Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@.

Search
  • FIRST POST
    • Jox
    • By Jox 22nd Sep 16, 4:28 PM
    • 1,178Posts
    • 2,541Thanks
    Jox
    Service charge issues in leasehold flats
    • #1
    • 22nd Sep 16, 4:28 PM
    Service charge issues in leasehold flats 22nd Sep 16 at 4:28 PM
    Can anyone advise me please…sorry for long post.

    My leasehold flat is for sale, I’ve got a buyer and we are going through the conveyancing process.

    There are 48 flats in my block of flats, and it has just come to my attention that the top floor (6 flats built 5 years ago) do not contribute to the annual service charge.

    The top floor flats are owned and managed by the freeholder and the rest of the flats are managed by a management company. The service charge 42 flats contribute to includes buildings insurance and the freeholder claims that he pays a separate buildings insurance for the top floor.

    My buyer is thinking of withdrawing from the sale because of the inequality….so if I lose the sale what are my next steps? Should I get legal advice against the freeholder / management company for not making us aware of this situation and getting the top floors flats’ contributions for the last 5 years? I’ve been in my flat 11 years.

    The latest service charge invoice I have received is for the following but surely the top floor is also covered in these costs and the 42 flats are paying for those 6 flats’ use of the services (for the past 5 years):

    Drainage & Sewerage £900
    Door entry system £300
    Pest control £500
    Window cleaning £800
    Electrical maintenance £1800
    Cleaning contract £5800
    General repairs and maintenance £2800
    Bulk refuse removal £1700
    Grounds maintenance £6500
    Electricity £4000
    The building insurance is £13,000 – is it possible to have one buildings insurance policy for 42 flats over 3 floors and a separate policy for 6 flats on one floor?

    Thanks for reading all this
Page 1
    • Guest101
    • By Guest101 22nd Sep 16, 4:31 PM
    • 11,183 Posts
    • 10,503 Thanks
    Guest101
    • #2
    • 22nd Sep 16, 4:31 PM
    • #2
    • 22nd Sep 16, 4:31 PM
    Are you sure that those costs aren't the pro rata rate?
    • Hoploz
    • By Hoploz 22nd Sep 16, 5:09 PM
    • 2,785 Posts
    • 2,490 Thanks
    Hoploz
    • #3
    • 22nd Sep 16, 5:09 PM
    • #3
    • 22nd Sep 16, 5:09 PM
    The buyer can't be very keen if he is thinking of pulling out on a point of principle of 'inequality'
    Last edited by Hoploz; 22-09-2016 at 8:20 PM.
    • Jox
    • By Jox 22nd Sep 16, 5:11 PM
    • 1,178 Posts
    • 2,541 Thanks
    Jox
    • #4
    • 22nd Sep 16, 5:11 PM
    • #4
    • 22nd Sep 16, 5:11 PM
    I have asked the freeholder if they pay separately for the services and they have told me to ask my solicitor to contact their solicitor and there will be costs involved so maybe I have to drop this but I may lose my buyer over this and it will come up again if I find another buyer so I feel stuck..
    • Jox
    • By Jox 22nd Sep 16, 5:13 PM
    • 1,178 Posts
    • 2,541 Thanks
    Jox
    • #5
    • 22nd Sep 16, 5:13 PM
    • #5
    • 22nd Sep 16, 5:13 PM
    The buyer can't be very keen if he is thinking of pulling out on a point of principle of 'imequality'
    Originally posted by Hoploz
    Would you want to buy a flat and pay the annual service charge (around £1200 a year) knowing that 6 flats weren't paying their share?

    I don't think I would and I may be in that situation unknowingly..
    • Guest101
    • By Guest101 22nd Sep 16, 5:18 PM
    • 11,183 Posts
    • 10,503 Thanks
    Guest101
    • #6
    • 22nd Sep 16, 5:18 PM
    • #6
    • 22nd Sep 16, 5:18 PM
    Would you want to buy a flat and pay the annual service charge (around £1200 a year) knowing that 6 flats weren't paying their share?

    I don't think I would and I may be in that situation unknowingly..
    Originally posted by Jox
    ... id never buy a leasehold flat.


