Monthly ground maintenance on new appartments

woody2234

I am thinking of buying 1 bedroom apartment in a block of 6 apartments. which is a new build block with a carpark so i think in reality no maintenance cost for things like new roof or rendering walls because its a new build. EA says building maintenance will cost about 100 a month but say everyone moves into the properties and then 1 year or 5 years later the company which owns the freehold of the land decides to put up the ground maintenance to say 500 a month for arguments sake.
can the property owners do anything about this type of thing or is it unlikley to happen.

[Deleted User]

Unless you have some kind of written guarantee that it will never go up then you can guarantee that it will. Even then you won't be able to sell it because the new owner won't get the same protection.

Sounds like scam.

rheme

You might find these links helpful.

https://www.gov.uk/leasehold-property/service-charges-and-other-expenses

http://www.telegraph.co.uk/property/propertyadvice/9200995/Ask-the-expert-paying-service-charges.html

http://england.shelter.org.uk/get_advice/renting_and_leasehold/leaseholders_rights/service_charges

chris_m

In general, your payments will be split into ground rent and service charge.

The ground rent will be set out in the lease, including any periodic increases that will apply - some, for example, double every ten years.

The service charge will be to cover general maintenance and will include the management company's profit. Hopefully it will also include a surplus, above the amounts needed for general maintenance (cleaning, gardening, insurance, etc.), which will be used to build up a sinking find - to finance major works instead of asking all the leaseholders to chip in with what could be large, short-notice payments.

IIRC leaseholders have the right to inspect accounts and, if enough of them agree, to take over the management themselves - so if a management company were to try taking too much, there is a way to stop them.

propertyman

chris_m wrote: »

The service charge will be to cover general maintenance and will include the management company's profit. .

No it isnt profit its their fees for the service that they provide. They are agents not a contractor or supplier employng subcontractors and taking a profit.

sunflow

We bought a new build 7 years ago and found that service charges more than doubled within the first two years. This was due to charges quoted being based on year 1 and 2 when most items are within warranty (e.g. car park gates, lifts) so it's worth checking the service charges forecast post year 2 aswell.

chris_m

propertyman wrote: »

No it isnt profit its their fees for the service that they provide. They are agents not a contractor or supplier employng subcontractors and taking a profit.

So you think their fees solely cover the cost of doing the work that providing the service entails? Unless they're a not-for-profit company or a charity, that's a funny way to do business.

propertyman

Well Chris I know, not think

Service charges are a bill from the landlord, be it a freeholder or residents group etc, under the management of an agent, and represent the total of the bills ( or an annual estimate thereof) of the cleaners utilities repairs etc, by a variety of suppliers.

An element of that total SC bill is the manager's fee which is for the work that they do organising the above as well as accounting, a raft of technical and statutory compliance for the landlord client and other duties that they are asked to undertake. That fee includes a profit yes @6-8% gross before tax, of their fee, not the entire service charge bill that you get.

I hope that makes it clear to you. :A

Fraise

woody2234 wrote: »

I am thinking of buying 1 bedroom apartment in a block of 6 apartments. which is a new build block with a carpark so i think in reality no maintenance cost for things like new roof or rendering walls because its a new build. EA says building maintenance will cost about 100 a month but say everyone moves into the properties and then 1 year or 5 years later the company which owns the freehold of the land decides to put up the ground maintenance to say 500 a month for arguments sake.
can the property owners do anything about this type of thing or is it unlikley to happen.

Yes you can - you can take it to Tribunal and appeal. It's not true that a management company can increase maintenance charges to any figure they want - that is ridiculous and would be laughed out of court.

Do remember that there is a BIG difference between a MANAGEMENT COMPANY and MANAGEMENT AGENCY.

A Management Company is owned by the freeholders of the property (and if you have a share, then you're a joint freeholder too by way of your company share) As a shareholder - and even if you aren't a director of the company - you have every right to dispute an increase.


A Management Agency is employed by the freeholders (which is the management company) to simply arrange tradespeople to carry out work. An agency is only needed if there are lots of flats - you would not need one for a small property consisting of,say, 6 flats. The company can self-manage a property that small, and arrange their own maintenance. Simple. It cuts down on unnecessary expenses too. Further, a management agency can be sacked by the company too.

propertyman

Fraise wrote: »

Yes you can - you can take it to Tribunal and appeal. It's not true that a management company can increase maintenance charges to any figure they want - that is ridiculous and would be laughed out of court.
.

Not true - the figure can be any that I want as long as I can show that there is basis for it.

If a new roof is needed the SC can go from £1000 pa to £10000, or in a case we are dealing with, to £45,000.:eek:

Thats what the OP needs to know not a misleading " laugh out of court" as that only applies where there is no basis for such an increase.

But where there is, the increase can be enormous.:(

Fraise

propertyman wrote: »

Not true - the figure can be any that I want as long as I can show that there is basis for it.

If a new roof is needed the SC can go from £1000 pa to £10000, or in a case we are dealing with, to £45,000.:eek:

Thats what the OP needs to know not a misleading " laugh out of court" as that only applies where there is no basis for such an increase.

But where there is, the increase can be enormous.:(

My solicitor says otherwise.

Are you a solicitor, Propertyman?

My solicitor said that no management agency can increase service charges that are ludicrous. It can't be done. Yes, if MAJOR works need carrying out, then the residents will need to chip in for the work to be done, but to suggest they'd EACH have to increase their service charges by a whopping 900% doesn't even make mathematical sense- let alone legal sense!:rotfl:

I'm sure most people when buying a flat will have a surveyor's report done and if it says a new roof will be needed in a few years time - and it's going to cost an EXTRA £9,000 a year service charge - they ain't gonna buy it!:rotfl:

Just make sure your roof is good for the next 50 years before you buy!

The figures you've quoted, Propertyman, what sort of property is it? It must be massive or delapidated....