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  • FIRST POST
    • karljt2013
    • By karljt2013 2nd Oct 17, 12:49 PM
    • 69Posts
    • 15Thanks
    karljt2013
    Management company fees on leasehold flats
    • #1
    • 2nd Oct 17, 12:49 PM
    Management company fees on leasehold flats 2nd Oct 17 at 12:49 PM
    I have saved my backside off for the last 7 years to buy a flat with cash. It has been a learning curve with leaseholds and the first flat I tried to buy fell through because there were so many legal anomalies in the paperwork that my solicitor said it was too risky.

    I am viewing my second flat today but the weekly management/maintenance fees are £30 per week (north west property). That seems almost like mini rent to me as the first two properties I viewed had minimal ground rent of £10 per year along with around £200 yearly buildings insurance.

    What are the chances of the management company just jacking that up to £40 whenever they feel like it and would I have any recourse against this? They say the fee is for maintenance of the small car park (which looked scruffy when I checked) and the roof etc.

    I basically need to know what my rights are because it today's current rancid state of the UK property market anything is now possible.
Page 1
    • ££sc££
    • By ££sc££ 2nd Oct 17, 1:29 PM
    • 243 Posts
    • 122 Thanks
    ££sc££
    • #2
    • 2nd Oct 17, 1:29 PM
    • #2
    • 2nd Oct 17, 1:29 PM
    The first ones you saw (£10 ground rent and £200 buildings insurance) would also have has a service charge for upkeep of the building. This may not have been a regular monthly amount but could have been billed when works were carried out - this could have been large amounts of money.


    In terms of the one you are viewing today, it is virtually impossible to make a any comment on the level of service charge without knowing what it covers, overall I'd say £130pcm isn't very high though. it is unusual for there to be anything un the lease restricting how high it can go but it must be reasonable and properly incurred. You are also protected by something section 20. This is where the landlord must consult you formally before carrying out any repair/work that will costs you more than £250. Or entering into any agreement that will cost a leaseholder more than £100 a year. If major works are carried out though and there are insufficient monies to pay for them in any fund that has already been started, you will be liable for the shortfall, and depending on what the works are this could cost you 000s. This isn't unusual and the level of service charge currently being paid by the lessee is almost irrelevant. I think the questions to think about are how much is there in a any fund towards future works and what are the anticipated future expenditure - what condition is the block in?


    Good luck
    • eddddy
    • By eddddy 2nd Oct 17, 1:46 PM
    • 5,253 Posts
    • 4,892 Thanks
    eddddy
    • #3
    • 2nd Oct 17, 1:46 PM
    • #3
    • 2nd Oct 17, 1:46 PM
    What are the chances of the management company just jacking that up to £40 whenever they feel like it and would I have any recourse against this?
    Originally posted by karljt2013
    In simple terms, the management company have duties that the lease says they must perform (e.g. getting a builder in to fix the roof etc).

    All the bills (like the builder's bill) are added together and split between the flat leaseholders. The leaseholder has a legal right to see these bills.

    If the leaseholder believes that any of the bills are 'unreasonable' (e.g. the management co have hired a mate's firm and are overpaying them), the leaseholder can challenge them.

    So the management co cannot 'jack up' the fees as such.

    But if the car park is scruffy and needs repairing by contractors soon, the leaseholders should each expect to pay a share of the bill for that.
    • karljt2013
    • By karljt2013 2nd Oct 17, 9:43 PM
    • 69 Posts
    • 15 Thanks
    karljt2013
    • #4
    • 2nd Oct 17, 9:43 PM
    • #4
    • 2nd Oct 17, 9:43 PM

    But if the car park is scruffy and needs repairing by contractors soon, the leaseholders should each expect to pay a share of the bill for that.
    Originally posted by eddddy
    But isn't that what the £30.00 per week is for? That is £1500 per year! That may be chicken feed in the South but in the North West it's grating after you have just pulled out 90k cash for the leasehold. How anybody ever gets mortgages on these leaseholds is beyond me. I can just see bill after bill after bill coming my way If I bought this flat. The entire industry just seems so dripping with corruption.
    Last edited by karljt2013; 02-10-2017 at 9:46 PM.
    • eddddy
    • By eddddy 2nd Oct 17, 11:22 PM
    • 5,253 Posts
    • 4,892 Thanks
    eddddy
    • #5
    • 2nd Oct 17, 11:22 PM
    • #5
    • 2nd Oct 17, 11:22 PM
    But isn't that what the £30.00 per week is for?
    Originally posted by karljt2013
    You're kind of misunderstanding how a service charge works.

