Freeholder has suddenly impose a management agent, increasing annual charge by over 300%

BrettCollins

Is there anything that can be done to stop this.

anselld

More detail needed.

Annual charge for what?  New charge, old charge, etc. ?

Might be perfectly fair, eg freeholder previously diy managing for next to nothing, decides to appoint professional management co for whatever reason.  Perfectly reasonable if the manco is charging a fair market rate for the job.

Peter999_2

Percentages really don't help in cases like this.   If he was charging £3 a month then he'd now only be charging £12 a month.

How much, in pounds, has it gone up?   As has been previously mentioend if he used to do it himself and has now appointed a company it will go up a lot.   When I stopped doing my block of flats and got a professional company the monthly charge went from £25 to £75.

NameUnavailable

Yes the freeholder can appoint an agent assuming that you don't have Right to Manage?

Who managed the building up to this point?

A management company will charge quite a lot just to 'manage' - that's without any charges for actual works/maintenance. If you and other leaseholders don't like the arrangements then look into getting Right to Manage or buying the freehold if you are able to.

gm0

You can't make the Freeholder do all management actions for free.  They have sole agency on that decision.

So absent RTM - they can appoint an MA of *their* choice.  And recharge it subject to the provisions of the lease.

With RTM you get to choose the who. And the what (beyond basic obligations that must be in scope of the contract).

There are tribunal challenge processes for some categories of charges.  But don't expect to win a battle on there "not being one".  Or it being unreasonably expensive if it isn't 20k and up. Divided by N units.  Scope dependent obviously.

10k buys very little managing agent now after recent inflation.  The split of the bill make a huge difference (number of units).

Or you can collectively as leaseholders vote to implement RTM and follow the process to take control and appoint your own managing agent.  And will discover that hiring a managing agent is still just as expensive.  But as you only have one property - you can't attract agencies with more volume of blocks to contract for.  So it will depend on who you can find locally and what bids you can get.

Or your volunteer "director leaseholders" (who organised the majority of leaseholders vote and then arranged the RTM and would let the agent contract - can instead do all the work for free to the benefit of all leaseholders.  That would be their decision to take it on and donate their time for free.  Good luck with that idea.

Few would do it for anything bigger than a split house.  But in a split house - many do - as the economics are punishing if you don't.

100 units. MA. 
Multiple blocks and lifts.  MA.  

4 units in a house - no MA. 

Somewhere >4 and <50 is the break point. 

This is rough if you have 10-20 lots of stuff to keep on top of - and nobody wants to do it. So you need one.  But it's £1000 each for management overhead.  And then the actual day to day costs on top.

Even if a bigger site does try self manage via RTM - the arrangement will likely collapse in a few years when someone moves out and nobody wants to take over. Or just an ill timed critical illness and a lease change and suddenly no directors, no context and no handover.  And it's a crash where the situation needs to be cleaned up from scratch.  This is bad enough when there is an MA and volunteers keep changing as the volunteers learn "how it works" from the MA who is trying for maximum milk for minimum effort and acceptable levels of dissatisfied mooing.

eddddy

So I guess you're saying...

• You've received an estimated Service Charge Bill for the forthcoming year...

• That estimated Service Charge Bill is either 300% of last year's estimate, or 300% of last year's actual Service Charge Bill (you haven't specified which).

If so, you need to look at...

• The line items on last year's estimate or last year's actual accounts (things like Buildings Insurance, Communal Electricity Costs, Repair Costs etc)

• Versus, the line items on this year's estimate (things like Buildings Insurance, Communal Electricity Costs, Repair Costs, management fees etc)

... to see which things are estimated to cost more, etc


If you think any of the line item charges on this year's estimate are not reasonable, you can choose tp challenge them at a tribunal if you want.


BUT.,. sometimes what happens is: You have a disinterested freeholder who hasn't done any maintenance and repairs to the building in years. So they hire a Managing Agent to sort everything out. And there's a big backlog of maintenance and repairs to do - so the Service Charge jumps upwards (But maybe only temporarily, while all the overdue jobs are done.)

Hoenir

eddddy said:

BUT.,. sometimes what happens is: You have a disinterested freeholder who hasn't done any maintenance and repairs to the building in years. So they hire a Managing Agent to sort everything out. And there's a big backlog of maintenance and repairs to do - so the Service Charge jumps upwards (But maybe only temporarily, while all the overdue jobs are done.)

Rarely any sinking funds in place either. 

