Living in USA and UK, any thoughts?
#61
Re: Living in USA and UK, any thoughts?
One thing to consider when buying an apartment in the UK is the reserve fund. Monthly maintenance charges are low compared to where I am in Toronto. Here the condo company must have enough money in the reserve fund to cover major repairs/renovations. This is often a million dollars or more. Our condo fees are almost $1,000 per month compared to about £50/60 per month that we were quoted when looking at apartments in the UK. In the UK if major repairs/renos are required all the owners have to chip in...this could be thousands or tens of thousands of pounds each.
#62
Re: Living in USA and UK, any thoughts?
One thing to consider when buying an apartment in the UK is the reserve fund. Monthly maintenance charges are low compared to where I am in Toronto. Here the condo company must have enough money in the reserve fund to cover major repairs/renovations. This is often a million dollars or more. Our condo fees are almost $1,000 per month compared to about £50/60 per month that we were quoted when looking at apartments in the UK. In the UK if major repairs/renos are required all the owners have to chip in...this could be thousands or tens of thousands of pounds each.
#63
Re: Living in USA and UK, any thoughts?
If you are buying a leasehold apartment in the UK you should get a survey and specifically ask the surveyor if there are any big maintenance expenses likely to occur in the foreseeable future.
#64
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Re: Living in USA and UK, any thoughts?
There's nothing to stop you creating your own "reserve fund" though. ...... You'd be exposed until it had a decent balance, but depending on the age and state of repair of the building, it would be prudent to put at least £200-£250 each month until you had £10k set aside.
#65
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Re: Living in USA and UK, any thoughts?
This reminds me of another wrinkle in England - shared freehold, I think it's called. We looked at a few subdivided Victorian or Edwardian houses in Cromer. Some were leasehold, but others had a shared freehold situation which I think meant that each owner had financial obligations to the other owners, and there was no management agent involved. Seems like a recipe for disaster when one owner starting getting water coming in and the others weren't immediately affected...
#66
Re: Living in USA and UK, any thoughts?
True, but this doesn't help with the vexed problems that could arise with less financially responsible neighbours. You have your reserve fund with £10k or more in it. You just need a couple of neighbours who refuse to contribute, and it could drag on for years, with the roof leaking on all, the financially willing and financially unwilling alike.
#67
Re: Living in USA and UK, any thoughts?
True, but this doesn't help with the vexed problems that could arise with less financially responsible neighbours. You have your reserve fund with £10k or more in it. You just need a couple of neighbours who refuse to contribute, and it could drag on for years, with the roof leaking on all, the financially willing and financially unwilling alike.
#68
Re: Living in USA and UK, any thoughts?
Paying fees to build a decent reserve fund is a much fairer system IMO. Why should John Smith have to fork out £30K for major repairs when he only bought the apartment a few months ago? The previous owner had lived there for 15 years and had paid almost nothing towards repairs/renos.
All the last few posts explain why many people, me included, won't touch leasehold/ condo properties.
#69
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#70
Re: Living in USA and UK, any thoughts?
'Shared freehold'? I'm not sure I understand what you mean Robin. A common situation is where the freehold of the entire building is held by a tenants' association, usually set up as a limited company. What you buy is a leasehold flat, but you also get an automatic share in the tenants' association.
Personally, I prefer that arrangement to the freehold being owned by an outsider, whether it is a management company or a private individual.
Nowadays, the holders of long leases are entitled to get together with the other leaseholders in their development and jointly buy the freehold. They may still set up a management company, but they won't have any ground-rent to pay.
Personally, I prefer that arrangement to the freehold being owned by an outsider, whether it is a management company or a private individual.
Nowadays, the holders of long leases are entitled to get together with the other leaseholders in their development and jointly buy the freehold. They may still set up a management company, but they won't have any ground-rent to pay.
#71
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Re: Living in USA and UK, any thoughts?
In theory, as is implied by Editha's post above, the value of a unit in a building in poor state of repair would be worth less to reflect the deferred maintenance, thereby costing the seller money which is transferred to the new owner in a discounted price. Certainly there would be fewer buyers even interested if the shell and common areas are in a poor state of repair.
All the last few posts explain why many people, me included, won't touch leasehold/ condo properties.
All the last few posts explain why many people, me included, won't touch leasehold/ condo properties.
#72
Heading for Poppyland
Joined: Jul 2007
Location: North Norfolk and northern New York State
Posts: 14,456
Re: Living in USA and UK, any thoughts?
'Shared freehold'? I'm not sure I understand what you mean Robin. A common situation is where the freehold of the entire building is held by a tenants' association, usually set up as a limited company. What you buy is a leasehold flat, but you also get an automatic share in the tenants' association.
Personally, I prefer that arrangement to the freehold being owned by an outsider, whether it is a management company or a private individual.
Nowadays, the holders of long leases are entitled to get together with the other leaseholders in their development and jointly buy the freehold. They may still set up a management company, but they won't have any ground-rent to pay.
Personally, I prefer that arrangement to the freehold being owned by an outsider, whether it is a management company or a private individual.
Nowadays, the holders of long leases are entitled to get together with the other leaseholders in their development and jointly buy the freehold. They may still set up a management company, but they won't have any ground-rent to pay.
Glossary : Leasehold Advisory Service : Frequently Asked Questions
Essentially what you say in your first paragraph.
#73
Re: Living in USA and UK, any thoughts?
In theory, as is implied by Editha's post above, the value of a unit in a building in poor state of repair would be worth less to reflect the deferred maintenance, thereby costing the seller money which is transferred to the new owner in a discounted price. Certainly there would be fewer buyers even interested if the shell and common areas are in a poor state of repair.
All the last few posts explain why many people, me included, won't touch leasehold/ condo properties.
All the last few posts explain why many people, me included, won't touch leasehold/ condo properties.
#74
Re: Living in USA and UK, any thoughts?
I've lived in long lease flats twice, once in my twenties which was my first purchase, and then a Docklands flat in my forties. In the first property there was a problem with building maintenance, due to a badly drafted lease, but the flat was still a good investment. My Docklands flat would have been a brilliant investment if I'd kept it (I try not to brood on that).