Mortgage
Most people will have taken out a mortgage in order to buy an apartment. This will require a monthly payment to your provider which will cover interest on all mortgages and capital repayment if you have opted in. As long as you pay interest only, you will always owe the original amount you borrowed.
For capital repayments, these are typically over a 20 to 30 year period (but can be shorter). Interest will be highest at the beginning of the mortgage as the amount owed is the largest at this point. You can normally opt for a fixed rate mortgage which offers a stable payment or a variable plan which fluctuates but can offer better rates.
As you pay down the mortgage, the interest gradually makes up a lower proportion of your repayment. Your loan to value (LTV) should reduce, which would be beneficial when you renew your mortgage plan. Lower brackets typically offer better interest rates to compensate for the lower risk that the bank is taking on.
If you are in a position to pay cash in full, you won't have to worry about this.
Service Charge
Practically all apartments have service charges which are needed to cover the cost of the communal areas such as building management, lift maintenance, exterior and interior cleaning, car park, utilities, insurance, gardening etc.
Tenants are typically charged based on an estimated budget which rises to cover any unforeseen costs and inflation. The charge may be paid monthly, half-yearly or annually depending on your building's arrangements. A typical range is £1k-£3k per year.
Ground Rent
Leaseholders do not own any land as apartment units are built on top of each other. Therefore they pay the freeholder of the land in order to occupy their respective space. This is commonly paid half-yearly or annually. Typical ground rents cost in the range of £200 to £500.
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Furniture/Appliance Repair and Replacement
Standard wear and tear is a given. Electrical appliances like fridges, cooker stoves, washing machines and boilers will break down.
You will need to decide whether to replace the existing item or whether it is more economical to replace the item. Ideally, set aside a maintenance fund for this purpose.
Interior Maintenance
Your property degrades over time, which could lead to leaks, damp, paint peeling, rusting, damaged flooring. One needs to budget for remedial works so that the property elements can be restored to a new condition.
Emergency Fund
Some unexpected situations such as water leaks need to be resolved immediately for an apartment. For example my boiler was leaking and it cost me £1.5k to get a specialist to replace and install.
If left ignored, this could led to more serious problems later (such as leaking to the downstairs apartment) and prove very costly. Deal with swiftly and often.
Council Tax
This pays for waste collection and facilities in your local area. The amount depends on your location and your property value.
Most people need to pay council tax (not everyone needs to, so check the criteria for your local area to see if you meet the conditions for exemption).
If you are renting out your property, the tenant will pay the council tax unless you have made a special arrangement to include this.
Utilities
As for any living space, you will typically need to account for electricity, gas, water, sewage, internet. Newer apartments may not use gas at all, electricity will fulfil cooking and heating needs.
If you are renting out your property, the tenant will pay for their own utility bills unless you have made a special arrangement to include this.
*The information on this page is my own opinion, for general informational purposes only and are not intended to provide specific advice or recommendations for any individual. It is purely intended to provide education about personal finance.
From reading this website we cannot assess anything about your personal circumstances, your finances, or your goals and objectives, all of which are unique to you, so any information contained on this website are just that – an opinion or information. We highly recommend you seek professional advice from someone who is authorised to provide financial advice.
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