Management company service charge

marksmen10

I moved to a freehold property last August, in a gated complex made up of flats and houses. The service charge was £277 every  6 months. The management company changed in November and the service charge has increased to £459 every 6 months. Surely this can't be allowed @60% increase. The normal payment request threatens compound interest etc if not paid on time. What rights do I have and to who do we escalate ? Many thanks Mark.

123imp

In a similar boat. You're options are pretty much zero. Legally, you can scrutinise their spending, ask to see records, etc. The industry is pretty much unregulated, and the management companies are definitely scamming their leaseholders. I've heard of residents forming associations and ousting management companies, but sounds like a longwinded process. Under a grand a year is actually pretty good, just hope for the best going forward. 

Hippycamper

I’m not sure exactly how it works, but I knew of someone who lived in a lovely block of flats, where the management company had reached a point of charging/receiving over £80,000 a year for their services.

The block, bar one flat, was owner occupied, (that flat was owned by a distant relative of the occupants),  clubbed together to receive legal advice, then sent a solicitors letter asking awkward questions which in turn got the service charges reduced drastically because apparently a slush fund had been created. 

I know yours is a slightly different scenario, but how many properties are paying how much for what and is speaking to a solicitor to find out yours and your neighbours rights the way to go.

I wish you the best of luck

Le_Kirk

marksmen10 said:

I moved to a freehold property ...............

If it is freehold, why are you paying a service charge and what do you get for it?

Alter_ego

Le_Kirk said:

marksmen10 said:

I moved to a freehold property ...............

If it is freehold, why are you paying a service charge and what do you get for it?

Probably communal areas of estate maintained. Then the cost of sending invoices and collecting service charges. That's basically what mine covers.

daveyjp

Those gates aren't cheap to maintain!

What you need to check in a mixed tenure development is that the house freeholders aren't paying the costs purely associated with the leaseholder costs such as building insurance for the flats, maintenance of equipment purely serving the flats such as entry control systems, lifts etc, sinking funds for significant repairs.

Unfortunately as a freeholder your only action is through contract law.  I would ask for a breakdown of the costs, if you need to pay to avoid interest you can pay under protest until an explanation of the increase is received.

Sandtree

Hippycamper said:

I’m not sure exactly how it works, but I knew of someone who lived in a lovely block of flats, where the management company had reached a point of charging/receiving over £80,000 a year for their services.

First of all a flat is almost certainly leasehold and there are lots of protections for leaseholders. The OP here however states they are the freeholder and the protections are much lower.

By "receiving" do you mean the total of all service charges were £80k or that simply the company's own fee for management was £80k and costs for water, concierge, cleaners, repairs etc were on top of that £80k? The last place I rented before buying were collecting much more than £80k but then they were needing to do some major roof and window repairs and the quote for scaffolding alone was over £1m

diystarter7

Avoid ALL service charge rip-offs.

Those damn gates on so-called gated property can be a nightmare and constantly breaking down and cost a lot to maintain/repair. There could be other charges in looking after the road, the street lighting behind the gated areas.

I have a family member that bought a swanky apartment in London/Greenwich near the dome, well about 20 mins walk.
Their flat is massive and the charges are per square foot/size. They have allocated park, security/etc all costing loads of money. Though the place may be worth ideally 800+k hardly anyone can sell as the services charges etc etc are over 10k per annum -

this covers the heating in the communal aras etc, the cleaning and removal of rubbish dumped by others and their entry phones constantly being repaired etc, etc. Avoid service charges if you can

Sandtree

diystarter7 said:

I have a family member that bought a swanky apartment in London/Greenwich near the dome, well about 20 mins walk.
Their flat is massive and the charges are per square foot/size. They have allocated park, security/etc all costing loads of money. Though the place may be worth ideally 800+k hardly anyone can sell as the services charges etc etc are over 10k per annum -

this covers the heating in the communal aras etc, the cleaning and removal of rubbish dumped by others and their entry phones constantly being repaired etc, etc. Avoid service charges if you can

The penthouse in our ex rental was paying £35k/year in service charge - it was also share of freehold so no greedy freeholder taking backhanders etc.

If its still a swanky place then you can sell it easily even with a £10k or £35k service charge... the problem with the area around the dome is that it really isn't a swanky neighbourhood at all and there was a vast amount of development all at the same time which is still going on. If you can afford that level of service charge and there are plenty of new builds to choose from that will be further away from expensive work like lift maintenance then unless your family member has vastly improved the place they need to be realistic on sales price and what they are going up against.

Put that same flat in another area of London and not only will the value get a 1 in front of it but it'll be snapped up because its a desirable place still with more limited options. 

Our area will soon become like Greenwich, it was redeveloped in the 80/90s but now is looking a bit tired again. The neighbouring area is about to build several thousand homes which will look more polished as they are newer and so sales will be hit. Its hard to claim its prime London when all the wooden windows are 40 years old and very much in deed of replacing.


Realistically if you have a flat you will have service charges for the common areas. I'd be more concerned with a freehold house with a service charge because of the lack of protection

Hippycamper

Sandtree said:

Hippycamper said:

I’m not sure exactly how it works, but I knew of someone who lived in a lovely block of flats, where the management company had reached a point of charging/receiving over £80,000 a year for their services.

First of all a flat is almost certainly leasehold and there are lots of protections for leaseholders. The OP here however states they are the freeholder and the protections are much lower.

By "receiving" do you mean the total of all service charges were £80k or that simply the company's own fee for management was £80k and costs for water, concierge, cleaners, repairs etc were on top of that £80k? The last place I rented before buying were collecting much more than £80k but then they were needing to do some major roof and window repairs and the quote for scaffolding alone was over £1m

Good Evening

i have spoken to my friend this afternoon and asked what happened in their case.

Initially, when they went to the solicitors for help, they were all struggling to keep up with the sky high charges.

There was quite a furore with the freeholders,

No cleaning companies were employed to clean the community areas, the residents hoovered the carpets in the hallways themselves - it’s not hard - open the front door when you are hoovering inside your own flat, and just continue to do the hallway and stairs.

No gardening contractors to pay, the old boy on the ground floor did an amazing job with the gardens - still does.

No communal electric bills - the lights in the hallways (one either side of personal front doors) were connected to the flat owning the front door, and the light above the garage door was also connected to the flat whose garage it was. The property has always been exceptionally well lit.

Windows have been replaced by each flat and paid for when replaced by the flat owner - they had to be replaced like for like, be fitted by a qualified tradesperson, that was the only terms and conditions which makes perfect sense.

There has never been intercom systems as the main doors have never been locked.

The solicitors eventually served the freeholders with a leaseholder collective enfranchisement, which of course the freeholders fought tooth and nail, because paying the buildings insurance once a year entitled them to charge admin fees - very high admin fees.

Anyhow, a limited company has been set up, the leaseholders are all now joint freeholders, if they choose to have solar panels installed on the roof tops - they can, if they want to have a top of the range internet/tv/phone package to serve all flats which is a lot cheaper than individually - they can, if they choose anything and they all agree - they can.

I believe that owning a freehold either as an individual or collectively with like minded people, that gives you much more freedom and peace of mind than being beholdant to a company/organisation that sees you as a cash cow.

I hope the original questioner can be part of a residents group that take care of the gates etc, but I suggested going to a solicitor(s) because that question I’m not 100% sure of the answer.