Constant price hikes by property management company?

Constant price hikes by property management company?

10:51 AM, 16th June 2020, About 3 years ago 14

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I have two small flats in a small development of 7 which I rent out privately. A couple of years ago we got a new Freeholder who appointed a new Property Services Management Company. Every year the prices are increasing especially regarding admin fees and buildings insurance.

This year they wanted to increase the admin fees by 19%! The buildings insurance went up by £350.00. We got together and complained when the fees were reduced to 5% as a ‘goodwill gesture’! The buildings insurance remains the same. We seem powerless to stop this happening every year when the budget is set.

My question is are there any limits to fee increases and is there an industry standard ceiling say inline with inflation? Also how do we know they are getting the best price for insurance?

Finally is there any cap on the amount the freeholder can charge for ground rent as I suspect that will be next for a hike!?

We are not in a formal residents association and the price to buy the freehold is way too expensive.


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Neil Patterson

10:56 AM, 16th June 2020, About 3 years ago

Hi Terry,

This section of the Leasehold Advisory services deals with management and service charge issues >>
In Particular you may want to discuss with the other leaseholders a Right to Manage RTM.

Professor W

11:52 AM, 16th June 2020, About 3 years ago

we had a similar issue with a management firm "requiring" us to pay £5k for the painting of a metal fire staircase..which we did not even have . RTM is defiantly the way to go , still small admin fees but huge savings, especially if you know local tradespeople, we used Christine Gray,
The Right to Manage Organization Limited.

Mark Weedon

11:58 AM, 16th June 2020, About 3 years ago

get together with the other residents and form an RTM co and take over the management. If you don't want to manage it yourselves employ your own managing agent.

As for the ground rent that will be specified in the lease.

Pat Simpson

12:49 PM, 16th June 2020, About 3 years ago

Regarding the insurance Get a copy of it and go a reputable broker and get comparisons. First challenge the Freeholders on their policy cost . They take a commission. If they do not lower the cost take them to the first tier tribunal . All fees have to fair and reasonable

Graham Bowcock

13:09 PM, 16th June 2020, About 3 years ago

Hi Terry

With regards to the agent's fees, it would be more useful to know the actual fee, rather than the percentage increase. It may be that their fees were historically low (or tendered to get the job) and they need to be increased to cover the costs of delivery. A good agent will be doing many things behind the scenes so you need to understand what the agent does and how much they actually charge for it, so as to find out if it is competitive. They should be able to set out in details what they do.


14:17 PM, 16th June 2020, About 3 years ago

I've had similar issues with Freeholders and their agents, and I can appreciate the stress you and your fellow leaseholders must be experiencing.
As has been said on here, the way forward is RTM. You will still have a freeholder but can free yourselves of the agent (often 'linked' to the freeholder) and their spurious charges. I was Co.Sec. of a block where we owned the freehold and therefore had first-hand knowledge of what costs should be. We didn't charge for 'admin' and didn't take a kick-back on insurance, although a number of providers approached me, unaware that we were also the leaseholders, saying how much we, as agents, could profit by passing it on to the leaseholders.
I've since been through RTM twice and can't tell you just how amazing it feels to shake off the yoke of the managing agent.

Ian Cognito

14:44 PM, 16th June 2020, About 3 years ago

Reply to the comment left by Professor W at 16/06/2020 - 11:52
Hi Prof W. I can't find a website address, email address or tel no for The Right to Manage Organization Limited, only a postal address. Can you help, please?


21:16 PM, 16th June 2020, About 3 years ago

Hi Terry,
I echo all the above comments. I find the information from LEASE only helpful to a point, they also support freeholders and therefore are not entirely impartial with their advice, which is a shame., Especially as it's a gov tax funded organisation!
The general right of challenge for leaseholders is via the property courts using first tier tribunal, however again this is expensive to raise anything via the first tribunal.
As already stated by other posts here your best way forward is to apply for RTM. First get together with the other leaseholders and see if everyone (all 7 flats) will be in support of this. Second contact a RTM specialist. I have used Shula Rich before, Brighton based but doesn't matter if you're not. You'll easily find her details online. She has been largely responsible for the legislation changes in this field so is well worth her salt. It's very difficult for the freeholder to win against you. In your situation they most certainly will fight you on this. It cost us around £750 to proceed the RTM route, this was only two flats though. You save this amount easily in the first year if not much earlier. Good luck and post back how you get on as it's something more leaseholders need to be aware of.
Regards. N

Professor W

21:47 PM, 16th June 2020, About 3 years ago

Reply to the comment left by Ian Cognito at 16/06/2020 - 14:44
try 0208 8749664 or 07947 642504.

Terry Scaife

10:14 AM, 20th June 2020, About 3 years ago

Thanks for all of your comments very useful indeed and I will now consult with the other leaseholders and seek to form a RTM.

I assume this would be a limited company with us all as Directors?


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