Heating & Water bills included in service charge

[Grampa]

I am considering putting in a offer for a one bed flat but the service charge is £120 pcm but it does include the heating (unlimited) and water bills. It is a converted building with 8-9 units and does include a share of the freehold. The S/C account looks very healthy with a big chunk in the reserve fund.

The property has a small study (40 sq ft) room off the large lounge but is too small to be consider as a 2nd bedroom but there is the option to move the  stud wall into the lounge which would make the room big enough (52 sq ft) to be classed as a 2nd bedroom.

It only appeals to me as a 2 bed as that increases the rent by about £100/125 pcm plus I guess it would give capital growth,

I estimate the heating and water bills equate to about 80-100 quid per month. so I plan to advertise the property at 725pcm with a footnote in the advertising stating as the heating and water bills are included the actual rental payments will be 800/825pcm.  

Any thoughts? Am I missing anything?

 

[Richlist]

I can't argue with your figures, they all make sense. What I don't know is wether £725 pcm (£800 with heating & water) equates to a competitive market rent for a 1 bed flat in your location.

You could try to find out what other owners in the block have done.

It's always great if you can buy property and add value such as a second bedroom in your case.

Hopefully the ground rent isn't to high or the lease length to short.

[Grampa]

The going rate for a 1 bed flat  would be 575-600 (without heating /water) but its for sale price is a bit toppy for me to pay for as a 1 bed flat. But turn it into a 2 bed and you are looking at approx 15k+ increase in value and higher rental (£700ish) for relatively little cost. 

I am picking up a copy pf the lease this week but I am guessing/hoping it is 999 years  and a peppercorn R/Gent.

Its the heating arrangement that is making me a bit jittery and I am wondering if there is a implication i am missing.    

 

[Richlist]

One thing you might like to check is your income tax position.......ie....Is the supply of heating and water by the landlord tax deductible ?

Obviously the cost of the work to convert from a 1 bed +study to 2 bed is going to be a capital expense.

You might also like to check the lease to ensure there are no restrictions with regard to moving internal walls and creating a second bedroom.

[Melboy]

22 hours ago, Grampa said:

 

"Its the heating arrangement that is making me a bit jittery and I am wondering if there is a implication i am missing".    

 

I am guessing the maintenance of the heating system is a shared responsibility by all flat holder's.  There must be some form of contract rules in place to cover this question?

 

 

[Grampa]

I believe the boiler is a shared responsibility. 

But you know whats its like with these estate agents its like getting blood out of a stone when chasing info.