Property maintenance charges devaluing my property hugely

lija0222

Is anyone aware of anything that can be done about property maintenance companies charging extortionate amounts? I currently own a 2 bedroom flat and the maintenance charge is over £500 a month. It is in an normal area. It's has been on the market for some time with no interest owing to the maintenance costing more or similar to a monthly mortgage cost on the property. It even went to auction and received no bids owing to the maintenance charge. I am stuck with this property with huge unaffordable bills to pay. According to house price increase data it should be worth at least 230k, except it's not had any interest even listed at 110k which is less than I paid for it in the early 2000s. Is there anything that can be done legally or is there any ongoing campaign against this? The extortionate amount has made it unsellable and completely devalued the property.

Brie

Can't you demand an accounting from them to justify the costs being charged?  I doubt it will be a quick solution to anything but if there's a residents' group that might help.

born_again

Ilija0222 said:

Is anyone aware of anything that can be done about property maintenance companies charging extortionate amounts? I currently own a 2 bedroom flat and the maintenance charge is over £500 a month. It is in an normal area. It's has been on the market for some time with no interest owing to the maintenance costing more or similar to a monthly mortgage cost on the property. It even went to auction and received no bids owing to the maintenance charge. I am stuck with this property with huge unaffordable bills to pay. According to house price increase data it should be worth at least 230k, except it's not had any interest even listed at 110k which is less than I paid for it in the early 2000s. Is there anything that can be done legally or is there any ongoing campaign against this? The extortionate amount has made it unsellable and completely devalued the property.

Is this one of the "Over a certain age" properties?

Like this

https://www.rightmove.co.uk/properties/147329015#/?channel=RES_BUY

AskAsk

born_again said:

Ilija0222 said:

Is anyone aware of anything that can be done about property maintenance companies charging extortionate amounts? I currently own a 2 bedroom flat and the maintenance charge is over £500 a month. It is in an normal area. It's has been on the market for some time with no interest owing to the maintenance costing more or similar to a monthly mortgage cost on the property. It even went to auction and received no bids owing to the maintenance charge. I am stuck with this property with huge unaffordable bills to pay. According to house price increase data it should be worth at least 230k, except it's not had any interest even listed at 110k which is less than I paid for it in the early 2000s. Is there anything that can be done legally or is there any ongoing campaign against this? The extortionate amount has made it unsellable and completely devalued the property.

Is this one of the "Over a certain age" properties?

Like this

https://www.rightmove.co.uk/properties/147329015#/?channel=RES_BUY

They are called retirement homes.  My in-laws have just dropped out of buying one because of the uncertainty of the service charges and major works bills.

lija0222

I am "over a certain age", as are others living in the property but some flats are also owned by working professionals so it's not specifically tailored to "over a certain age"

eddddy

lija0222 said:

I currently own a 2 bedroom flat and the maintenance charge is over £500 a month. 

So I assume it's a leasehold flat. So you're probably paying an estimated service charge (of £6000) for the current year.

Weren't you given a budget document at the beginning of the year to tell you how that budget was arrived at? i.e. A list of all the costs.

If so, what is resulting in the high cost? Is there anything in the budget you disagree with?



Are there cladding and/or fire safety issues with your block of flats? For example, that require a 24/7 Waking Watch, and huge insurance costs?

Or as others suggest, is it a retirement development? 

AskAsk

eddddy said:

lija0222 said:

I currently own a 2 bedroom flat and the maintenance charge is over £500 a month. 

So I assume it's a leasehold flat. So you're probably paying an estimated service charge (of £6000) for the current year.

Weren't you given a budget document at the beginning of the year to tell you how that budget was arrived at? i.e. A list of all the costs.

If so, what is resulting in the high cost? Is there anything in the budget you disagree with?



Are there cladding and/or fire safety issues with your block of flats? For example, that require a 24/7 Waking Watch, and huge insurance costs?

Or as others suggest, is it a retirement development? 

we will await the OP's response but it does sound like it is a retirement home, with annual service charge that high.  You can get very high service charges for multi million complexes, where you have a concierge, communal gym and swimming pool, tennis courts etc, but those flats wouldn't be at the £200,000 mark!

When my in-laws were looking at retirement homes, we noticed that some of them have dropped the minimum age to 55, so they are aiming to get younger residents.

DullGreyGuy

eddddy said:

If so, what is resulting in the high cost? Is there anything in the budget you disagree with?

This is the key point... 