    But what you describe isn't inherently unfair. You pay the freeholder to provide a service, and they provide that service.
    • G_M
    • By G_M 22nd Sep 16, 5:18 PM
    • 35,963 Posts
    • 39,298 Thanks
    G_M
    • #7
    • 22nd Sep 16, 5:18 PM
    • #7
    • 22nd Sep 16, 5:18 PM
    The building insurance is £13,000 – is it possible to have one buildings insurance policy for 42 flats over 3 floors and a separate policy for 6 flats on one floor?
    Originally posted by Jox
    I imagine if the building burned down the 2 insurers would spend months arguing (maybe going to court) over which of them pays how much.

    Overall it's a vey unsatisfactory state of affairs. Short term, if the buyer puls out there is nothing you can do except
    * try to improve the arrangement whilst also
    * looking for a new buyer

    Longer term, my first steps would be

    * discuss with other leaseholders and see if they feel the system is fair and are willing to take action
    * if enough of you are concerned, apply for Right To Manage
    * once you control the management of the building, start billing the freeholder for services he uses eg drainage etc
    * if he refuses to pay for services that he uses but which you pay for (he may clean his own windows but I doubt he has seperate drainage!), then either withdraw those services (if possible - eg disconnect the door buzzer to the top floor?) and/or go to court.
    Last edited by G_M; 22-09-2016 at 5:21 PM.
    • Jox
    • By Jox 22nd Sep 16, 5:21 PM
    • 1,178 Posts
    • 2,541 Thanks
    Jox
    • #8
    • 22nd Sep 16, 5:21 PM
    • #8
    • 22nd Sep 16, 5:21 PM
    Guest101, I've been in my leasehold flat 11 years, wasn't in a position to buy a freehold house before now but it might not happen

    I'm obviously not explaining myself properly but I'll see if anyone else can see where I am coming from, thanks
    Last edited by Jox; 22-09-2016 at 5:25 PM.
    • Jox
    • By Jox 22nd Sep 16, 5:25 PM
    • 1,178 Posts
    • 2,541 Thanks
    Jox
    • #9
    • 22nd Sep 16, 5:25 PM
    • #9
    • 22nd Sep 16, 5:25 PM
    Thanks for your input G_M, I don't want to manage the building, I want to move to a house so my child can have his own bedroom but I appreciate your suggestions
    • G_M
    • By G_M 22nd Sep 16, 6:22 PM
    • 35,963 Posts
    • 39,298 Thanks
    G_M
    Thanks for your input G_M, I don't want to manage the building, I want to move to a house so my child can have his own bedroom but I appreciate your suggestions
    Originally posted by Jox
    Then what can I say beyond the obvious? Find a new buyer....
    • ElsieMonkey
    • By ElsieMonkey 22nd Sep 16, 6:34 PM
    • 254 Posts
    • 229 Thanks
    ElsieMonkey
    I don't think it's worth the effort and heartache to fight against the current set-up personally. You'll just have to find a new buyer and sooner or later one will come along where they won't take much notice of what the current set up is or it just won't bother them. Good luck
    • Jox
    • By Jox 22nd Sep 16, 7:42 PM
    • 1,178 Posts
    • 2,541 Thanks
    Jox
    Thank you, I guess it's not worth trying to get 5 years worth of contributions from the freeholder for all the electricity etc we have paid for, for the top flats
    • Hoploz
    • By Hoploz 22nd Sep 16, 8:26 PM
    • 2,785 Posts
    • 2,490 Thanks
    Hoploz
    I can see it isn't fair but would it be enough in itself to stop me buying my dream home, when I've got this far into the process?

    It sounds a bit odd. I cannot imagine that an insurance company would insure on the basis that they did not cover the whole building. That is the point of having a common policy, after all! The only way to tell would be to ask to see the building insurance documentation. TBH I don't think a mortgage company would be happy with a split arrangement either.

    Which makes me wonder whether it's all just a bit of smoke and mirrors - the freeholder just excluded his own flats from the payment schedule, but they are actually included in the policy and services paid for by the charges. That's the simpler explanation. Not fair, but oh well never mind.
    • Jox
    • By Jox 23rd Sep 16, 10:39 AM
    • 1,178 Posts
    • 2,541 Thanks
    Jox
    Thanks Hoploz, I don't know if this is my buyer's dream home, probably just a starter flat while he is young and single and maybe he'll decide that he can do without the hassle of these problems or maybe he'll decide that the flat is worth buying despite these issues. Hopefully I'll find out today.

    But if the sale doesn't go through (this is my second buyer as the first buyers withdrew due to Brexit they said) then it will be disheartening to have to start the process again after 3 months and I am resentful now that the management company and freeholder are causing me these issues.

