Service Charges

Chickenman1108

Hi all
I've read some horror stories on these threads relating to management companies charging leaseholders extortionate service charges. Obviously I understand that this is a risk that you take when purchasing a leasehold property.
Often I hear of management companies ploughing a lot of money into sinking funds to pay for things like roof damage etc - which would be regarded as a reasonable charge.

I recently purchase a new build property whereby structural issues are covered for 10 years by the NHBC warranty. My question is, would a management company feasibly be able to increase our service charges and use these kind of issues as an excuse to do so, if the building is currently under warranty?

Currently trying to work out the pros and cons of purchasing a share in the freehold and obviously having control over service charges would be a distinct advantage, but I'm not sure that the existing management company would have much scope to increase our charges to an extortionate level whilst a lot of things are covered by a warranty!?!

Thanks in advance for all your advice

davidmcn

Not all work is going to be covered by warranty, and you might want to have a sinking fund ready for stuff needing done in year 11 and beyond.

need_an_answer

Structurally things would be covered however sitting back on your laurels as a management company isn't a good idea...after 10 years the structure isn't covered by a guarantee.

I purchased a nearly new build flat a few years ago and its been clear that in the years where things were new there has been little thought put into a sinking fund or how to maintain the building going forward.


Typical service fees have there fore doubled in the 3 years that I have owned the property simply because at around 10 years old thing like lighting decoration and communal carpets now need attention.

All things that fall under the wear and tear umbrella but when those who have lived there before have made no contribution to the upkeep it now falls very heavily at the feet of the present leaseholders.

AdrianC

Don't get confused between the service charge/maintenance expenses/sinking funds, which is the money they spend on the property, and the actual management fees charged by the management company, which is the money paid to them for managing it.

A warranty might cover some aspects of maintenance and expenditure, but it certainly won't cover all.