New Build Apartment - Off-Plan Service Charge vs Reality

-Chris_4

Greeting all,

I'll try to keep this as brief as I can.

I bought a new build apartment off-plan back in September 2022 (reserved) under the affordable housing scheme with a 35% discount applied for my area for those eligible.

The service charge was quoted as £950.69 per annum for the building on the reservation agreement. Both me and the developer signed & dated this agreement in September 2022 and I have a copy. I also have a signed and dated reservation checklist from October 2022 with the same £950.69 service fee charge listed.

We discussed this charge in the sales office, and we talked about cost, and worked it would roughly be around £80 per month, which was written for me in pen on the document, but they couldn't say how the management company would take that payment (monthly, annual etc), and I would need to discuss this with the management company once they took ownership of running the building. This cost was a huge factor for me purchasing the property, as I had factored in how much the service charge would impact my affordability and savings, as I eventually would like to save up enough to purchase a house.

After moving in to the property in June 2023, I rang the developer to ask when the service charge payments would start, but they said I would need to wait for the management company to take over and they would contact me when that happens.

Fast forward to now, April 2025, and I received my first letter from the management company regarding my service charge payments. They have said they sent me a bill last year in January 2024 via email for Jan - Dec 2024 payment (in advance), and I did not pay, and again this January 2025 for Jan - Dec 2025, and I have not paid. I am now in arrears of £3232.55.

I rang them on the same day, and clarified the only contact they have tried is via email, and when reading out my email, it had a missing letter, so I have not been receiving any information from them. The advisor said I would have 28 days to pay, but the management company, due to their clerical error, will agree to a 6 month payment plan.

The 1st year is - £1600.55
2nd year - £1632.00

I asked why my developer and documents said the service charge would be £950.69 and they said that is just a estimate the developer gives, not a fixed fee.

How can the estimate be so vastly different? To me this is mis-selling in order to get me to purchase the property. If they had been honest and said the service charge would start on £1600 on year 1 I would 100% have not bought the property and would have continued to save my money for a house where there is no service charges.

I have been sent a 'breakdown' of the costs, but this just shows what money goes into what areas. £1000 for gardening for example, yet we don't have a garden just a few plants dotted around the property and a 2 small squares of grass (about 3 metres squared). £1400 in management fees, £600 in general maintenance, it's a new build, what maintenance does it need? Surely any faults are covered by the developer given it's less than 2 years old.

Regardless of actual cost to run the building, my point is, surely you can not legally give someone a estimated cost, and then the actual cost is pushing double the initial amount? This is very poor selling tactics, either incompetence, or something a little more fraudulent?

I really appreciate anyone taking the time to read and offer any sort of advice, and apologies for such a long post.

Any help really is appreciated.

gwynlas

Sorry that you appear to have been misled but the developer would not have had any true idea of the actual service charges unless they had been given quotes. Less than £1000 sounds better than over £1000 and of course this could have been a 21/22 figure.

The ideal would be for you and fellow tenants to take on a Right to Manage role so that you can either self administer or appoint your own managing agents.

The management accounts should be audited as correct so you have no choice really and must pay what is asked, failure to pay service charges could lead to forfeiting the lease, 

It is unfortunate that they had misentered your email address and should have made contact in writing but they have admitted theit mistake and given you a payment plan.

born_again

-Chris_4 said:

Greeting all,

I'll try to keep this as brief as I can.

I bought a new build apartment off-plan back in September 2022 (reserved) under the affordable housing scheme with a 35% discount applied for my area for those eligible.

The service charge was quoted as £950.69 per annum for the building on the reservation agreement. Both me and the developer signed & dated this agreement in September 2022 and I have a copy. I also have a signed and dated reservation checklist from October 2022 with the same £950.69 service fee charge listed.

