Management Charges

Branagorn

Hello Forum,


I am currently a very long way into a flat purchase (first time buyer), and expect to transfer my deposit imminently. The contracts are preliminarily signed but not dated (I am not obliged to complete the purchase at this point).


This is going to be for a leasehold flat, for which there is a management company in charge of the upkeep of the building/surroundings.


I have just received an email from my solicitors, which includes the following excerpt.


'
In relation to the management pack attached, I would in particular draw your attention to the following:

• Your Landlord is X
• The Management Company is Y.
• The managing agents have confirmed that there are no major works due, but cyclical works will be implemented next year (redecoration). There is a reserve fund held by the management company, but accounts for the year ending December 2017 are awaited to determine the level of such reserve fund. Should the reserve fund not cover these works, then each tenant will be required to pay additional service charges for any shortfall.
• You are required to pay 1.3862% Service charge and 0.4950% Estate Charge. I am currently awaiting the current service charge budget to determine the level of the service charge which you will need to pay.
• On completion we are required to serve a Notice of Transfer on the management company. Their fee for receipting this is £96.00. Please note that Notice of Transfer will also need to be served on the Landlord, and I am currently awaiting further details as to the requirements and costs in this regard.
• On completion we are required to serve a Notice of Charge on the management company. Their fee for receipting this is £96.00. Please note that Notice of Charge will also need to be served on the Landlord, and I am currently awaiting further details as to the requirements and costs in this regard.
• Please note that our own fee for service of each notice is £75 plus VAT

I note that you have previously been provided with the Deed of Covenant for signature, which you have returned. This will be sent to the management company on completion. They do not charge a fee for dealing with this.

• You are required to become a member of the management company on completion. The Application for Membership Form is attached and the management company will charge a fee of £90 to process your membership application.
• In accordance with the restriction on the register, a Certificate of Compliance will be required from the management company. Their fee for processing this is £96.'

My issue is regarding the fees to transfer out the current owner, and me in his place for the management company.


So from the above I can deduce that I will be charged £378 + and undetermined amount for serving similar notices to the Landlord, lets assume this to be similar ~£192.


My solicitor is then stating that I will be charged £75+vat per service of each notice, i.e £90x4 ~ £360.


So at worst this could amount to £930.


A significant amount that I have never been aware would be required.


I appreciate that by nature, property purchases are expensive and can throw up all sorts of hidden charges (especially with leaseholds). However, I feel that this unexpected cost is quite excessive.


I now have all sorts of questions. Should the Estate Agent have made me aware of these costs? Before making my offer, I did ask about the management fees. But I was not aware that I would have to be considering 'transfer' fees. Or was the onus, indeed on me to ask about this?


I was made aware that a previous sale of the property had fallen through, but the Estate Agent told me this was down to the buyer being worried about his job security given recent news. My suspicious mind is wondering if perhaps these exorbitant fees might perhaps have been the real cause.


I know that a large chunk of this added cost is from my solicitors charging their own fee per notice, but that really does not help things.


My parents have advised considering pulling out of the purchase, given that I may also face difficulty in the future with selling, as buyers (like I am) may be by these fees.


I would really appreciate the advice of the forum as to what action to take next?


Am I in a position to question, negotiate any of these fees? If so, who should I be taking this up with, the Estate Agent, Management Company or my Solicitor?


Many thanks,

SmashedAvacado

This is all fairly normal.

There is no-one to complain to about this. it is what it is. You have to expect to contribute to the organisation of managing the common parts of a property - and this includes setting this up and administering it legally. Buy a freehold and you will avoid fees like this.

eddddy

My only comment is that the notices you describe sound fairly normal...

... so your solicitor should have made an allowance for them when giving you a quote for a leasehold purchase.


Did you opt for a 'super-cheap' solicitor, or perhaps one referred by an estate agent?

They sometimes make their 'headline price' look cheap, by charging extra for the things that other solicitors might include in their price.