A recent survey suggests that buyers of apartments coming onto the market this year are paying significantly more in service charges than those buying older properties – with ‘hidden cost’ service charges on new-builds are reaching an average of £2,777.
Service charges are often a hidden cost, which should be factored in when considering the affordability of a property. In some cases, service charges are uncapped and can escalate rapidly. Landlords need to take into account all associated costs when purchasing a property, such as service charges, ground rent and taxes.
Leaseholders pay a service charge or fees to a management company to cover maintenance of the building. They tend to vary from year to year. Owners who rent out their homes may pass on these costs to their tenants.
The survey suggests that leaseholders of newly-built properties are paying a lot more in these charges than the general average of £1,863.
The research also suggested that some developers are also requiring freeholders to pay fees for the upkeep of private roads or communal gardens in private estates and for trendy additions such as gyms, so if you’re buying in an apartment block, do your homework on service charges first.