Costs to Consider
The following are costs that you are likely to incur in the
purchase of your property:
- Legal fees
- Survey fees
- Valuation fees and other costs associated with taking out a
mortgage.
- Stamp duty (if applicable)
Freeholder
Once you have purchased your property you will become a
freeholder if it is a house or a leaseholder if it is a flat or
maisonette. The following are some of the on-going costs and
responsibilities you need to consider and make sure you have
allowed for. You must bear in mind that properties need to be
maintained and kept in good repair.
Your costs as a freeholder will include:
- Monthly mortgage payments (if you have taken out a mortgage);
you may also wish to take out mortgage payment protection
insurance
- Building insurance for the structure of the house (usually a
requirement of granting a mortgage from the building society or
bank) as well as home contents insurance and possibly life
insurance
- Day-to-day repairs within your home and for its structure which
can be quite costly, for example; if your boiler breaks down or
your roof starts leaking
- Council tax, charges for water, gas and/or electricity
supplies, sewerage and other utility services, regular bills if you
are on a private sewerage system or cesspool/septic tank (usually
in rural areas)
You need to be aware of the risk of repossession of your home if
you do not make regular mortgage payments.
Leaseholders
If you are buying a flat or maisonette you will be a
leaseholder. Although the Council will remain responsible for the
structure of the property you will be required to pay for any work
that is carried out to the structure of your home or shared parts,
such as communal staircase areas. These costs will be passed on to
you annually in a service charge. Your service charge can also
include an estimated amount for day-to-day repairs, communal
cleaning (if applicable), building insurance and ground rent. You
are responsible for any maintenance and improvements carried out
within your property and for the annual servicing of your boiler
(if applicable).
Your costs as a leaseholder will include:
- Monthly mortgage payments (if you have taken out a mortgage);
you may also wish to take out mortgage payment protection
insurance
- Home contents insurance, and possibly life insurance
- Day-to-day repairs within your home and its structure, for
example if your boiler breaks down
- Council tax, charges for water, gas and/or electricity
supplies, sewerage and other utility services
- Service charges to the Council
- The service charge you pay to the Council can include annual
charges and one-off charges
Service charges can include:
- Ground rent
- Building Insurance for the structure. This is usually arranged
through the council or it is possible to arrange your own insurance
with certain conditions
- A proportion of the day-to-day repairs of the communal areas
and structure
- A management fee (currently 12.5% of the total annual
charge)
- Communal area cleaning/caretaker costs (if applicable)
- Communal area electricity costs (if applicable)
- Maintenance of fire alarms, emergency lighting and fire
extinguishers (if applicable)
One off Charges
The Council carries out improvement works on a regular basis to
the structure and communal areas, for example; renewing flooring or
decorating of communal areas, upgrading of fire alarms, replacing
roofs, re-pointing brickwork. You will be responsible for paying
for your proportion of these costs.
These costs are limited for approximately five years after
purchase to the amounts specified in your Offer Notice but after
this time you will be charged your proportion for all costs
incurred.
These notes do not cover of everything that is involved in the
purchase of a property under the Right to Buy Scheme. They are for
guidance only as individual circumstances may vary. You are
strongly recommended to obtain your own legal advice once you have
decided to proceed with your purchase.
Discounts you may have to repay if you sell
If you are considering selling the property it is important that
you note the following information:
- A percentage of the discount based on the resale value is
repayable should you sell the property within 5 years from the date
of completion.
- The Council has a right of first refusal on the property so, in
certain circumstances, if you should wish to sell the property
within 10 years from the date of completion of your purchase, you
must first offer the property back to the Council. The
Council will then advise you whether it wishes to repurchase the
property. This may save you estate agency fees.
This webpage was updated on
2/27/2008