We discussed this charge in the sales office, and we talked about cost, and worked it would roughly be around £80 per month, which was written for me in pen on the document, but they couldn't say how the management company would take that payment (monthly, annual etc), and I would need to discuss this with the management company once they took ownership of running the building. This cost was a huge factor for me purchasing the property, as I had factored in how much the service charge would impact my affordability and savings, as I eventually would like to save up enough to purchase a house.

After moving in to the property in June 2023, I rang the developer to ask when the service charge payments would start, but they said I would need to wait for the management company to take over and they would contact me when that happens.

Fast forward to now, April 2025, and I received my first letter from the management company regarding my service charge payments. They have said they sent me a bill last year in January 2024 via email for Jan - Dec 2024 payment (in advance), and I did not pay, and again this January 2025 for Jan - Dec 2025, and I have not paid. I am now in arrears of £3232.55.

I rang them on the same day, and clarified the only contact they have tried is via email, and when reading out my email, it had a missing letter, so I have not been receiving any information from them. The advisor said I would have 28 days to pay, but the management company, due to their clerical error, will agree to a 6 month payment plan.

The 1st year is - £1600.55
2nd year - £1632.00

I asked why my developer and documents said the service charge would be £950.69 and they said that is just a estimate the developer gives, not a fixed fee.

How can the estimate be so vastly different? To me this is mis-selling in order to get me to purchase the property. If they had been honest and said the service charge would start on £1600 on year 1 I would 100% have not bought the property and would have continued to save my money for a house where there is no service charges.

I have been sent a 'breakdown' of the costs, but this just shows what money goes into what areas. £1000 for gardening for example, yet we don't have a garden just a few plants dotted around the property and a 2 small squares of grass (about 3 metres squared). £1400 in management fees, £600 in general maintenance, it's a new build, what maintenance does it need? Surely any faults are covered by the developer given it's less than 2 years old.

Regardless of actual cost to run the building, my point is, surely you can not legally give someone a estimated cost, and then the actual cost is pushing double the initial amount? This is very poor selling tactics, either incompetence, or something a little more fraudulent?

I really appreciate anyone taking the time to read and offer any sort of advice, and apologies for such a long post.

Any help really is appreciated.

While I get there has been a error in email, & figures. Was it not stated on paperwork on the cost? Did your solicitor never question this?
Why had you not chased the management co since 2023?
Given you had been given a rough figure of £80 a month, had you not been putting this on one side for the period from June 23?

-Chris_4

Thank you for your responses. Yes I have a savings account in my bank I have been paying into (that generates some interest), so I have a chunk of it covered, and if I have to pay the rest then that will have to go on the payment plan they have offered. The communication & dealings with the developer throughout the entire process has been dismal (lies upon lies), so I ran out of energy in the end and just waited until the new management company contacted me as promised.

There was no paperwork about the cost, other than the reservation agreement. The leasehold agreement states no set cost. My gripe is more with the mis-selling of the set annual service charge on the initial conversations and documentation, and me wrongly assuming it was a fixed fee. The developers estimates were wildly off. I understand it was late in 2022, and I received the first bill for Jan-Dec 2024, but could it really jump by 59.4% in just over one year for a new build property? It sounds like the developer got the estimate completely wrong, more so than inflation rises accounting for the huge increase.

I understand there is a breakdown of the costs, but I would have back away from the deal if they quoted in the region of £1600 for charges.

I have a call next week with the legal team my company give me free access to for advice so I can see what they advise. Any further advice is welcome, and I really appreciate the time taken to comment 🙂

gwynlas

Just for information there cannot be a set cost for service charges as thet vary with the amount of maintenance required and annual costs will rise due to wage increases , changes in NI payments, material costs rising etc.

daveyjp

Downside of buying a new build.  There is no history of service charge payments and as a managing agent hasn't been appointed there is no way for the developer to know how much the ongoing management charges will be.  For them it doesn't matter as their job is done once the development is completed.

If/when you come to sell also be aware of the 35% discount if this has to apply to all future sales.  You need agent, surveyor and a conveyancer who understand the process and the difference between market value and discounted market value and how this is reported.