New build apartment - need advice

[Gifgaf]

We are FTB and after lots of research and viewings we have come across an actual dream home located in a perfect location. The new build is very lux in every aspect with 24/7 conceriage and blue chip businesses below and private podium and winter gardens etc. The apartment we want is on high demand because there is not enough 3x beds in the building.

However, we are super uncertain and split on what to do because we are hearing horror stories of service charge increases and people being presented with large bills that they can't afford.

What are people's experience with new builds and does it make much of a difference in having a super lux one compared to maybe an average one in terms of service charge and building works etc.?

On the contrary, me and DH have a house each to our name (selling them is out of the question ) and we are in a financially stable position as we are but it is now way too small for our family and should we decide to take this new build, we will more likely be very difference financial position and will have to be extremely conservative on our spending and constant budgeting.

I am really looking for valuable advise, authentic experiences and opinions.

It's a huge decision and I am worried about making the wrong one especially have small children.

Dont do it. We bought one on 2017 - service charge was £3.5k per annum. by the time we sold it (at a huge loss) the service charge was £10k per annum. no one would buy it, hence the loss. It was a highly stressful time.

You’re both in housing association properties which I thought were for people in need to some degree yet you’re looking to buy a luxury flat with a service charge of £6,000…. .

Luxury flats normally get absolutely hammered in a housing downturn.

I would think very carefully.

I wouldn’t touch it, maintenance charges for all those amenities will go up quickly. I’d look further out for a freehold place that you can add value too rather than being sucked into the “dream” of luxury living.

That's what's so annoying why service charges is unregulated and uncapped.

It can't be capped because it depends on the needs for each building. Service charges increase anyway because of inflation - any building with even a basic function will need a cleaner, the cleaners wages will go up. Times that by the number of staff needed to run the building.

It's not necessarily the end of the world if you like the flat there are some big advantages to owning a flat but in terms of the service charges these are the key things:

residents have the right to manage RTM the building - whcih means taking over the running of it and deciding the budget and what it is spent on. This is generally better because the residents have a massive interest in keeping the costs down in the way a commercial landlord doesn't.

It only works though if you have enough residents wanting to do that AND enough sensible residents willing to be on the board. If your neighbours are all foreigner abroad who just want to do short term lets, they aren't going to be interested in getting involved on a residents committee/ RTM company. If you have a few professionals in the building - accountants, lawyers, property types, who are keen then it can work very well.

You need to see whether there is a sinking fund which is 100% essential in my view. This is payment in now for nothing specific to protect against future problems of a big expense - like having to replace the lifts when they are end of life or reclad the building. Often what happens is a new build doesn't have one, everyone proceeds without thinking about it and then BAM, there is a bill for £500,000 to replace the roof. This is a massive financial burden on everyone - crippling sometimes - if there has been no future planning.

The state of repair of the building is very dependent on the number of people living there. You need a full building with every flat contributing to the service charge. if it becomes too expensive and people abandon it, and the whole thing either becomes too expensive for the remaining payers or falls into disrepair. This is less likely for a luxury development but the point is that if you have a lot of foreigner non-dom owners, there maybe a risk of problems with future non payers.

Short term it's likely to be ok. if you are buying it to live there for 5 years+ then these are things to think about.

My best friend in zone 2 with a flat on the river views of CW the O2 swimming pool gym said her service charge went up 40% after everyone moved in. And nothing you can do about it. Not sure if she expects a 40% rise again or not. I’d be very wary of the mod cons if you don’t Need them. Zone 1 sounds amazing though if you can afdord

Some great advise on here!

So I've just double checked and it appears the swimming pool and gym are not part of the amenities of the apartment which makes me believe these will be separate. Does this make a huge difference to SC ?

Possibly
but you will still have very little control over the service charge and the only way it will
is up. It’s never going to come down

are there any social housing flats in the block as you may be subsiding these flats service charge when any work is done

my friend has a flat in a nice council owned block he bought it with cash as he couldn’t get a mortgage on it

he’s just been hit with a 60k bill
flat is having major building work inc new windows - doors and work done on the roof scaffolding over the whole block and they have removed several of the parking spaces for the contractors so he’s having to pay to park elsewhere

2 years ago he got a 7k bill for the replacement of the lifts

he has only owned it 7 years

neighbours either side of him are still owned by the council so they don’t have to pay anything apart from there rent which as it’s a council owned building the rent is around £100 a week 😂

why don’t you find out what the service charge is for the flats with the pool & gym and compare

I'll have to find out but I imagine very limited.

