I am really interested in a leasehold purpose built flat (4 flats) with a 25% share of freehold for the purpose of letting out.
The leasehold and ground rent is currently £850 per month so 70 quid a month also some spare money is also sitting in the fund not sure how much.i did have a brief chat with with guy who is assigned to manage the lease he seems honest
So my question in your experience do you think this is fair ?
So each owner is paying £70 so 4 x 70 = 280 a month.
I suppose bills do mount up and especially with vat on the top also in the meeting being a 25% freeholder I would get a say if I thought the money was.not being spent properly!
125 years left on lease
Hope to talk soon
Granted being a 25% freeholder i would have some say in the yearly meetings
Do you mean the service charge and ground rent are 850 per year, so 70 per month for each flat owner
You can ask what is paid for by this, just like any other purchase
-does it include the building insurance?
-what are the other costs
(cleaning and electricity for communal area, accountant, fire risk assessment, maintenance etc)
contributions to a reserve fund for , how big is it
It obviously depends on the size of the property, but 300-400 quid pa per flat for the building insurance isnt unusual in my experience. The Service charge for a property depends very much what services are provided but it’s likely to be cheaper when there’s a share of freehold or RTM with a small block of flats than a freeholder who uses a management company - and as you say you have more control. Obviously some maintenance etc services are more expensive in some places eg London
£850 pa for the service charge/ground rent if it includes the building insurance isnt expensive at all, at least for London
Remember also all these charges can be counted against your landlord income for tax purposes
Why is there still ground rent if you would own a share of freehold? Is the majority share of the freehold still owned by 1 person? If not, why haven’t the other leaseholders voted to scrap it?
I do think that £850 a year is too high, but the bigger concern would be what the lease says about escalation. Does it double every 10 years for example? I would also be looking very closely at the service charge and any sinking fund payments.