Myrtlebloggins

I live in Birmingham. I own a leasehold property, a 2 bedroomed flat. I have had it for 8 years. There are 12 flats in the building altogether. Property management fees to HML have gradually increased over the years. I paid £1159.48 service charge on April 24th 2025 and £62.50  ground rent in February 2025. This August I received a demand for £3,200. They are putting in new fire doors although these have not been put in yet. Can such an almost 300% hike be justified?  It is a complete shock.

eddddy

Myrtlebloggins said:

This August I received a demand for £3,200. They are putting in new fire doors although these have not been put in yet. Can such an almost 300% hike be justified?

(It's best to start a new thread if you have a new question, otherwise it gets a bit confusing for readers.)


I'd guess the service charge demand is higher, because it's taking account of the cost of installing the new fire doors.

Did the management company provide a breakdown of the £3200, so that you can see how it was calculated?


Also, if the fire doors work will cost more than £250 per leaseholder, the management company should do a 'Section 20 consultation' before starting the work - which will give you an opportunity to give feedback.


 
(Are the fire doors the front doors for each flat? If so, most leases say they are the leaseholders' responsibility - not the freeholder's / management company's responsibility.) 

gm0

@Myrtlebloggins

Impossible to say.  It depends on the age of the place.  The approach taken prior. Saving up for sinking fund for medium term maintenance or not. etc. etc.  Comparison of last year's budget to this year and the changed items in the ten or so categories.  HIgher charges along the way or lumpy big one off bills. Deficits from Ukraine war on energy costs.  Slack or attentive agent to the financials and works.  Many factors lead to where you now are.  And where it could go next.   Even well run places with savings can have a big unexpected event - and then face the choice of a big one off bill now.  Or to use savings first.  And then start saving MORE from now - to refill the bucket for the still needed medium term stuff.  After all the "but why how oh woe stuff" - this is the option many people prefer over the big one off bill landing with no warning at all.  With external freeholder views can be expressed to agent via section 20 consultation or residents meeting.  With SOF you get to vote and decide as a group.

In a leashold building of 10.  Where the flat leases are - for simplicity 250k each. 2.5m and the freehold worth about 50k- (for the ground with the flats on it and the communal bits) which has little or no income on it (peppercorn/low ground rent - and can be bought by the leaseholders at any time).  With 999 year leases say.  Guess who pays for new lifts, the roof etc. as they need replacing every 100 years.  Yes - leaseholders. It's where the money is.  Ditto doors.  Intercoms. Tarmac in carparks etc. etc.  Freeholder has to organise the communal not demised to flats stuff.  Recharges these costs to the leases according to the terms of them.

You don't have to organise any of it.  Hooray for communal flats.  But you have to pay for all of it withhout control over it. Boo for communal flats.

Or the leaseholders can instead club together, buy the communal bits and land (the freehold by negotiation or via statutory route and now have to decide as owners of a new company owning their building in common - what to do and when.  Whatever it is the block has by way of facilities and grounds and maintenance.  How often to paint.  Lifts. Alarms. Intercoms/access and fobs.  In yuppy london ones - concierges and pools.

Constrained by legal minimums. Still pay for it all.  But now have some more control on the discretionary edges.

Interpretation of fire risk has changed post Grenfell tower.  And was changing over the years before that.  It is often the case in a say - 20-40 year old block. That developers or site specific companies are long gone. 

Warranties expired.  Would not cover wear/tear anyway.  And wanting a "better" fire risk protection solution now is common.  Checking demised flat owner door types and smoke seals is very common. Bigger blocks.  More communal stuff to do, test and/or update.

On a hiding to nothing trying to prevent fire risk activity. Scrutinise the solution and level of spend on it by all means. 

This is in the MUST do column of legal obligations to attend to it for the freeholder who puts it in the scope of the agent contract. BUT not a particular solution which may be good/bad, cheap/expensive). Doing nothing may not be an option

In most cases it will be impractical to pursue a long ago developer for something "now" required - if it wasn't then.  Not the same as "wrong cladding" or "defective fire breaks in walls".  And even if vaguely arguable as on topic as a poor design choice then - the legal costs to make the attempt may overshadow the cost to just do the job.  Risking double bubble costs for you.  So the freeholder will instread do the project. And take action on the fire risk assessment and bill it through.  Incentives are not aligned.  The fire risk assessor is cautious.  The freeholder cannot ignore but does not have a strong incentive to minimise costs.  And you want to be safe. But also don't want to pay too much for contractors doing arguable works (of unknown quality).