    The management company took 3 weeks to respond to the buyer's solicitor's queries about who paid the service charge.

    I extended my lease a year ago and paid £15k + £3k legal fees to do so and now the freeholder isn't playing fair with using the services 42 flats are paying his share (6 flats) for, for 5 years.

    Thanks for all your input.
    Hoping to sell my flat and buy a house this year 2016!
    • pinkpiglit
    • By pinkpiglit 23rd Sep 16, 12:42 PM
    • 208 Posts
    • 67 Thanks
    pinkpiglit
    I have asked the freeholder if they pay separately for the services and they have told me to ask my solicitor to contact their solicitor and there will be costs involved so maybe I have to drop this but I may lose my buyer over this and it will come up again if I find another buyer so I feel stuck..
    Originally posted by Jox


    Maybe you need to do this in order to find out whether there are separate charges that are paid directly by the top floor. I'd have thought this will be the only way you'll know for sure, anything else will be pure speculation.
    • Jox
    • By Jox 23rd Sep 16, 12:53 PM
    • 1,178 Posts
    • 2,541 Thanks
    Jox
    Maybe you need to do this in order to find out whether there are separate charges that are paid directly by the top floor. I'd have thought this will be the only way you'll know for sure, anything else will be pure speculation.
    Originally posted by pinkpiglit
    True, but as the freeholder hasn't been immediately transparent and has instead told me to ask my solicitor to contact their solicitor to find out what they pay for and made a point of telling me that this would be costly to me makes me think they aren't playing fair.

    But it is speculation at this point though my solicitor has told me that my buyer is thinking about whether to proceed or not so I may need to remain in my flat for a while longer and lose the house I wanted to buy. But I will try to be positive until I know for sure.
    • Rosemary7391
    • By Rosemary7391 23rd Sep 16, 1:44 PM
    • 940 Posts
    • 1,392 Thanks
    Rosemary7391

    It sounds a bit odd. I cannot imagine that an insurance company would insure on the basis that they did not cover the whole building. That is the point of having a common policy, after all! The only way to tell would be to ask to see the building insurance documentation. TBH I don't think a mortgage company would be happy with a split arrangement either.
    Originally posted by Hoploz
    It's not impossible - I think it happens reasonably often in Scotland, where there isn't the same leasehold structure for blocks of flats. In my block each individual flat arranges their own buildings insurance.

    It does seem daft that a freeholder can just refuse to answer a seemingly straightforward question... can you ask for a copy of the bills/documents in question, eg the insurance, so you can see for yourself whether it relates to the entire block and how much it costs? I'd certainly expect to get such information from the factor as a matter of course, so it seems reasonable to ask the freeholder for it.
    Me escondo detras de mi lengua... tengo miedo de que me entiendas... pero me gustara que me entendases ¡Ayudame!
    • Jox
    • By Jox 23rd Sep 16, 4:44 PM
    • 1,178 Posts
    • 2,541 Thanks
    Jox
    Thanks Rosemary, I'm in England.

    I did specifically ask the freeholder for a copy of the buildings insurance certificate for the top floor and I spelt out all the items on the service charge invoice and asked if these were services the top floor used (electricity in the communal area etc) and have been asked to get my solicitor to contact their solicitor to get the answers and that "it will cost me" so I don't trust them..

    If my buyer decides not to buy then I may take this further or leave it as it may make it difficult to sell my flat in future as on the solicitor forms you have to state what disputes there are / have been with the management company / freeholder.
    • Guest101
    • By Guest101 23rd Sep 16, 5:06 PM
    • 11,183 Posts
    • 10,503 Thanks
    Guest101
    But of course it will cost you, why should it be 'free'
    • Lord Baltimore
    • By Lord Baltimore 23rd Sep 16, 5:10 PM
    • 1,133 Posts
    • 1,147 Thanks
    Lord Baltimore
    Thank you, I guess it's not worth trying to get 5 years worth of contributions from the freeholder for all the electricity etc we have paid for, for the top flats
    Originally posted by Jox
    I would be seething if this happened to me but I wouldn't cut off my nose to spite my face by kicking up a fuss whilst I was still in a property that I was trying to sell.

    Get rid of that place first; get even later
    The views expressed are my opinion, nothing more, nothing less.
Welcome to our new Forum!

Our aim's to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

5,033Posts Today

5,208Users online

Martin's Twitter