House association - service charge and rent hike

Haddenham35

Hi,

As first time buyers, we entered into a Shared Ownership agreement with Catalyst Housing last August. We purchased 75% of the property, leaving 25% still with Catalyst.

So we are currently paying our mortgage, plus a rent on the 25%, plus a service charge. These two latter costs equate to £214 a month. Even at this price, we have no idea what value we get for this, as Catalyst refuse to help with any issues we have reported - such as internal damp.

We received a letter today saying this rent and service charge has now been increased to £261, effective from 1 April. This is a 22% increase, which I find staggering. We are already scrimping and savings to make ends meet, and I have no idea how we'll manage another £50 a month (£600 a year).

Surely 22% isn't an acceptable increase? If anyone could help I'd be forever indebted... Any advice or guidance would be really appreciated.

Many thanks

marksoton

Haddenham35 wrote: »

Hi,

As first time buyers, we entered into a Shared Ownership agreement with Catalyst Housing last August. We purchased 75% of the property, leaving 25% still with Catalyst.

So we are currently paying our mortgage, plus a rent on the 25%, plus a service charge. These two latter costs equate to £214 a month. Even at this price, we have no idea what value we get for this, as Catalyst refuse to help with any issues we have reported - such as internal damp.

We received a letter today saying this rent and service charge has now been increased to £261, effective from 1 April. This is a 22% increase, which I find staggering. We are already scrimping and savings to make ends meet, and I have no idea how we'll manage another £50 a month (£600 a year).

Surely 22% isn't an acceptable increase? If anyone could help I'd be forever indebted... Any advice or guidance would be really appreciated.

Many thanks

Why was this not picked up when you bought?

Check your agreement to see if you can challenge these charges. But in most cases you're responsible for all maintenance etc...

ciderboy2009

I think you probably need to stop thinking of the rent and service charge as a single payment - they are two separate things.

Bear in mind that you'll always be liable for the service charge whilst you live there - even if you buy the remaining 25%.

What is the breakdown of the amounts before and after the increase?

What reasons have been given for the increase?

What does your lease say about increases in rent?

Haddenham35

I'm totally aware that I'm liable for the service charges - but it turns out they have been increased by £77 to £125 a month (and this is the reason for the increase).

What concerns me is that, for the 6 flats in my unit, this equates to £750 a month.For a new build flat, with zero repairs required, and a tiny garden, I have no idea how they can justify this increase, and the overall charge.

Surely there is some sort of body or advisor that can look into extortionate/unreasonable service charges?

csgohan4

What does your lease say about service charge


As someone said above, you cannot complain about internal issues within your own home as you are now fully liable whether 25% or 75% owned.


I am concerned you are struggling to pay even 50 pounds extra a month. Did you get a government loan scheme? If you did how are you going to pay it back eventually.


What about remortgaging or going on the SVR when your deal ends??


What about the external maintenance to which all the leasehold will have to share which may not be covered by the service charge?


Did you not consider the above before going in to a SO scheme?

marksoton

Haddenham35 wrote: »

such as internal damp.

Haddenham35 wrote: »

For a new build flat,

You have internal damp in a new build?

daveyjp

The service charge account will tell you what the money is being spent on.

Building insurance will be one element, how much is that? How much is it next year?

Haddenham35

Yes they came out today and found that there is damp due to a fault with the roof.

Haddenham35

My issue is not that we need to pay the service charge, I totally get that. It's that they are able to increase it by such a %. There's no justification for this and I wanted to know if we, as tenants, have any protection against this type of unreasonable increase.

And, in answer to a point above, yes £50 extra a month is not something that can just be absorbed that easily. Unfortunately we live pay cheque to pay cheque.

daveyjp

The justification is the accounts. Service charge is required to cover expenditure incurred to manage the building.

What do they say for last year? What was spent? Was there a shortfall? Why was there a shortfall? If no shortfall why the increase next year? What has increased in cost to justify the extra?

Find out answers to these questions and you may get useful responses.

Mokka

If it's a new built faults should be covered by guarantees. Many social landlords are run by totally incompetent people and you need to know your rights and when to challenge them.

Please find out about your rights and responsibilities as a leaseholder:
from
http://www.lease-advice.org/
http://www.servicechargedisputeguide.info/
http://www.leaseholdknowledge.com/

Service charges are only payable when reasonably incurred. If repairs should have been covered by insurance or the new built components are still on guarantees then the charge would not have been reasonably incurred.

Ask your freeholder for the breakdown of service charges and find out what they are for. If you don't challenge your freeholder they will get away with it!