Should I buy 110 year leasehold with 122 p/month service charge?

[BlingersMcBling]

I've seen a property I really like and I knew it was leasehold with ground rent of 150 p/a but went to view and the seller said the service charge is £122 a month... this was a big shock to me and means I'm going to struggle to afford it but I really want it. The house is detached so I was really surprised at the high service charge. Should I be concerned about buying a leasehold property at the moment with 110 years left on the lease? Thanks

I wouldn’t buy any house I would struggle to afford. It puts you in a precarious position.
Throw in a sudden boiler break down, or an expensive car repair, and you could be easily plunged into debt.

I presume they will put the service charge up each year, how will you afford that if you can’t really afford it at its present rate?

Are you buying the whole house or is it a flat in a house? I usual if it's the first.

What if the charges were raised in the future? Can you still afford it?

I'd be wary.

The leasehold could go up every year, the leaseholders could insist you buy their buildings insurance and in 20 years you’d really need to buy the lease itself so would have to save and hope it’s not extortion.

The leasehold I had insisted on their buildings insurance which 5 years ago was £450 a year. I resented paying that every year.

We used to have a leasehold property and the management company did very little for what we paid each month so I would be wary. Also it could be harder to sell in the future as the lease will decrease each year.

Find out what the service charge covers. If the service charge means you will never have to pay for a boiler repair/new roof/other expensive maintenance tasks which are needed every decade or so then you could be quids-in. If you had a freehold property you should be putting significant monthly funds into savings for predictable maintenance expenses which tend to be very lumpy and cost £6000 in one year and then not much for a couple of years before the next big job is needed.

I was under the impression that the service charge can be raised by any totally unreasonable amount so you could soon find yourself unable to afford it at all.

This is what would put me off buying this sort of property.

I would avoid this situation.

I'd want to know how much a statutory lease extension would be (gets more and more expensive the shorter the lease) and what the provisions of increases of the standing charges are and what (if any) large bills you could be liable for if the freeholder comes across them.

Ideally I'd buy something else that was less hassle but if I didn't have a better option I'd be prepared to consider it if I had the above info and could afford a statutory extension within a couple of years.

Aww OP I know this is gutting as you really like the house, but honestly I wouldn't.

We actually watched a programme a few nights ago that talked about Leaseholds as being a bad idea and likened it to a modern scandal. One poor lady had seen her annual maintenance fee quickly increase year on year to the point that she couldn't afford to buy food and had been told within a few years it would increase to £8000 a year. There's no cap on how much this can be increased by. Another case was someone who bought a leasehold property having been told at the point of sale that buying the leasehold would cost £2000, but when she then went to buy it after purchase the price had been increased to £14000.

As others have said you would likely find it hard to sell on, as the downside of leaseholds is it means you don't own the land, which isn't attractive when you're buying rather than renting. Also if you ended up needing to sell due to high maintenance fees then they'd likely put buyers off too.

It's not just whether she can afford it, nobody will buy it off her if the service charge becomes too expensive.

If it is a house what the hell is that £122 per month being spent on?

I own a flat and pay £180 pm service charge and that covers gardening, cleaning of communal areas, insurance, electricity in communal areas, minor running repairs and a contribution to a major works fund (eg we recently had to have an underground mains drain pipe replaced and it was paid for out of this fund).

Others are correct Also v important is how long you intend to stay there If just a step to get on the market then probably ok
You must get a survey

Thanks guys, really helpful advice-I think I’ll keep looking

I would avoid and buy a freehold house instead, service charges only ever go up, plus after 10 years the lease will be under 100 years!

From working with conveyancing solicitors. Definitely not. The service charges will go up every year.

DB and SIL are in a leasehold flat and the management company are less than useless.

I heard govt looking into stopping
People charging high amounts for leasehold extensions but only a White paper

Think about this: people don’t buy leasehold more than once in their life, getting burned once is usually enough

Hey folks

interested in buying a flat for BTL which has a peppercorn ground rent of £1 per annum, £122 service charge with 900+ years left on lease isit worth it?

@Immbear You're usually better off starting your own thread and giving all the details (leasehold only, share of freehold, property type, whether the building has a management company or if that company is run by residents, is there a sinking fund etc).