No mention of service charge in lease but management co seeking it anyway

omega1987

Hello all,

So I brought a Leasehold flat five years ago, the lease states that a £20 per annum ground rent is owed to the landlord but it makes no specific mention of a service charge. The lease states that us leaseholders are responsible for repairs and for holding building insurance so I don't see any justification for a service charge in addition to my existing responsibilities.

The freehold was recently brought and a management company put in place, unfortunately I have just received a letter stating that a £100 monthly service charge is now in place and my first payment is due at the end of the month (only received the letter today). As a service charge isn't mentioned in the lease I don't believe I'm required to pay a monthly service charge but I would like advice on this if possible.

The situation is made worse by the fact that I sold (stc) the flat a few months ago and the sale is currently ongoing and I'm afraid this will scare my buyer away when I really need to move as my wife is pregnant with our first and our current property isn't suitable for her.

eddddy

omega1987 wrote: »

As a service charge isn't mentioned in the lease I don't believe I'm required to pay a monthly service charge

That's correct.

As a starting point, you could write to the freeholder/managing agent and ask which clause in the lease they are relying on to charge you a service charge.

(Depending on how thoroughly you've checked the lease - it might allow this type of charge to be charged, but without using the words "service charge".)

omega1987

Thanks Edddy, thats a good idea so I will ask them to do that. I have read the lease throughly however it is written in legalese so I'm not yet 100% confident that no allowance has been made for a service charge, I will try to get it read by a professional.

mrginge

How is a management company supposed to manage things if it has no income?

omega1987

mrginge wrote: »

How is a management company supposed to manage things if it has no income?

Until a couple of months ago there was no management company dealing with the properties and as the lease seems to make individual flat owners responsible for building repairs, maintenance and insurance I don't think there is a need for one. If the lease doesn't allow for a service charge to be made to a management company then the landlord will just have to pay their fees out of their own pockets.

moneyistooshorttomention

It does look possible that there is no service charge (by that name or by any other name) in your lease - which would leave you personally in the clear for not being legally liable for service charges.

The other point you need to check though is whether anything would get re-written in the course of the flat changing ownership from your hands to a buyers hands - as, if they can re-write things at that point, then your buyer could be liable for a service charge (ie even if you aren't) iyswim.

TrickyDicky101

omega1987 wrote: »

Until a couple of months ago there was no management company dealing with the properties and as the lease seems to make individual flat owners responsible for building repairs, maintenance and insurance I don't think there is a need for one. If the lease doesn't allow for a service charge to be made to a management company then the landlord will just have to pay their fees out of their own pockets.

I'd be rather concerned about a savvy solicitor/buying noting there is no collective provision for building maintenance - this would make the property unmortgageable in the same way freehold flats typically are unmortgageable. Sounds like a potential problem (for all flat owners).

omega1987

TrickyDicky101 wrote: »

I'd be rather concerned about a savvy solicitor/buying noting there is no collective provision for building maintenance - this would make the property unmortgageable in the same way freehold flats typically are unmortgageable. Sounds like a potential problem (for all flat owners).

The buyer of my flat is aware that there is a minimal ground rent and no service charge. This was correct when the conveyancing process began and I'm pretty sure it is still correct today although I am seeking advice RE the imposing of a service charge. The flat is a converted house so the split cost of repair and maintenance should be similar to running a regular freehold house.

My fear is that the buyer will be scared off and my wife will be stuck in an unsuitable home for the duration of her pregnancy :-(

IAmWales

Do you currently have (adequate) buildings insurance? It's not impossible to individually insure leasehold flats but it's not the norm and the rebuild cost would need to take account of the structure of the building as a whole, not just your flat.

omega1987

Yes, it's a buildings and contents insurance designed for leasehold flats.

mrginge

omega1987 wrote: »

Until a couple of months ago there was no management company dealing with the properties and as the lease seems to make individual flat owners responsible for building repairs, maintenance and insurance I don't think there is a need for one. If the lease doesn't allow for a service charge to be made to a management company then the landlord will just have to pay their fees out of their own pockets.

So when repairs have been required, how have you paid for them in the past?