Rental property charges

OneAimMan

Hi

Thanks for reading.

I have a question on charges relating to a rental property and i'm getting mixed answers.

As far as I'm aware a leasehold flat incurs:

(1) ground rent, paid to the freeholder
(2) service charge, paid to the management company

My question is, who normally is required to pay these two charges? Is it the landlord of the property or the tenant currently occupying the flat?

The tenant of course pays a monthly rental fee for the property so do landlords normally request *an* additional charge for (1) and (2) per month or per annum?

Also I understand utility bills are the reponsibility of the tenant, that is gas, electricity and water but what if the water is also charged by the management company as an additional charge on top of the service charge. Is this considered an "inclusive" charge to the service bill or can it be passed onto the tenant?

The tenancy agreement(which is a general one from estate agent) makes no mention of service charges but does about utilities...

Tenant:
TO PAY all charges falling due for the following services used during the Tenancy and to pay such proportion of any standing charge for those services as reflects the period of time that this Agreement was in force:
gas
water (including sewerage and other environmental services)
electricity
any other fuel charges
telecommunications

Thanks in advance!
:money:

G_M

In most cases the landlord (flat leaseholder) pays the management charge and ground rent. However it depends on the terms of the tenancy agreement. From what you've quoted it appears this is the case here, though note that the tenant is responsible for water.

jaylu

I am a leaseholder and have rented out my flat 3 times. As owner, I pay the service charges, buildings insurance and the ground rent. The utilities are paid by the tenant who basically pays for the costs he or she generates. Infrastructure is basically the landlord's responsiblity and usage is the tenant's.

There is no extra charge for water attached to my service charges. It is interesting that your housing association seem to be charging you extra. It's a good idea should look into exactly what this charge is for. Do you have a Leaseholder's group you can ask? Also check your lease.

I had a look at my service charge detail on water and I found this: 'Sewerage: If your property is connected to mains drainage there will be no charge for this service as you will be paying the water company directly. The charge is only applicable where there is no mains drainage and the housing association arranges collection and treatment of sewage'.

Perhaps it is a general rule. Is your charge to do with sewage? If it is as above I would expect to pay it as it is an infrastructure thing. Check with your letting agent, they should know this too.

jaylu

Just to clarify, in my case my housing association is both the freeholder and manages the services. The freeholder is anyway ultimately responsible for arranging for delivering the services they charge for.

jaylu

Actually, having just re-read your tenant's responsibility list from your agent and the sewerage quote from my document I would NOT expect to pay that charge if there was no mains drainage, as it is to do with the useage of the occupier.

jaylu

Just a thought in case I have misunderstood you. I've been assuming that you pay two charges regarding water - one direct to a water company and another mystery one that is tacked on alongside your service charge. Have I got this wrong? Is it that you just pay one water charge to your management company? If this is so, it would just mean the water bill is just set up to be paid via the company instead of directly by you. They pay a water company instead of you doing it. If that's the case, then it's definitely the tenant's bill!

robcauson

My last flat was on a leasehold and the landlord paid the service charges; however, my neighbour paid theirs because their tenancy agreement stipulated that they must. In most cases it's the landlord who pays the management fees (factors fees in Scotland), but if your tenancy agreement says it's up to you, then it's up to you. Yours doesn't seem to do that, so at least for the term of the agreement you're on now (and until it's replaced with one that does stipulate that it's your responsibility) I don't think you should be paying, and I certainly don't think your landlord could legally require you to do so.

As far as the water goes, Jaylu's asked the question there really: do you pay directly to the water company yourself, and is the charge levied by the management company an additional one to that, or is the charge made by the management company the only one?

G_M

Jaylu,
Your endless posts relate to your own circumstances. The OP needs to know about HIS position. His tenancy agreement makes that pretty clear.

OneAimMan

Guys thanks for the replies.

Jus to clarify, I do not pay any charges to the water company.
As far as I know on the service charge breakdown there is a communial charge for water which is included but then get billed seperatly for the water used in the property. So yes I agree the water used by the appartment is the tenants responsibility.

I was more interested in what the market situation was normally in terms of the service charges & ground rent being paid by the landlord or tenant on top of the market rate rent paid for the flat. I didn't think landlords could get away with charging rent and service charges to the tenant...surely it would make any property to expensive! G_M thanks for clearing that up.

I'd be interested in hearing from tenant/landlords that stipulate in their TA that tenant pays rent, utilities, service charge or ground rent but i think thats wishfull thinking from any landlord.

robcauson

I think it's more common in Scotland for tenants to pay the factors fees than it is to pay the management fees in England, but then everything works a bit weird up here. We don't pay water rates for example - it's included in the council tax.

princeofpounds

Normally in england the landlord pays the ground rent and service charge whilst the tenant pays utility bills. In a situation with communal water or heating, for example, the landlord normally pays.

The reason that this is done is to do with liability. The landlord can insist on a contract where the tenant pays the ground rent, but the tenant is not directly liable for the ground rent as far as the freeholder is concerned so if the tenant does not pay the freeholder goes after the landlord. The landlord would then need to go after the tenant for breaking their contract in turn, which is a silly situation.

It would also potentially be difficult, for example, when things like ground rent or service charge vary. Unlike a property leaseholder (landlord) with a freeholder, a tenant and a landlord have a contract that is governed by consumer contract law. It could easily be considered an unfair clause if the tenant is forced to sign up to liabilities that later change unpredictably, or they cannot have full awareness of, and in that case the landlord would never be able to recover the money.

There also practical issues to consider. Why as a tenant would I sign up to pay service charges when any day the management company could come along and whack it up to replenish a sinking fund for a year, the benefit of which would be shared by the leaseholders and freeholder over the years to come?

So ultimately bills should remain with the liable party. I know lots of instances where different arrangements are reached, but generally it's stupid to deviate from that principle.

Finally, in one sense it's all academic really as prices are in the main determined by market forces. As a tenant, it's the same to me if I rent a place for 12k or for 10k and a 'service charge' payment of 2k. What I'm not going to do is pay above market rate, so the landlord can phrase the payments however he likes, he isn't going to get more economic benefit from it.