Challenging High Service Charges on Leasehold Flat

ben1985 · 15 August 2009 at 10:54PM

Hello. I just recently bought a leasehold flat and are already convinced next time to buy freehold and not leasehold but that's my plan in 8-10 years and we'll cover that subject later!

My query relates to the Supervision and Management costs and Property Insurance Premium.

First of all the (Supervisor and Management Costs) increase in years is shown below from the data I have:

April 08-March 09- £40.00
April 09-March 10- £80.00 (estimated 09/10 on 16/07/07)
20th July 09 announced Supervision and Management cost's increasing to £250!

So basically from 08/09 to 09/10 they had doubled which seems bad enough and then from the estimation on 16/07 to 20/07 they decided that they should be tripled to £250!!,

I don't really understand when they already estimated costs for 09/10 (£80, which are doubled from last year) can be tripled in 4 days?!.

The second issue is the property insurance premium. The freehold is owned be the local council housing association and they insure all leasehold properties under a blanket policy. Their charge is £147 per year. I have found insurance for my flat with Directline for £101. Also according to my leaseholder handbook it prepares they may accept your own insurance as long as they receive a copy of the certificate and it's the same re-instatement value as their policy.

So firstly do you think I can insist to use my own building insurance, which specifically covers my flat? (hopeful according to their wording in their handbook)

Secondly, do you think I can challenge the excessive Management + Supervision costs, especially as it's £250 this year and I cannot see the justification for that. The estimated £80 is bad enough but £250 my foot!!

I should have looked into this more when buying a leasehold property. I know it could be worse, looking at internet posts the fact that the freeholder is the local authority is a good point (better than private management companies) and even though I think the service charge is high, it doesn't seem to be amazingly excessive compared to some others.

My mortgage rate is fixed for 5 years from NatWest (90% LTV 5.99%) so to be honest with me absolutley hating leasehold currently and the anal restrictions, responsbilities it brings I can highly likely see me attemping to see 2014/2015. Lets hope the flat property rises quite a bit in 5 years and I will port the existing mortgage and add it to a nice 3 bedroom S/D or D property with a Garden and with a FREEHOLD title.

Sorry for the rant, Leasehold? ,whoever thought up that joke should be shot:rolleyes:

Regards

BW

PasturesNew · 15 August 2009 at 11:01PM

Re insurance, for £50 it's not worth the hassle. If there were a big fire, for example, and your flat was the only one outside of their blanket policy you could have a right nightmare getting it all sorted, whereas your neighbours would all just have it all sorted for them. There'd also be differences in the policy no doubt, which you wouldn't be aware of until something went wrong and you thought you were insured but the LA insurance was a bit different and, again, you ended up stiffed while your neighbours were sitting pretty.

ben1985 · 15 August 2009 at 11:39PM

Hi,

Yer I agree with you on that one. What do you think of the mention about the Supervisor + Management Crazy Cost's increase? That's already put me off leasehold for life + will never buy it again!

BW

KiKi · 15 August 2009 at 11:40PM

Hi there Ben

If you want to challenge the costs, you need to get a breakdown of the service charges, and check your lease for the proportion that you are paying. Ask them for a breakdown of the previous years' accounts (which you should be getting as a leaseholder anyway). Chances are that over the last two years they have fallen into arrears and are now trying to clear them - or they are trying to create a slush fund for when works might need doing. The breakdown should tell you that.

FTR, the first year in my leasehold flat (that I'm thankfully rid of now!) I paid £800 a year service charge. By the time I left I was paying £1300 - plus MUCH more than that each year for additional work. I know £250 is a big leap from £80, but I'd be laughing if that's all I'd had to pay!!

Hope you get it sorted.

Cheers
KiKi

Fire_Fox · 16 August 2009 at 2:16AM

ben1985 wrote: »

Hi,

Yer I agree with you on that one. What do you think of the mention about the Supervisor + Management Crazy Cost's increase? That's already put me off leasehold for life + will never buy it again!

BW

Service charges have to be "reasonable" and costs have to be "reasonably incurred". There is no requirement in law for them to be cheap. What you pay depends on what services are provided, and what the 'going rate' is in your area. If you weren't paying service charges, you would be paying a lot more for direct maintenance to your own freehold property.

Do you know what duties are being performed by the managing agents and their chosen contractors? If not you are unable to demonstrate that the charges are not reasonable. It may be that the roles have altered this year - for example at out place our caretaker took on a great role and the managing agents took a step back, hence what we paid for each changed drastically.

Your first line of attack is to familiarise yourself with the link below and your long lease. This will tell you what is and is not chargeable and broadly what the responsibilities of the managing agents are.
http://www.lease-advice.org/publications/documents/document.asp?item=14

Secondly you will need to examine the breakdown of charges you have been given, ideally alongside the breakdown of charges for similar properties locally. If you are still not happy you will need to write to the managing agents (recorded delivery) and formally request further information such copies of service contracts and ask specific questions about the increased charges and if the insurance was competitively tendered.

If you are still not satisfied you can go to a Leasehold Valuation Tribunal - the above link will explain how. You will need the support of other leaseholders to stand the best chance of success- however you may find you get all the answers you need from doing the above. A lot of the time leaseholder discontent is down to not understanding the enormous amount of work that is required to successfully run a block of flats.

cbrecruit1 · 7 March 2011 at 5:24PM

My advice is make sure you issue a [FONT=Times New Roman, serif][FONT=Arial, serif] Under Section 22 of the LTA 1985 to view all receipts and documentation, even if it not part of your concern.
[/FONT][/FONT][FONT=Times New Roman, serif][FONT=Arial, serif]
I am in the process of contesting my service charged and found that a number of people have already contested the charges. But failed to win valued points has they did not request documentation on insurances policy water rates (which are included in the service charges) and claims that the management may have used to back up their arguments.
[/FONT][/FONT]
http://www.rpts.gov.uk/Files/2010/June/00105IN4.htm
[FONT=Times New Roman, serif][FONT=Arial, serif]
[/FONT][/FONT][FONT=Times New Roman, serif][FONT=Arial, serif]Check to see if similar block or similar buildings in your have already raised a complaint. Try to got other leaseholders on board, you be surprise that others may have already done some background work.

Google your management company and see if there any other information out there.

Try and get comparable of service charges about three. And if possible try and see if you can get a management company to give you a price but with a on site visit because most of the time is not worth much if visit are no made on site.
[/FONT][/FONT][FONT=Times New Roman, serif][FONT=Arial, serif]
[/FONT][/FONT][FONT=Times New Roman, serif][FONT=Arial, serif] You can use a solicitors but a service charge company seem to have more knowledge on how things work. All the tricks management companies use.

Do use a leasholder advices to start the general process they can give you valued advice.

[/FONT][/FONT][/SIZE][FONT=Times New Roman, serif][FONT=Arial, serif]
[/FONT][/FONT]

Challenging High Service Charges on Leasehold Flat

Comments

Confirm your email address to Create Threads and Reply

🚀 Getting Started

Categories

Is this how you want to be seen?

Get our FREE Weekly email full of deals & guides - and it’s spam-free