Service Charges (Flats/Maisonette)
If you buy a flat or maisonette we will be responsible for the external repair and maintenance of the block and its common parts. We will also provide communal services such as lighting and caretaking. We will recover our costs from you by way of a service charge. Such charges can fluctuate according to what works are carried out in a particular year and the level of communal services provided in that year.
With some types of property, such as high-rise flats, repairs can be very expensive and often result in high service charges. Also, we are obliged to carry out repairs when they are needed which may not be financially convenient for you. When you are given the purchase price of a flat you will also be provided with an estimate of service charge.
This will give you an indication of the charge that you will pay in the first year but do bear in mind that unexpected repairs might become necessary resulting in a higher charge. The general trend for charges is upwards. The law does provide some protection for leaseholders and the following independent website is worth looking at: www.lease-advice.org
You already pay for your utility costs [electricity, gas, sewerage, water and telecommunications] and this will continue as a homeowner. You pay Council Tax and this will also continue. It is a good idea for everyone, whether they are a tenant or an owner, to insure the contents of their home. There are many policies available so it is advisable to seek a variety of quotes to obtain the cover that is best for your personal circumstances.
Mortgage lenders may require you to take out life assurance to at least the value of the property. This means that in the event of your death the loan will be paid off. There are many providers of this cover and you should liaise with the lender to get the best cover for you, although this does not necessarily have to be bought from the lender.
You should consider taking out Mortgage Protection insurance to cover payments if you lose your income through illness or unemployment. Again, there are many providers and you should seek quotes and liaise with your lender.
Future sale of your property
If you are buying with the help of a mortgage you will know the property currently qualifies for mortgage lending. If you are buying without a mortgage you should talk to lenders to confirm that they would give a mortgage on the home to future prospective purchasers. If mortgage finance is not available it will be difficult to sell the property on and its value will be lower.
You must remember that in future lenders may change their policy on mortgage lending for certain types of properties in certain locations. The fact that mortgage finance is currently available to purchasers does not mean it will always be available. This is a risk of property ownership.
As an owner when you sell you will have an amount of money to buy another property of your choosing [subject to your financial circumstances] in the location of your choice. You will usually have a much wider choice than tenants wanting to move. However for some types of property, most notably sheltered housing, there is very limited choice in the private sector. Consideration should be given to this.
Do your sums
Download our affordability planner: RTBPurchaseaffordability.pdf [pdf] 28KB. You can use it to set out your possible costs of home ownership and it will show the affordability of your home at the present time. You should also bear in mind the prospects of your income changing and how that might affect the property’s affordability.
Some lenders provide mortgages whereby legal and survey costs are reduced or are paid by the lender. The figures quoted above are approximate and for guidance only. If you do not make payments as required by the mortgage / loan company, they can take action to repossess your home. The Local Authority or Housing Association does not have to give you another tenancy if you lose your home in this way.
If you have any queries regarding any of this information or would like to receive an application form and/or a free booklet, produced by the Department for Communities and Local Government called “Your right to buy your home” please do not hesitate to contact our Sales & Marketing team on 01892 501490 who will be happy to help.