Our last flat (rental to us) had a service charge of £8,500 (the penthouses paid over £40k) but it was share of freehold so no greedy freeholder skimming monies off and was being done intentionally to build up the sink fund as major works were needed to replace the windows, renew all the lifts (think there were 10) and major works on the roof to be done simultaneously to the windows to save on scaffolding costs (the quote for which had been over £1m)

gm0

Sounds like there is something else going on as well as service charge being unpopular.  And yes it is a higher or lower % of the typical mortgage cost as the price of the flat in local market rises and falls. And mortgage rates rise and fall. But all that is irrelevant frankly to why it is what it is.  What mix of profit making and true costs and world events.

There are campaigns about retirement providers and unfair terms/restrictions.  With limited traction.  Though there is more consumer awareness and the worst and most complex ideas on playing with costs on the way in, during and out seem to be disappearing for new.  Existing leases still bind so far as I am aware.  For the most horrid there may be some unfair contract terms potential to dispute.  Legal advice.  But sheltered accommodation with employed staff always has higher in year costs. Just like flats with a welcome mat concierge tending a car park and taking in parcels aimed at the wealthy.

On service charge more generally. There are "paying under protest" and challenging reasonableness via tribunal remedies.  And then there is the populist demonisation of leasehold mechanics.  Much of which is delusional in terms of what people think abolition means.  Campaign for and call it what you want.  Share of freehold (after purchase into a Ltd), common hold, existing leasehold with some corners knocked off as unfair terms (escalating ground rents as example). Yet when the lifts need replacing x6 in a site with 24 units.  You owe the cost of 1/4 of a lift - into the thousands

So you either

A ) save up for it (sinking fund contributions) = higher in year service charge. 
B ) pay it all at once in the year of demand (Section 20) 

People seem to think they can "vote" or press a developer MA for Not A and also for Not B and then not ultimately have to walk up the stairs.  Or even if they know they can't have it both ways play the "I will be dead and gone by the time that bill comes due card".  So its B. And let the future go sort itself out.  This approach has a slow cancerous affect on saleability as visible tiredness and liabilities show up, and yet there is no budget for them.  A 30 year old site with no sinking fund and looking tired - would definitely fall into this category.

A decent managing agent or property maintenance communal outfit will publish a budget to accompany the planned next year charge.  At least to "list of major categories and last year/this year" level of twenty or so line items 

It is not at all an unreasonable request in writing to the MA or to make at a residents meeting.  And in most leasehold settings a developer appointed MA who skimps on this stuff is usually expelled by the residents organising for right to manage.  Sheltered accommodation leases make all this a tad more complex.  As do the can't be bothered with all that - demographics of the community.

£300 isn't great news but it isn't a show stopper amount for flats in 2024.  It might have been well south of £250 3 years ago and the MA is doing a gold star job and it can still be £300 now. Details matter.  Or you are in hock to an exploitative operater as owner who is overcharging on all maintenance sourcing and their own management fee.  Without a breakdown - impossible to say.  Both kinds exist.

Looming and uncosted liabilities and it being widely known locally there is no sinking fund will also stop sales in their tracks - depressing exit values for forced sellers (the only ones).  Only investment buyers willing to take a long term punt will bite. Willing (and able so not a retirement lease) to rent it meanwhile.  And extremely aggressive in paying pence in the £ to acquire - to account for the turn around effort and risk and refurb etc.

Tough place to be.  Ironically this exposure once you don't live there to ownership costs or as inheritor in retirement settings - is one of the arguments for lease assignment exit levies precisely to reduce the normal service charge to the day to day expenses.  A widely detested feature of retirement special leases.

NameUnavailable

Assuming it isn't a retirement flat (which always have higher service charges as you're paying for support as well as maintenance) has the service charge been increased recently? If you're asking the question it would suggest it wasn't has high up til now?

What are the charges for? It's a very high charge so there must be something in there that's bumping it up significantly.

If it's high to deal with specific issues then presumably once paid/work done the charge will reduce again to a 'normal' level. Maybe - if that's the case - make that clear in the marketing info and maybe even offer a 'cash bonus' for any buyer to cover the costs for the next year?

Finally you have the option to challenge costs at tribunal.

dell12

As others have said, you need to find out what exactly your money is paying for. But it feels like alot on the face of things. There are flats in a block near me in Croydon going for similar to what they were going for in 2009 with annual one-bed service charges of £4k and two-beds paying £7k.

There's a good service charge index here, although I guess there's a pretty wide distribution of charges.