d really like one!

I think that you should be seeking advice from your solicitor on this.

I forgot because it’s new build it’s so warm. I turn on my heating in December and turn it off end of February. Pay £25 a month for heat and hot water monthly.
however it’s boiling in the summer - had to buy two massive standing fans when I moved in.

No management co. Getting people to agree on work is going to be a nightmare. Then you've got to get quotes, organise the builders, make sure they turn up, do the work, then check the work is done to standard...a management co will do all that, as well as arrange the insurance and chase people up for money. They'll also produce the annual accounts.

The trouble with doing it al among the freeholders comes when people aren't interested in getting involved and it all lands on one or two people. Worse, when no-one's interested in getting involved.

I used to live in a similar flat. Block of 4 purpose built flats. All own front door so no inside communal areas. We didn't have any service charge or management company either. Admittedly i was younger when I bought it so didn't really think it through that well. But I lived there 20 years with no issues. The one difference in our set up though was the upstairs flats owned the roofs and each flat needed their own buildings insurance. Now I'm older, I'm not sure I'd do it again without asking a lot of questions. On the other hand I had no issues but maybe I just got lucky!

I will ask solicitors to check this, thanks