The NAEA president explains service charges on flats
When buying a property in a block of flats you will almost certainly have to pay service charges - Credit: Archant
Simon Gerrard, the president of the National Association of Estate Agents, answers your property questions.
I am looking at buying a flat, but people have warned me about service charges. Could I end up forking out thousands for repairs?
When buying any property you will be liable for buildings insurance and the upkeep and ongoing maintenance of that property. When buying a flat which is part of a larger building, such as in a block or converted house, these costs are divided between the residents and collected as service charges.
1. Check the lease
This will set out the obligations of the flat owner and the landlord and details what each flat contributes towards the running costs. You should take the time to go through this in detail with your solicitor.
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The condition of the building – This should give you a reasonable steer as to the possibility of having to fork out thousands for major works in the near future. However in many cases the Service charges may include a reserve or sinking fund that the lessees contribute to in anticipation of major works such as internal re-decoration (about every seven years) or external re-decoration (about every five years); or work on the structure, such as the roof.
2. Taking control
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In the past a major concern was that landlords could dictate exorbitant service charges. However the introduction of the Commonhold and Leasehold Reform Act 2002 gave leaseholders the right to take over the management of their property by setting up a Right To Manage Company. This effectively gives greater control on expenditure, while the maintenance obligations remain they can be handled by the residents or a managing agent can be appointed to deal with the day to day running of the building on their behalf and to ensure that the plethora of legal requirements are handled correctly.
3. No nasty surprises!
Most importantly before committing to buy make sure you are fully aware of your obligations. Your solicitor will give you a full report of the lease highlighting your ongoing obligations and costs, including if any large expenditure works are planned.