    Like I say above, think of it like this...
    • The freeholder/management co pays all the bills for maintaining the property - which might include common area electricity bills, gardening bills, builders bills, insurance bills, car park repair bills, etc
    • Then they add all the bills up, and split the total between all the flat owners.
    • This year the freeholder/management co have estimated that your share of the bills will come to £30 per week.
    • If they've underestimated, and your share works out as more, they'll ask you to pay more at the end of the year
    • If they've overestimated, and your share works out as less, you'll be left with 'money in your account' at the end of the year.

    That may be chicken feed in the South but in the North West it's grating after you have just pulled out 90k cash for the leasehold.
    Originally posted by karljt2013
    I guess if builders, gardeners, car park repairers etc charge less in the North West than they do in the South, your service charge will be similarly less.

    Realistically, who do you think should pay to maintain the building car park etc, if it's not the people that own the flats?

    The entire industry just seems so dripping with corruption.
    Originally posted by karljt2013
    eh?
    • 3mph
    • By 3mph 2nd Oct 17, 11:44 PM
    • 178 Posts
    • 202 Thanks
    3mph
    • #6
    • 2nd Oct 17, 11:44 PM
    • #6
    • 2nd Oct 17, 11:44 PM
    The service charge on our flat is £290 a month and that just covers day to day stuff. Insurance, £14k management fee £10k caretaker £14k part time common area maintenance and lights etc £12k. Lifts and gates and doors 20k then a load of smaller stuff all totalling about £100k

    External painting overdue and likely to be £100k part from reserves and part as a levy over 2 years on each flat.

    I don't know the logic of apportionment as some flats 2 bed and some 1 bed but those on the front directly onto the beach cost double those on the side.

    Also conflict within leaseholders as some it's our home so want it done fully, some its 2nd or 3Rd holiday home so want to save and some rented so want only minimum
    • karljt2013
    • By karljt2013 3rd Oct 17, 12:48 AM
    • 69 Posts
    • 15 Thanks
    karljt2013
    • #7
    • 3rd Oct 17, 12:48 AM
    • #7
    • 3rd Oct 17, 12:48 AM
    eh?
    Originally posted by eddddy
    You must not watch much news if you are confused by my corruption statement. The unfolding leasehold scandal in this country is going to be as big, if not bigger than PPI

    https://www.theguardian.com/money/2017/jul/25/leasehold-houses-and-the-ground-rent-scandal-all-you-need-to-know

    But I thank you for your information.

    This is my first time looking for a flat so I am finding a lot puzzling.
    • karljt2013
    • By karljt2013 3rd Oct 17, 12:52 AM
    • 69 Posts
    • 15 Thanks
    karljt2013
    • #8
    • 3rd Oct 17, 12:52 AM
    • #8
    • 3rd Oct 17, 12:52 AM
    The service charge on our flat is £290 a month and that just covers day to day stuff. Insurance, £14k management fee £10k caretaker £14k part time common area maintenance and lights etc £12k. Lifts and gates and doors 20k then a load of smaller stuff all totalling about £100k

    External painting overdue and likely to be £100k part from reserves and part as a levy over 2 years on each flat.

    I don't know the logic of apportionment as some flats 2 bed and some 1 bed but those on the front directly onto the beach cost double those on the side.

