Management companies

marksmen10

Hi I am buying a property which has a managing agent for an annual service charge. The property is coming up to 3 years old. I noticed from the information provided that the first year payment was £118, yet the following year had increased to £167 an increase of over 40%. My question is are there any protections in place for home owners in reference to these charges or can management companies charge what they like. Thanks Mark

Mark_d

https://www.gov.uk/leasehold-property/service-charges-and-other-expenses
FYI I pay £300 a month for service charge for my flat.  All the costs are transparent so we are not being overcharged.  It's a lot but that's because it needs to build up for roof replacement when that becomes necessary

MattMattMattUK

Mark_d said:

https://www.gov.uk/leasehold-property/service-charges-and-other-expenses
FYI I pay £300 a month for service charge for my flat.  All the costs are transparent so we are not being overcharged.  It's a lot but that's because it needs to build up for roof replacement when that becomes necessary

I would generally dispute that, whilst the costs might be transparent almost all management companies overcharge. E.g. the cost of cleaning the common areas is £1,000 a month, that is what they bill you, but the cleaning company rebates them 50% at the end of the year. They book in plumbers for maintenance of shared piping, booster systems etc. as well as an out of ours/emergency service, that cost is £8,000 a year which they bill you, but they get a 25% rebate on that. 

The same with the freeholders insurance, almost all use schemes which give them a headline figure to charge leaseholders, but a rebate of up to 50%, this usually happens until they are challenged at a tribunal. 

daveyjp

marksmen10 said:

Hi I am buying a property which has a managing agent for an annual service charge. The property is coming up to 3 years old. I noticed from the information provided that the first year payment was £118, yet the following year had increased to £167 an increase of over 40%. My question is are there any protections in place for home owners in reference to these charges or can management companies charge what they like. Thanks Mark

If its a freehold with common part recharges your only protection is contract law, you would need to demonstrate to a court the charges are excessive for the services received.

eddddy

marksmen10 said:

Hi I am buying a property which has a managing agent for an annual service charge. The property is coming up to 3 years old. I noticed from the information provided that the first year payment was £118, yet the following year had increased to £167 an increase of over 40%. My question is are there any protections in place for home owners in reference to these charges or can management companies charge what they like. Thanks Mark

Is the property freehold or leasehold?

If it's leasehold, there is a lot of legislation that is supposed to protect leaseholders.  The lease will specify what work the management company can charge for.

If it's freehold, as above, there is currently only contract law to protect freeholders.  A deed will specify what work the management company can charge for.


When a building/estate is brand new, it might need relatively little maintenance, repairs etc - so the management charge might be low.

As years pass, and there is more wear and tear, more maintenance and repairs might become necessary - so the management charge might increase.

eddddy

MattMattMattUK said:

E.g. the cost of cleaning the common areas is £1,000 a month, that is what they bill you, but the cleaning company rebates them 50% at the end of the year. 

In theory, a leaseholder could challenge that charge at tribunal, on the basis that £1000 a month isn't reasonable, because other cleaning companies (who don't pay rebates) would only charge £500 per month.

But realistically, that means the leaseholder would have to gather evidence - for example, getting other cleaning companies to give quotes, preparing a tribunal case etc.



But there's also the issue that...

If I was hiring a cleaner, I might be happy with hiring "George" from around the corner, based on a recommendation from a neighbour.

However, when a Management Company hires a cleaner, they might want the cleaner to provide:

• Public Liability Insurance
• Evidence that the cleaners are familiar with The Control of Substances Hazardous to Health Regulations (i.e. cleaning fluids)
• Evidence that the cleaners have experience of similar work
• Written References from other clients
• etc

And cleaning companies that meet all those requirements might charge 2 or 3 times what George would charge.