Revealed – the great leasehold service charge rip-off

by Property118.com News Team

9:53 AM, 12th June 2012
About 9 years ago

Revealed – the great leasehold service charge rip-off

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Revealed – the great leasehold service charge rip-off

Revealed - the great leasehold service charge rip-offIt’s likely that if you own a leasehold buy to let property that you have been a victim of the great service charge scam.

Much publicity goes to fly-by-night letting agents whose businesses close leaving landlords and tenants out-of-pocket – but few dare to whisper the rip-off perpetrated by managing agents.

Service charges for leasehold homes – especially apartments – are probably one of the most expensive costs for landlords. For many, they swallow any rental profits on the gap between what comes in from the tenant and what goes out to cover the mortgage and other bills.

The problem is property owners cannot visit a comparison site to find the cheapest service charges – they have to pay what the landlord or agent demands unless they can prove the cost is unreasonable.

The amount paid is generally worked out on the floor area of the apartment as a percentage of the floor area of the block, including communal areas.

So, if a 2,000 square foot apartment is in a 20,000 square feet block, the owner pays 10% of the total cost of repairs.

That doesn’t seem unreasonable until the managing agent puts out the repair to a maintenance company they own or is run by a crony.

Some industry insiders reckon leasehold property owners are paying up to £400 a year too much each on service charges – a staggering £700 million a year in total.

Many leaseholders tackle the problem in one of three ways – if the leasehold property is a house, the leaseholder can buy the freehold and take control of the property.

Flat owners cannot buy their freehold, but they can get together with their neighbours to buy the freehold of their block or form their own management company.

In effect, both options offer the same solution – the flat owners have control of the maintenance of the block and how much the work costs.

Comments

Steven Spowart

23:45 PM, 6th September 2016
About 5 years ago

I have a leasehold property that is managed by my local council.

They decided the cladding that was covering the walls needed replacing with something more resistant to fire and that had a higher energy efficiency rating.

They replaced it with cement boards and it is now less energy efficient than what was there before. The boards look like they could cracking if kicked much as well.

They sent me a bill for over £25000. The flat 8s only worth £125000.

I queries it and they started spinning out a load of rubbish about oh but we had asbestos to remove, and we had to change the roofing felt etc.
well a servo yor I got round there said no way, plus they would have had to remove the tiles in order to do it.
Not the sort of thing you could miss.
The asbestos removal was sanding it down with a sander and allowing all the dust to fly through open windows.
When something was said to the worker he said no speak English. Well you get the picture.

Currently trying to challenge this bit it is costing a fortune in legalfees.

Because the property is a block of 4 flats and the other 3 are council homes not much I can do.

They say they won't need to do more work for 25-30 years, but how can I possibly believe them when they keep lieing to me all the time.

I think for large repairs like this they should require 100% concent to proceed, and give individual quotes at the start. All I got was an estimate for the whole estate.

This needs to stop. I am going to sell now just because of this, I simply can't trust them not to do it again.
getting quite depressed over it actually.

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