    Also conflict within leaseholders as some it's our home so want it done fully, some its 2nd or 3Rd holiday home so want to save and some rented so want only minimum
    Originally posted by 3mph
    The flat I am buying is the basement flat of a four storey building. You must be talking about something much grander by the figures mentioned.
    • PasturesNew
    • By PasturesNew 3rd Oct 17, 1:18 AM
    • 60,256 Posts
    • 352,009 Thanks
    PasturesNew
    • #9
    • 3rd Oct 17, 1:18 AM
    • #9
    • 3rd Oct 17, 1:18 AM
    If I'd saved enough to pay cash for a flat .... then I'd wonder if I could get a mortgage and stretch to a small house... the mortgage wouldn't be more than some rents would be and you're "in control" of costs once you've paid off that mortgage.

    Over time... if you've got the life/working lifespan to get/pay a mortgage, you're more settled/better off in X years' time.

    With a house you own, you're in control of how often the grass is cut - and can do it yourself .... you can choose whether/when to paint the front door ... and if you wish to do it yourself or pay somebody at a price you choose to do the work. Your choices, your timescales, your budget.... with the options to leave it, or try it yourself. No luxury of choice with management companies.
    • eddddy
    • By eddddy 3rd Oct 17, 4:23 AM
    • 5,253 Posts
    • 4,892 Thanks
    eddddy
    This is my first time looking for a flat so I am finding a lot puzzling.
    Originally posted by karljt2013
    Yes, I can see that.

    Your question was about Service Charges - but your link is to an article about Ground Rent.

    You must not watch much news if you are confused by my corruption statement. The unfolding leasehold scandal in this country is going to be as big, if not bigger than PPI
    Originally posted by karljt2013
    You need to look beyond the sensationalist headlines, and try to understand what the real issues are.

    There are over 5 million leasehold properties in the UK, it's a very small minority that have issues with high, fast escalating ground rents.

    And obviously, it makes sense to steer clear of that small minority.



    Edit to add...

    There can be issues with Service Charges as well, but you need to understand what service charges are, before you can understand the issues.
    Last edited by eddddy; 03-10-2017 at 8:38 AM.
    • BBH123
    • By BBH123 3rd Oct 17, 9:25 AM
    • 441 Posts
    • 654 Thanks
    BBH123
    The first ones you saw (£10 ground rent and £200 buildings insurance) would also have has a service charge for upkeep of the building. This may not have been a regular monthly amount but could have been billed when works were carried out - this could have been large amounts of money.


    In terms of the one you are viewing today, it is virtually impossible to make a any comment on the level of service charge without knowing what it covers, overall I'd say £130pcm isn't very high though. it is unusual for there to be anything un the lease restricting how high it can go but it must be reasonable and properly incurred. You are also protected by something section 20. This is where the landlord must consult you formally before carrying out any repair/work that will costs you more than £250. Or entering into any agreement that will cost a leaseholder more than £100 a year. If major works are carried out though and there are insufficient monies to pay for them in any fund that has already been started, you will be liable for the shortfall, and depending on what the works are this could cost you 000s. This isn't unusual and the level of service charge currently being paid by the lessee is almost irrelevant. I think the questions to think about are how much is there in a any fund towards future works and what are the anticipated future expenditure - what condition is the block in?


    Good luck
    Originally posted by ££sc££
    This is not correct, It has nothing to do with an annual service charge in excess of £100 per year. A Sec 20 does not protect you at all it is just the process the managing agents have to follow before works in excess of £250 can be arranged. In theory the Leaseholder can submit quotes and have a view but in reality as in my case any observations were met with ' its not up to you to decide what works are done and when '.

    In reality some Leaseholders have no troubles but more and more are having problems as Freeholders and Managing Agents see the profits to be made from these set ups. Where else could you be asked the price of a family car on demand for repairs / maintenance etc.

    The usual platitudes of fairness / reasonable etc are toothless as who is to say what fair and reasonable are. The tribunals set up to supposedly help Leaseholders are run by those with interests in the property market and are not unbiased.

    My advise, if you have cash to buy I would get a small mortgage and buy a proper Freehold house, it could be the smartest move you make.

    For more reading of the horrors of some Leaseholds commonly now known as Fleeceholds join FB page National Leashold Campaign. Some of the stories on there are the stuff of nightmares.
    Last edited by BBH123; 03-10-2017 at 9:27 AM.
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