Buying an Apartment in Northern Ireland
Many people in Northern Ireland, particularly first time buyers, are opting to buy apartments as it suits their lifestyle and financial circumstances. Not to state the obvious but an apartment is not the same as a house and there are a number of issues that you should be aware of when thinking about buying an apartment.
The Difference between a House and an Apartment
With an apartment you, as owner, share in the benefit of common areas, amenities and services with your fellow apartment owners. These often include:-
- The roof
- A lift
- Car parking areas
- Corridors and Stairwells
- Sewage and drainage systems
- Electricity and other utility services
- Security and Cleaning
You will have exclusive ownership of internal walls, floors and ceilings but not external walls and you will be responsible, along with the other owners, for the upkeep and maintenance and insurance of these common areas and services.
Who manages all of this?
If these common areas and services are not managed correctly they can have a negative impact on the value of your apartment. Would you buy an apartment were the outside areas and stairwells were unkempt and grubby?
To make the job of management easier the developer will set up a “management company” and when each apartment is sold the purchaser will sign an agreement which requires them to share all of the costs of the upkeep, maintenance and insurance of common areas, amenities and services. So you might be thinking, “Do I have to meet up with all of my neighbours to gather money, arrange insurances etc., etc.,..?”. To avoid that unenviable task the developer will usually assign the “management” of the management company to a management agent who specialise in the management of apartment complexes in Northern Ireland. That company will organise all insurances and keep the property and services maintained. All you will have to do is pay to them an annual “service charge”.
What is a Service Charge?
A service charge is a fee that an apartment owner pays as a contribution towards the maintenance and upkeep and insurance of the common areas, amenities and services. The important points you want to be sure of before buying are:
- How much is the service charge?
- How often is it to be paid?
- Can it be increased without limit or is it tied to inflation?
- Does part of it go towards a “sinking fund”?
What is a Sinking Fund?
A sinking fund is a term used for funds kept aside out of the service charge payments to cover significant items of expenditure such as:
- Roof Repairs
- Lift Maintenance/Replacement
- Road resurfacing
If there is no sinking fund and a major item of work needs to be carried out that is not covered by insurance then the only way for this to be paid is by increasing the annual service charge. This could cause an annual service charge of £500 to increase dramatically to £3000. It is therefore essential that you ask your solicitor to make sure there is a sinking fund in place.
Key things to look out for
If the apartment complex is not being properly managed and owners are not paying their service charge then the value of your property will be very seriously affected and you will have to deal with a lot of problems that you might not have anticipated when buying the apartment. You should find out if there is a management company and if so try to get the following (if no management company look for another property!):
- Copies of Management Company Meeting Minutes
- Copies of Management Company Accounts
- Copies of planned future expenditure (they should have a forecast for the next year)
- Details of sinking funds
- Copies of Block Policy Insurance (this is the policy that covers the entire apartment building structure – you will need to get your own insurance for the internal structures of your apartment and your contents).
- Confirmation that all apartments have paid their service charge up to date.
You should be able to get a good idea of how well the apartment block is managed when you view the property. If the lawns are well manicured, the walls nicely painted, all light is working etc then it is likely all is well!
What if I have a dispute with the Management Agent?
It is likely that an agent will be appointed to manage the management company so that you and the other owners are not inconvenienced by have to carry out the day to day running of its affairs. It can happen that you have paid your service charge but the property is not being well maintained or kept in the condition that you would like it to be. If this happens you should contact the agent firstly and raise your concerns directly.
If you are not satisfied with their response or they do not act to rectify the issues you have highlighted then consult your solicitor. When you purchase an apartment the Deed should impose an obligation on you to pay the annual service charge but it should also impose an obligation on the developer/management company to keep the property in good repair and condition. If the managing agent to whom those responsibilities have been assigned is not performing satisfactorily then you could potentially sue them for breaching their obligations.
What if I have a dispute with a neighbour?
What if you move in to your apartment and a neighbour is very noisy or leaves rubbish in a corridor? Again when you purchased the apartment the Deed will have imposed obligations on you and your neighbours not to cause nuisance to each other. Firstly you could raise your concern with the management agent and if the problem persists you should consult your solicitor.
Food for thought! If you have any queries please do not hesitate to telephone us or send an email with your query.