[aalyas]

I am thinking of buying a garden flat in a popular part of south west london london - the service charge is £1270 per annum ? I've seen another nearby flat with a service charge of £300, but am aware these can vary significantly?

The flat is in a victorian period conversion - so honestly not sure what service needs to be done, but wondering what people think of this cost ?

[aalyas]

sorry forgot to say - ground rent, gas/water/electricity, buildings insurance not included

[rit]

aalyas, on 09 February 2012 - 01:29 PM, said:

I am thinking of buying a garden flat in a popular part of south west london london - the service charge is £1270 per annum ? I've seen another nearby flat with a service charge of £300, but am aware these can vary significantly?

The flat is in a victorian period conversion - so honestly not sure what service needs to be done, but wondering what people think of this cost ?

Ask them to break down what the service charge does cover. Also check to see if there is a reserve fund and if so at what level is at at compaired to where it is expected to be. It could be that a large amount of work has been carried out in the recent past, so reducing the reserve fund and so the charge has been raised to build up the fund again.

[rit]

rit, on 09 February 2012 - 02:13 PM, said:

Ask them to break down what the service charge does cover. Also check to see if there is a reserve fund and if so at what level is at at compaired to where it is expected to be. It could be that a large amount of work has been carried out in the recent past, so reducing the reserve fund and so the charge has been raised to build up the fund again.

The reason for asking about the reserve fund is that I know someone being sold a flat with had been priced to take into acount a large amount of 'improvements' that had taken place over the last few years. It turned out that many of the improvements had been funded from the reserve fund and so as the purchaser they were going to end up paying for them via the higher service charge over the next few years and the seller was trying it on.

[aalyas]

Thanks for your responses. From looking at the price of several similar flats the charge seems to be much higher - and I guess it will only go up year on year. It all seems abit dodgy to me.

[Guest_ringledman_*]

Read the management accounts.

Is there cash in the bank?

Was the overall income coming in from the flats higher than the expenditure?

The balance sheet of the management account is critical for buying a flat.

If there is a deficit. Avoid.