council sinking fund

leegarlick

I have just enquired about the right to buy my property,it is a top floor maisonette.It is in a poor area and only valued at £32000 which i can buy for £11500 because of my 12 years of being a council tenant (10 years at this property) i have just received the servicre charge bill and the advance payment fund (sinking fund)is £888.32 a year.The total bill for service charges comes to £1165.32 is this reasonable????
I think it is extremely high especially as ive been here 10 years and nothing has been done to the block,are all sinking funds this amount??? Any help or advice would be appreciated
thanks:)

BitterAndTwisted

The sinking-fund is that high precisely because nothing has been done to the block!

MisterBaxter

I assume that they have given you a full breakdown of how these service charges have been calculated and exactly what you have received and what /when you will be receiving the work/services that are covered by the advanced payment.

Check the lease carefully, not all allow for a sinking fund, some only allow for collection when work/services are provided. Also check that the things they are looking to charge you for are actually recoverable under the lease. Some leases only allow for repairs and maintenance and not improvement.

The only way to know what you can and can't be charged for is to read and understand the lease, once you have established that then you can check that you are or will be receiving the services for which you are being charged. There are also consulation rules that need to be followed, if they aren't then the level of charges can be limited. There is an organisation called 'Lease' that provide lots of useful information to leaseholders and landlords.

leegarlick

i havent agreed to buy the property yet so not sure what they have sent me is the actuall lease but it does give a breakdown of were my payments to them would go.I agree with the majority of them i am quite happy to pay for repairs or improvments but only if i am fairly charged,when i rang and asked about the advance payment fund they said it was incase the roof got damaged or incase they decide to change all the windows?
Also if i have been renting from them for 10 years i presume some of my rent has been getting put into this pot yet no work in 10 years has been done, so the pot should be pretty big as there are 6 flats in the block.Also now they have broken down the service charge i have been paying for 10 years i can see that i have been paying for things that havent been done(£63 a year for gardening, the garden hasnt been touched by the council for at least five years) is there anything i can do about this?

cattie

I don't think many ex local authority flats have a sinking fund that they pay into, it's quite normal for them to send you a rough estimate of the proportion you need to pay for any major works or maintenance due to be carried out. So a council that has a sinking fund in place is actually a better bet than one that doesn't.

Plenty of people end up with bills of say £10k or more when a major problem has occourred or maintenance work required because there has been no sinking fund in place to help towards the cost.

What you've been paying in rent would already of contributed in rather a small way to upkeep such as lighting, any any repairs to tenanted properties that you might not be aware of etc. Also the council have had to pay buildings insurance on your block, which all tenants contribute towards from their rent.

The rent you've been paying has been heavily subsidised by the tax payer so it is not a market rent that the council charge you.

Once you own a flat, such things as buildings insurance, communal charges such as electrics, estate upkeep, cleaning of common parts etc.etc. is paid via service charge.

Unless you are prepared to be making a contribution towards all upkeep of the block/estate via service charges & also pay into a sinking fund, then owning a flat is not for you.

Too many people rush into buying their council property & it's only once they have done so & realise the full financial implications do they realise how much better off they were in paying a very low rent compared to what a similar flat would cost to rent privately.

MisterBaxter

If your rent and service charges are aggregated then there probably isn't much you can do about past payments, if the rents and service charges have been split and billed separately then you can at least try complaining to the landlord that they have been taking your money but not providing the service, you could go to the Local Government Ombudsman and claim mismanagement of the service charge fund.

Unfortunately any money you have paid through your rent account over the years will almost certainly count for nothing once you have bought. That money will sit in the rent account budget (HRA) and will pay for the Councils proportion of any works, they will still bill you for your proportion of the costs.

As I said before I suggest you check your lease to make sure that you know what the landlord can and can't charge for and on what basis, you would be surprised what landlords will try and get away with. Also don't be afraid the challenge any charges where the service hasn't been provided, you mentioned gardening, if they haven't done it then you shouldn't pay for it. If they don't consult properly then one off charges can be limited to £250 and recurring contracts can be limited to £100, make sure your solicitor runs through it with you so you know what your rights are and ensure that you don't get taken for a ride.

charlieismydarling

cattie wrote: »

The rent you've been paying has been heavily subsidised by the tax payer so it is not a market rent that the council charge you.

Council rent is not subsidised by the taxpayer, or indeed any other body. It is more affordable and not inflated like market rents.


Big difference. Yawn.

moremore

charlieismydarling wrote: »

Council rent is not subsidised by the taxpayer, or indeed any other body. It is more affordable and not inflated like market rents.


Big difference. Yawn.

Above post is totally correct....

OP said the property is a top floor maisonette there different to block of flats I expect the OP got details on section 125 which give a breakdown of works to be carried out and discount. OP should ask the council for a copy of the lease and read it or take it to a solicitor to get some advice on it.

Mokka

I live in a council tower block and the service charge is about the same (around 1K) but does not include sinking fund.
In top of service charge you will have to pay for water charges and you might get charged extra for major repairs if there is not enough money in the sinking fund.
Part of the income council gets from rents (which are NOT subsidised- it's just some inane Daily Mail fabricated urban myth) is supposed to be put towards repairs, but usually isn't - it goes to cover shortages in council spending.That's why so many estates are so badly neglected.
Check if your estate has a resident's association. It's best to join with other people when fighting unfair charges/bad quality of service.

ging84

charlieismydarling wrote: »

Council rent is not subsidised by the taxpayer, or indeed any other body. It is more affordable and not inflated like market rents.


Big difference. Yawn.

moremore wrote: »

Above post is totally correct....

OP said the property is a top floor maisonette there different to block of flats I expect the OP got details on section 125 which give a breakdown of works to be carried out and discount. OP should ask the council for a copy of the lease and read it or take it to a solicitor to get some advice on it.

Council or housing association owning an asset and not charging full market rate when renting it, is a form of subsidising.

MisterBaxter

Mokka wrote: »

...... it goes to cover shortages in council spending.That's why so many estates are so badly neglected.

Since self-financing came into effect several councils have tried to subsidise the General Rate Fund budget from the Housing Revenue Account budget, they have been taken to task over this and have been stopped from using tenants money to fund general council services, of course there are still back-door routes.

The other problem with run down council estates is that in many areas the housing department are expected to maintain the whole area despite a large number of the properties having being sold off over the years under RTB. Councils who have a retained housing stock have to keep their housing budgets completely separate from their general budgets which are funded from Council Tax.

The old Government funding and subsidy regimes have also changed significantly so the idea that social housing is heavily subsidised isn't as clear cut as some may have us believe.

None of this of course helps the OP who really just wants to to know what to expect in the way of service charges and really needs to know and understand their obligations and rights before committing to buy.