Freehold with Service Charge

  • Filter
  • Time
  • Show
Clear All
new posts

    Freehold with Service Charge

    I've had an offer accepted on a relatively new 4 bed property, however I've found out that it has a service charge for the parking area, seems to be about £300 per year at the moment. I'd keep away for some of the really unfair Estate rent charges which are used to make sure the service charge is paid, they name the service company in the transfer deed, this arrangement seem really nasty and it's near impossible to remove them, plus if you are over 40 days late they can force a repro, mortgage companies are picking up on it now making lending an issue.

    The reason I'm still considering this property is that it will cashflow at over £700 pm, needs very little maintenance, well designed with massive windows and just a place to be in, it's £20k less than anything equivalent which is true freehold. Currently the residents run the limited company which hires the service company, they have recently kicked out the previous service company and taken on a much better one, they also have the option to self manage but no one could that much time, the residents have 4 directors who make the decisions, the the residents are members of the residents company. The downside is that it's not really a true freehold and will have an impact on resale and these type of properties are getting a lot of bad press, it could be the next leasehold problem, also what happens when the clearly committed directors move.

    Does anyone have experience of owning a freehold with a service charge? With the residents controlling the company an acceptable solution, ideally the council should adopt everything but it's more common they don't these days- Walk away from it or continue?

    You should get your MP involved to spot the scam.


      This setup doesn't sound much different to where my mother lives. This is an estate of 30 houses built on the site of a country house that burnt down in the 60's. There are grounds to maintain, so each owner buys a share in the management company, and has to pay around £400 pa in maintenance. Obviously there are some disagreements regarding how the money is spent, but it seems to have been okay for the last 50 years.


        Thanks for the info, I have read lots of articles but there seems to be lots of models to apply the service charge, if I was buying it as a residential then I would back out and look for a true freehold. As this is an investment and the potential earning from it makes the decision slightly different, the service charge cost would be fully tax deductible, now the residents have control it might not be too bad, it’s in there interest to keep an eye on costs. I have to find out who actually owns the common car park area’s, if the land was transferred to the management company and we all own a share of that company then not too bad, if however the land is still owned by the developer and it’s leased to the management company at a cost then what’s stops then increase the costs or selling the land to a third party. Anyone have a similar setup?


        Latest Activity


        • Notice served , rent arrears increasing
          by Propertygoesup
          I have had a solicitor serve s21 notice for me on a tenant who is now 3000 in arrears (over 3 months) . Notice asks tenant to leave early Feb.
          ​​​​​​I have asked solicitor whether I can offer tenant any kind of deal on waiving rent , which they said I can in writing.
          I'm here...
          16-12-2019, 10:15 AM
        • Equity release
          by Bricko7
          Hi everyone.

          So I have a house with about 90,000 of equity in it, which is about 70% of the value. One option I have is to release the equity as it is rented out and I don't want to selll.

          I am half way through a 2 year fixed term on the mortgage. So if I release equity will...
          10-12-2019, 04:22 AM
        • Reply to Equity release
          by loanarranger
          Equity Release loans do not extend to Buy to Let Mortgages given that such borrowings are deemed Non Regulated by the FCA Whilst Residential Homeowner Loans are Strictly Regulated and why only Brokers with the relevant qualifications are permitted to advise and arrange such facilities with lenders.
          12-12-2019, 04:41 AM
        • Reply to Equity release
          by Gordon999
          If you are part way through an existing fixed term mortgage, you should want till nearer the end of the term before re-mortgaging.

          Equity release is only for those who have no income to pay interest on a normal mortgage loan.The interest rate charged is higher because the lender has...
          11-12-2019, 02:54 AM
        • Reply to Equity release
          by loanarranger
          Firstly are we discussing obtaining a further advance from the current lender , obtaining a second charge mortgage from a third party provider , I am a little confused; I am also assuming that the present loan is a Non Regulated mortgage as opposed to a Residential Homeowner Mortgage but where the property...
          10-12-2019, 07:59 AM
        • Reply to Borrowing against property to invest in shares etc
          by theartfullodger
          Indeed: I have experinced B0E interest rates hitting 17% (yes you read that right, under Thatcher...) and a price collapse during divorce divestment - both were ...err... painful: (the money position, not the divorce..)...
          09-12-2019, 15:52 PM
        • Borrowing against property to invest in shares etc
          by Clulass
          New here, just wondered what people in property thought about borrowing against a BTL property, to invest in shares (either plcs or start ups) - so relatively risky but big growth potential.

          Is it a totally crazy idea, or perhaps not, if you can afford the interest payments, and you accept...
          17-10-2019, 08:40 AM
        • Reply to Borrowing against property to invest in shares etc
          by doobrey
          Depends on circumstances, I guess. I was talking to brokers about extracting equity from my property for investment and I was being told no because it would be viewed as a good money-laundering strategy (i.e. buy for cash -> remortgage) and therefore they would be on the wrong side of AML rules....
          09-12-2019, 15:09 PM
        • Retrospective sub-division of a HMO and financing/refinancing strategy
          by GaryE
          I have 5 self-contained bedsits and 1 x 1 bedroom self-contained flat all contained within a single HMO property. There is a shared kitchen and lounge and I have a HMO license and certificate of lawful development (change of use C3 to C4). My strategy is to wait 3 more years and get retrospective planning...
          04-12-2019, 15:20 PM
        • Reply to Retrospective sub-division of a HMO and financing/refinancing strategy
          by loanarranger
          Can I make a slight correction Gordon to your last post and without wishing to sound clever;you are indeed correct regarding the possibility of the lender not allowing any flats to be extracted from the title but the possible exception is if the value of the Freehold plus the value of the remaining...
          07-12-2019, 14:13 PM