Must read. I highly recommend reading this article before purchasing your property
Which is better value?
- A 2 bedroom house on its own land, with no management fees for 200K or
- A 2 bed apartment with 2K per year management fees for 150K?
With a house comes responsibility bin charges, painting, gardening, etc. Some people like gardening and painting. For your bin charges, you can try to get the best value for money.
Here’s the thing about management agency fees, there is not a lot you can do in relation to the price, nor the services you may / may not receive. At least with your own home, you are in control of your money.
It is not uncommon for yearly management charges to hit 2K per year and more (about 167 per month). If your mortgage is 1,670PM, then you are paying an extra 10% for the benefit of your management agency. If your mortgage is 833 per month, then you are paying an extra 20% to your managemant agency.
When you make your final mortgage payment, you own your home. Mgmt agency fees never end. You don’t own anything for the fees.
What does a management agency do?
The aim of a management agency is to maintain the area. We can both have highly differing definitions of maintaining an area. Tasks would include lifts, gates, grass, bins, cleaning and so on. If you are outsourcing, or you can find volunteers to manage this, then an agent must be paid to look after this. You can see now, how you might be better off with your own home and managing your own fees and charges.
Mgmt fees don’t cover everything
Rest assured, there will be issues where the mgmt agency will try and wipe their hands. For example, a neighbours smashes through a wall to your apartment, or there is a leak above your apartment. It will not be uncommon for you to source and pay for your own plumber or plasterer.
It may get to the point where you are paying a lot of money, yet you find the grass is not cut, or the windows are not clean.
When you buy an apartment, you buy a 999 year lease. This doesn’t really mean anything, other than in 999 years, your great, great, great grandson might be told to evacuate an apartment he does not own.
What happens if I don’t pay?
Since you have signed on the dotted line, you have an obligation to pay the fees. However, mgmt agencies have means and ways to get the money. If you don’t pay, your entrance code might be cancelled, or your car might get clamped. If you are a landlord and you don’t pay, your tenant might not have access to the building, or their car might get clamped.
When you buy a home, it is freehold. So you own it forever.