What are the costs involved?
The following gives you an indication of the typical costs involved, although you should always do your own research.
Reservation Fee
Once you have viewed a property and decided that you wish to proceed with the purchase, we will ask you for a reservation fee.
If you proceed with the purchase and meet exchange of contracts and completion deadlines, this will, at completion, be offset against the cost of your purchase. Please be aware that in order to cover any legal or administrative expenses, this fee will not be refunded should you decide to withdraw from your purchase, for any reason, once Solicitors have been instructed.
Mortgage Valuation
When buying a property, it is always advisable to have a survey report and valuation carried out. (Your lender will always insist on this if you are applying for a mortgage). This is to ensure that the property you are buying is in a reasonable condition and that it’s worth the purchase price you are paying. Although you should budget for the mortgage valuation, some lenders may reduce or waive this fee to persuade you to take a mortgage with them.
Mortgage Deposit
Most lenders will expect you to provide a deposit of at least 5% of the value of your share. Some lenders will, however, provide 100% mortgages in respect of New Build HomeBuy properties. You are advised to take independent financial advice and shop around to find a product which best suits your requirements.
Legal Fees
You will need a Solicitor to act for you in the purchase of your home. Should you find it helpful, we can provide you with a list of Solicitors experienced in New Build HomeBuy property purchasing. Before making your decision, it is always worth asking for an estimate, as fees can vary significantly depending on the type of firm you choose to use. Your Solicitor will advise you on the content of your Lease, carry out a Land Registry search and make any enquiries as necessary on your behalf. In order to avoid any unnecessary costs, it is always worth ensuring that you can obtain a mortgage before instructing a Solicitor to act on your behalf.
Stamp Duty
This is a form of tax on the transfer of property. If you are purchasing less than an 80% share in your property you are not liable for stamp duty.
Additional Costs
These might include removal costs, the purchase of furniture or household appliances and contents insurance.
What are the running costs of your new home?
You are expected to pay all of the costs that homeowners pay on an ongoing basis. These include:
Mortgage repayments
On the share of the property you have purchased. Repayments will vary as interest rates change, unless you have opted for a Fixed Rate scheme.
Ground Rent
As the term “Leasehold” refers to the granting of a tenancy, it can be subject to the payment of rent (which may be nominal) to the Landlord or Freeholder.
Rent
Your monthly rent is calculated as a percentage of the equity owned by Circle Anglia (the value of the share you do not own). The rent is due on the first day of the month in advance and will increase annually. Further information relating to this will be contained in your Lease.
Council Tax
You are responsible for the payment of Council Tax to the Local Authority. This sum will be based on the full property value, not the share purchased.
Utility costs
These include items such as gas, electricity and water.
Service Charges
A Service Charge is the name given to the payments made by the Leaseholder to the Landlord or Freeholder for all of the facilities or services they provide. These may include the repair and maintenance of a building and the surrounding areas. For example, a block of flats will have internal communal areas such as the main entrance hall, stairwells, corridors and communal grounds such as gardens or car parking areas. All of these need to be kept clean and maintained regularly, with the work usually carried out by Contractors.
As your Landlord, we will arrange the provision of services but the costs in respect of these must be met by the Leaseholders as we make no financial contribution. As a result of our involvement, your Service Charge will usually include a contribution to our administrative or management costs.
Service charges are reviewed annually and can vary from year to year, depending on the level of expenditure. Details of what can (and cannot) be charged by the Landlord and the proportion of the charge to be paid by the individual Leaseholder will be included in your Lease. Your Service Charge is paid monthly in advance and will be collected, if applicable, by direct debit. Please note that even if you purchase your property outright, you will still be responsible for paying the service charges in respect of the services you receive.
Before you purchase a leasehold property, it is important to clarify any current or future service charges in order that you may budget for these accordingly.
A detailed breakdown of the Service Charge is provided in the draft documentation sent to your Solicitor
A service charge can normally include:-
The Management Fee
This covers the cost of providing a management service that includes the preparation and posting of quarterly statements or Actual Accounts, dealing with enquiries and site inspections.
Audit Fee
The Service Charge Actual Accounts are independently audited at the end of each financial year with a copy provided to each leaseholder. The audit is carried out by an Accountant, the fees for which are recovered directly from the Service Charge.
Buildings Insurance
Circle Anglia is responsible for buildings insurance and this is included in your service charge. You are responsible for insuring the contents of your home and we would always suggest that you do so.
Gardening and Cleaning
If your home has communal corridors, stairwells, gardens or other communal areas, we will appoint contractors to do the gardening and cleaning. The costs are covered by your service charge payments.
Communal Electricity
If the area in which you live has any shared lights for corridors, stairwells, paths or car parks, you will pay a proportion of the running costs through your service charge.
Responsive Repairs
From time to time, repairs will need to be carried out to the internal or external communal areas. Your proportion of the repair cost in respect of these will be collected from your service charge.
Planned Maintenance or ‘Cyclical Works’
As a Landlord, Circle Anglia is responsible for the main structure of the building and surrounding areas. This includes the redecoration of any internal or external communal areas and the planned maintenance programmes for major repairs such as roof replacement, lift maintenance, or the servicing of door entry systems. Planned Maintenance or ‘Cyclical Works’ usually take place every five to seven years and costs will vary depending on the level of the works required. Your Solicitor is responsible for explaining the likely costs for any known planned maintenance works.
Reserve or Sinking Funds
Many Leases provide for the Landlord to collect sums of money in advance to create one or more reserve or 'sinking' funds. The purpose of these funds is to build up a sum of money to cover the cost of any planned maintenance or cyclical works. Whilst these funds gain interest, they remain attached to the property. This means that should you decide to sell your property, the new owner will inherit the money in the fund. It cannot be repaid to you.