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Looking For Advice on Leasehold Apartment


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Hi all,

I'm hoping someone out there with some experience can help me.

This will be my third buy-to-let but my first leasehold property.  I've run the figures and they add up well.   It is a 1 bed top floor apartment with good transport links to the city.  My offer is £125,000 and the rental estimate is £625-£650 pcm.   However, my concerns are as follows:

 

There is a £678 service charge per year.  I have been told that this is £200 more than all the other apartments due to the need for the aqua system for fire safety.  This seems a lot of money to me, and I asked if this extra £200 goes into a different pot since it is in place for the aqua system and should be used to fix that in the future?  There is no ground rent and no building maintenance company.  Each owner is a director of their own leasehold and meetings are held annually to determine upkeep of the building.  Have people found that service charges go up a lot in a short time?

I've been told the leasehold is 125 years by the estate agent.  The term has only just begun (possibly six months in) as it's a new development.  This seems a low amount of time.  Is this normal?

 

What are other people's experiences of growth on apartments.  This isn't city centre (it's about a 20 minute bus ride out and 15 minute drive).

 

Thank you in advance to the people that respond.  It's nice to have support out there.

 

Cheers

Sally

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  • 1 month later...

Hi Sally, 

I own a couple of apartments just outside Manchester, one of them I purchased recently for just under 120k with a very similar rental. 

Regarding service charge, the speed at which it can increase should be in the terms of the lease. Ask the agent, and if they can't help you then your solicitor can raise an enquiry. Typically it will be something like every 5 years at a "reasonable rate". Reasonable rate being a legal term, meaning in line with inflation etc. In the past there have been situations where the service charge can double every few years, but that is now being phased out by the government, again check with your solicitor. 

Regarding my experience with growth, I purchased another city centre flat a few years ago and growth has been steady, but it was more of a purchase for the yield. There are many variables to this of course, it depends on where your property is, level of demand etc. Where in the UK is this?

I see that you posted some weeks ago - did you go ahead with the purchase? 

Kind regards, Matthew. 

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