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Grampa

Communal gas and water bills

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A 2 bed flat has just been reduced in the area its a good price but the block of 8 units has a communal gas boiler for the heating and communal water bills. This means the service charge is £1800 pa to include those utilities. It also comes with 999 year lease and share of FH.

My thoughts are, this has put off buyers and thats why it has been reduced even though the gas and water equates to about £100pcm of that service charge and means the true SC is 600 quid per year. 

But I'm thinking a similar "normal" 2 bed would rent for 750 pcm but if you advertise it at 850 no one would click on it to find gas and water were included. 

So I could advertise at the normal 750 and in the text below explain another 100 would be added to the rent for those utilities.

Thoughts? Would you buy a property like this? Is it worth considering? 

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As always, the devil is in the detail.

From a tenants point of view it might sound attractive but £100 pcm for gas and water = £1200 pa + electric. So not cheap for a 2 bed flat. 

From a buyers perspective that's not good news during voids when the property gas and water consumption will be virtually zero in summer.

It begs lots of questions......what about utility supplier changes, price increases, resale, usage limitations etc etc.

I'd probably pass on it.

 

 

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Tricky question that is. A SC charge of £1800 is enough to put anyone off buying this flat but to then learn you have little or no control over gas and water charges doesn't help does it.

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It comes with a share of the freehold so I would guess you have a voice and a little influence with how the block is run. 

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If you would have a share of the freehold, if there is profit from the energy charge where does it go?

Unless there are management charges that are independant of the committee, by a mangement company, I would assume any profits would become part of the sinking fund??

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Well, by law you are not allowed to resell electricity at a profit. Otherwise I would  guess that makes you technically  a utility provider and you would need licences and all sorts. . This issue comes up now and again in rented properties which still have coin/card meters operated/emptied by the landlord typically in a property above a shop when the single supply is for the shop and also flat above. The landlord trys to be clever and set the rate at higher than he is paying for it. 

But for the property mentioned at the start of this thread the idea was to just set the rent higher.

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I have no first hand experience of this situation but I would have thought that surely if the landlord is paying the gas and water bills and the tenant is just paying a fixed monthly amount then there is no incentive for the tenant to be careful with water or gas consumption. For example they can just leave a tap running or the heating turned up to max with no expectation of higher bills as the landlord is picking up the tab.

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1 hour ago, Richlist said:

I have no first hand experience of this situation but I would have thought that surely if the landlord is paying the gas and water bills and the tenant is just paying a fixed monthly amount then there is no incentive for the tenant to be careful with water or gas consumption. For example they can just leave a tap running or the heating turned up to max with no expectation of higher bills as the landlord is picking up the tab.

Typically a LL would instal a timer / stat / programmer that isn't T adjustable. But if the energy costs are set by the 'committee' there is no incentive for the LL to care anyway.

My thoughts in my previous posts were that if the 'profit' from the energy charges do go toward a sinking fund then there is an element of offset to the LL, that is the LL may well have the benefit of an increasing share of that fund. Unless, as suggested, there is a management company in place enjoying this as company profits.

As the individual owners are shareholders of the freehold they can change things as they desire, by a majority vote, at the AGM. It takes a bit more research to understand feasability, and typically the others are unlikely to sympathise with the 'new guy' wanting to re arrange things, but the £1,800 may not be so set in stone as you think.

In any case if there is a portion of profit that is effectively to the benefit of the LL they might view this as a way to offer a competative rent. 

Could the energy costs be invoiced to the T seperately to the rent? The property is advertised at an attractive rent, and the energy costs might not have to look too scary.

 

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That must be a mega boiler to deal with 8 units!  How new is boiler and system?  What happens when they need a new one.  What are the insulation values?

I would knock on a few doors and ask how things work out and who is a non or late payer - there is always one.

 

 

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I was thinking that as well about the size and output of a gas boiler serving 8 units. I should go and have a look at it Grampa as it probable can power the QE2as well       😊       and would cost a small fortune to replace. Also has it been serviced on a regular basis?

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Aren't properties with gas boilers on the way out ? Not many years from now legislation will be passed to outlaw their use. Gas boilers running on dino juice are so last year and the Greens/ Environmentalists would rather see users shot at dawn rather than just wag their finger at them. I can't believe people are so short sighted as to have new boilers fitted with the current global warming publicity we see every day in the media.

No.......the future is electric air sourced heat pumps. With the electricity provided from renewables (solar, wind etc). My current energy supplier provides power 100% from renewables so it can be done. We have one of these heat pumps in our Spanish property and It's great. Highly recommended.

Very soon properties with gas boilers will be frowned on in the same way as second hand diesel cars will be in the near future.

You have been warned.......just don't shoot the messenger.

 

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*  14% of total UK carbon emissions is from our homes........it has to be reduced.

*   Gas heating ban to be introduced by 2025.

*   So, it looks like we are all gonna freeze to death in 6 years time if we don't have a viable , affordable easily obtainable alternative.

It suggests anyone working in the domestic gas industry might need to look for another job or re train soon........it's a dying industry.

So, surely any property for sale with gas central heating is a good opportunity to negotiate a discount.

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1 hour ago, Richlist said:

 

*   Gas heating ban to be introduced by 2025.

 

Beware of low flying pigs - not you Richlist.  I do not believe a word of that propaganda.  The biggest polluters are the Chinese and the USA in that order.  The humble UK gas boiler comes way down the list.

Show me how you install an air source heat pump in a flat NOT on the ground floor of a building?

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It won't happen RL   I would concede though that new builds might have to have heat pumps installed as a heating source rather than gas.

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Well on the news this evening, if I recall the figures correctly ....total worldwide carbon emissions are:

China 30%,   USA 15%  followed by India, Russia, Japan and Australia.

the UK represents just over 1% of the total.......which rather puts things in perspective.

 

Air sourced heat pumps can be installed on any level including flats above ground level. Lots of properties in Spain have them because as well as providing heat in winter they double up as air conditioners in the summer. Dont be confusing them with ground sourced heat pumps which clearly are not for high rise.

The issue is the cost. As far as I can see air sourced heat pumps cost between £7K - £11K for a typical house in the UK. Persuading Joe Public to spend that much when they can replace their gas boiler for less than half is the difficult part. Without an incentive or a miracle it's difficult to see it happening.

Apparently 14% of all carbon emissions are from our homes in the UK

Don't under estimate the power of the Green lobby in this country or the will of Government to significantly reduce our 1% of carbon emissions. Neither will be deterred because China and the USA emit more carbon.

Gas boilers are yesterday's technology in the same way that diesel cars are.......don't call into the trap of thinking it's all bullshit.

If David Attenborough is right.......then we are all doomed.

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