Buying flat, pre-offer advised service charge , Solicitors found it to be higher.

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    Buying flat, pre-offer advised service charge , Solicitors found it to be higher.

    Hi all, so I'm in process of purchasing a flat. I was told (and checked this multiple times with them, what the service charge was because they kept changing it. It was 700. Then 750. Then 850. Then back to 800 depending on who at the estate agency you spoke to... eventually it confirmed at being 800 per anum.

    2-3 Months into the process... my solicitor provided the lease to me but I didn't see anywhere that stated the charge so I queried this and they confirmed the service charge is infact 1700 per anum. Completely different to what I was told. It's not even in the same ball park.... so having gone this far in the process... I feel reluctant to pull out however I am highly concerned of whether or not I will struggle to sell this property with such a seemingly high service charge?

    What are your thoughts.... do you feel I will struggle selling in the future?

    Kind Regards

    #2
    It seems quoting service charge at £700, then 750 , 800 and 850 is a form of deception to find a buyer. If the service charge at 1700 is for flat located around London area , it may be acceptable. But if the flat is old and located up north, and having a service charge of £1700 , you may struggle to find a buyer.

    You can check if £1700 is excessive for the area , with some local estate agents.

    Comment


      #3
      I think you already have your answer. If they could sell it easily with that service charge they would have no need to lie. Try reducing your offer and see if they take it.

      Comment


        #4
        Hi thanks for responding. I confronted the Estate Agent about this and they explained that it was a "mistake" on how they were reading the invoice they had been sent by the seller. The seller had sent an invoice showing the 800 however, they were also told this is per 6months not per anum...and the agents reading the figure, assumed it was 800 per anum... pretty big oversight in my opinion. This property was only just added to the market when I saw it (places around here come up and go within days at the moment so I snapped this one up when it came on as it ticked all the boxes including a low service charge until now...)

        I can also say having google searched, service charges are aparently been 1000-2000 in my area so it is not (yet) exceeding this but I can't help but wonder if this would be too high and put buyers off in 2-3 years time when I hope to sell. I initially thought the seller had supplied false info to the estate agent but it seems it is the estate agent that is at fault =\

        Comment


          #5
          Are you sure you understand what a service charge is?

          A service charge may vary wildly - if £800/year now it might be £10,000 in two years time depending on the circumstances.

          Your sentence "my solicitor provided the lease to me but I didn't see anywhere that stated the charge" suggests you don't understand that.

          Comment


            #6
            Originally posted by AndrewDod View Post
            Are you sure you understand what a service charge is?

            A service charge may vary wildly - if £800/year now it might be £10,000 in two years time depending on the circumstances.

            Your sentence "my solicitor provided the lease to me but I didn't see anywhere that stated the charge" suggests you don't understand that.
            What else could I possibly be referring to that is £1,700 per anum?

            The lease document itself should make referrence to the service charge and ground rent.... (Which I have now found in there, I must of missed it on first read). I still expected it to show SOMETHING however...and nothing did, nor did any of the other files they sent me at that time. So yes, I had to raise questions on this to find out the service charge is.

            I am also fully aware of service charges changing....thankfully my current service charge for the past 5 years has remained largely untouched.

            As explained in my previous posts, I posted this topic because I was concerned that £1,700 service charge would put people prospective buyers off in the future.

            Comment


              #7
              Just to add into the mix - in my case, the service charge for a 1 bedroom flat in SE London and also one in a block on the South Coast are both c.£2200.

              But as has been said, the service charge will vary - for example, one of mine was £2200 including £250 which goes into a reserve fund but at the end of the year £200 less had been spent (per flat) than forecast so £450 went to the reserve fund. That is a better scenario than if £1900 had been collected but nothing went to the reserve fund.

              Rather than looking at an invoice, one needs to look at the yearly service charge accounts over a few years to judge if it is good value or not. That will also show how much is in the reserve fund.

              Service charges are of course the total of what is spent (or wasted) in running the whole block apportioned for each flat - it's not a fixed charge from the freeholder to maintain the block which is how estate agents make it sound sometimes.

              Comment


                #8
                A very low service charge should be more of a worry as it could mean a badly maintained block with potential for huge future bills. £1700 is fair to maintain and comply with all legislative obligations, particularly if that includes insurance.
                EState agents rarely understand lease obligations

                Comment


                  #9
                  Thanks guys, appreciate the insight here.

                  Comment

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