70k 😮 what has he done ?

You will pay through the nose for a lux london apartment.

So people can keep HA properties forever and buy other property? 😮

They will have to be returned

Ok so you can't keep them

Just don't buy in Z1...

honestly will all the press about service charges, the cladding crisis etc I have no idea why someone would buy a new build apartment.

From you saying "there will be a pool and gym" I am guessing these are new builds?
If so you have no idea of quality, what amenities there will be, who will end up living there and what else will eb built/no built around them
That would put me right off

I lived in a flat, not a luxury one, but a new build and in the time I owned it the service charge tripled and unfortunately there’s no control over it. It’s a shame as I prefer a flat and it’s all I can afford but it puts me off buying a flat again.

7k was a few years ago replacement of lifts

now he has a bill for 60k as he’s needs major works roof / windows doors scaffolding all over the block

he’s got no choice but to pay it

if the service charge doubled every year could you afford it

like i posted earlier my sons old flat that he rented the service charge was 1800 in Jan 2023
It’s now 4k that’s In just over 2.5 years

he’s still on the residents Watsapp group 😂 so he can still read what’s happening and most of the residents are furious but because a large percentage are rented out it makes trying to do a right to manage difficult

Lots of stuff in media currently about huge service charge increases. Place in Somerset went from £700 pa to £7000 pa. Residents can't afford to pay it but can't sell either.
Personally, I wouldn't buy this flat.

I've said a few times now that they will have to be given up if I buy

I wouldn’t do it. Can’t you look in zone 2 or 3 for a maisonette? Maisonettes usually have garden even if on first floor and some are 3-bed, although one room will be a box room probably.

@Snapncrackle this is exactly my point in my post above about the lack of sinking fund.

every building should have one right from the start and everyone should be paying in other wise you end up in this situation.

To anyone living in a block of flats with RTM check that your building has a sinking fund and if not get the board to do something about it. It gets overlooked when the building is new but it causes major problems if there isn't one as @Snapncrackle s post.

People get irritated about paying a bit more for what looks like nothing. Come a major unforeseen expense like lift or roof replacement or reclading, it is essential.

Whereas I always voted to keep the sinking fund contribution minimal knowing that I was planning on moving and that was never money I was going to get back. Actually I would’ve rather had a cash call, than put money into a sinking fund- no one ever looks at management accounts and says there 200k sitting there I am buying 10% of that so the place is worth 20k more.

If you only buy a flat with the intention of living there for 2 or 3 years and it doesn’t have a sinking fund you’d be mad to push for one.

And that’s the problem with these places, different priorities when it comes to management.

Whereas I always voted to keep the sinking fund contribution minimal knowing that I was planning on moving and that was never money I was going to get back. Actually I would’ve rather had a cash call, than put money into a sinking fund- no one ever looks at management accounts and says there 200k sitting there I am buying 10% of that so the place is worth 20k more.
If you only buy a flat with the intention of living there for 2 or 3 years and it doesn’t have a sinking fund you’d be mad to push for one.

That's where you are wrong. That's the whole point of a sinking fund. You have zero guarantee that there might not be a massive unforeseen expenditure within your 2 - 3 year window that is not covered by insurance and would affect your ability to sell. You say you'd rather had a cash call but that's assuming it's a small bill. Some expenditure can be huge.

You don't know whether it's your own risk you are gambling with.

& for flats not being bought off plan, it would definitely deter some buyers who are more savvy - or are properly advised by their solicitors.

You are 100% right though about different priorities when it comes to management.

Ah I am so split on what to do. I so badly like the apartment and it's a perfect fit in many ways but I also don't want to put myself in a position where I will regret down the line 😫

If you want to live in a swish central London flat then rent. It will take years for you to break even from buying, you’re better off investing any cash you have.