Ludicrous leasehold charges-what to do?
Discussion
Folks,
I live in a shared-ownership block of flats, run by a housing association. Basically, we as the leaseholders own 30pc of the flats, the remaining 70pc is rented from Sovereign.
It's a good arrangement, on the whole. The flats are very pleasant, decent area of town and it's generally quite good value. The HA aren't always brilliant at sorting things out or communicating in anything other than a very "simple" manner, but basically things get fixed when they should.
However, the management charges have been farmed out to a "management company", for which we are billed separately from the service charge/rent. In the past these have been added to the service charge.
I've received a bill today though, asking me to make "prompt payment".... For a total bill of £900. No warning, payment terms of about a week. Clearly, this won't be happening, and I am virtually incandescent with rage at them for assuming that this is at all reasonable.
Secondly, I have been charged £349.36 for a year's buildings insurance. This seems manifestly excessive for a 2-bed flat in a reasonable, but not flash, block.
The icing on the cake is an additional charge of 15% PLUS VAT, termed a "Management fee". This is on top of the insurance premium. Why? What exactly is it about sending a BACS payment to Zurich that justifies a fee of nearly £5000 for the block?
Secondly, there is a £400 entry for management charges. This is fine, I don't fall out with it, it covers estate management, lift service etc. But then there is a 15%+VAT management charge on the, wait for it, management charge?!?!
Are they taking the piss as royally as they seem to be? And secondly, what as a body of residents can we do about it?!
Thanks in advance, my pee is boiling...
I live in a shared-ownership block of flats, run by a housing association. Basically, we as the leaseholders own 30pc of the flats, the remaining 70pc is rented from Sovereign.
It's a good arrangement, on the whole. The flats are very pleasant, decent area of town and it's generally quite good value. The HA aren't always brilliant at sorting things out or communicating in anything other than a very "simple" manner, but basically things get fixed when they should.
However, the management charges have been farmed out to a "management company", for which we are billed separately from the service charge/rent. In the past these have been added to the service charge.
I've received a bill today though, asking me to make "prompt payment".... For a total bill of £900. No warning, payment terms of about a week. Clearly, this won't be happening, and I am virtually incandescent with rage at them for assuming that this is at all reasonable.
Secondly, I have been charged £349.36 for a year's buildings insurance. This seems manifestly excessive for a 2-bed flat in a reasonable, but not flash, block.
The icing on the cake is an additional charge of 15% PLUS VAT, termed a "Management fee". This is on top of the insurance premium. Why? What exactly is it about sending a BACS payment to Zurich that justifies a fee of nearly £5000 for the block?
Secondly, there is a £400 entry for management charges. This is fine, I don't fall out with it, it covers estate management, lift service etc. But then there is a 15%+VAT management charge on the, wait for it, management charge?!?!
Are they taking the piss as royally as they seem to be? And secondly, what as a body of residents can we do about it?!
Thanks in advance, my pee is boiling...
I assume Sovereign are getting a back-hander from the management company. We were in a similar situation when we moved into our road, the developer had some deal with a management company who slowly ramped up the charges.
The residents of the street acted together to sack the management company and form our own. Our annual charge has now dropped from about £700 to £350 and covers more things.
However since you don't own the block I'm not sure whether Sovereign can stop you booting out the management company.
The residents of the street acted together to sack the management company and form our own. Our annual charge has now dropped from about £700 to £350 and covers more things.
However since you don't own the block I'm not sure whether Sovereign can stop you booting out the management company.
Thanks Paul, however I'm not 100pc sure that could be done since the block itself is leased from Crest Nicholson, and the terms of the shared ownership would forbid it.
I'm currently waiting for an itemised breakdown of the "External Management" charges. 80 quid a month just doesn't stack up: this doesn't include anything to do with the block such as cleaning, communal electricity, repairs etc- Just the external estate management, most of which is apparently public anyway. I smell scam.
I'm currently waiting for an itemised breakdown of the "External Management" charges. 80 quid a month just doesn't stack up: this doesn't include anything to do with the block such as cleaning, communal electricity, repairs etc- Just the external estate management, most of which is apparently public anyway. I smell scam.
I am a leaseholder/director of a leasehold property, the same being a block of four flats, with the leaseholders employing a Management Company to manage the common areas of the property. Our management fees are £120 per month, this being an increase from £60 per month, the same increase at my request. The communal cleaning of the stairs takes place once a month, at a charge of £80 per visit, with the communal garden lawn mowing charge being the same. Then add on the preperation of the trading accounts of £700 per year, management charges being also about the same, then when facing an unexpected bill for rebuilding a boundary wall £10k, reducing the height of overgrown trees £680, etc. etc. the bank account issoon in arrears.
Management Companies have a license to print money, and they are allowed to do the same by the disinterest of many leaseholders, who simply do not get involve in the day to day running of their management company.
In order to try and reduce the management costs, i have started to carry out myself minor repairs, blocked drains, door locks not working etc., this being brought about when the Management Company employed a company 25 miles away from our block of flats, to change an outside light bulb, the charge £135.
This link might assist the OP, on the web site there is a link to the Leaseholders Tribunal Appeal, where case history gives guideance on both the appeal process, and the Section 20 legislation.
http://www.lease-advice.org/
Management Companies have a license to print money, and they are allowed to do the same by the disinterest of many leaseholders, who simply do not get involve in the day to day running of their management company.
In order to try and reduce the management costs, i have started to carry out myself minor repairs, blocked drains, door locks not working etc., this being brought about when the Management Company employed a company 25 miles away from our block of flats, to change an outside light bulb, the charge £135.
This link might assist the OP, on the web site there is a link to the Leaseholders Tribunal Appeal, where case history gives guideance on both the appeal process, and the Section 20 legislation.
http://www.lease-advice.org/
Thanks, looks like a useful link. A few people in the block are cottoning on to the external management charges- Basically it looks like we are being charged disproportionately to other businesses/blocks in the area.
Until Sovereign come up with some itemised accounts I'm not giving them a penny- Once they do so we can start making enquiries to get the cost reduced. It's ridiculous!
Until Sovereign come up with some itemised accounts I'm not giving them a penny- Once they do so we can start making enquiries to get the cost reduced. It's ridiculous!
Its a long time since I had a flat but IIRC the buildings insurance should be incorporated in the maintenance fees and not separate. You only need contents insurance as a stand alone and this is optional.
I do recall the management company of our flats ripping us off so we formed our own arrangements and fortunatley we had an insurance broker living there who got us a deal on the buildings insurance. I don't think you can do this as it is part owned.
Common to get stuffed on these shared equity arrangements as they will argue you are getting a good place to live at a reduced purchase price/rent etc, but when you add it all up you realise the hidden charges.
I hope if/when you come to sell you are not tied to their valuer, agreed sale price and sinking fund etc! In-laws were in one of these and it was a bloody rip off - quite ironic when it was the Methodists than ran it!
I do recall the management company of our flats ripping us off so we formed our own arrangements and fortunatley we had an insurance broker living there who got us a deal on the buildings insurance. I don't think you can do this as it is part owned.
Common to get stuffed on these shared equity arrangements as they will argue you are getting a good place to live at a reduced purchase price/rent etc, but when you add it all up you realise the hidden charges.
I hope if/when you come to sell you are not tied to their valuer, agreed sale price and sinking fund etc! In-laws were in one of these and it was a bloody rip off - quite ironic when it was the Methodists than ran it!
Zingari said:
Its a long time since I had a flat but IIRC the buildings insurance should be incorporated in the maintenance fees and not separate. You only need contents insurance as a stand alone and this is optional.
My understanding is it can be done either way, the difference being the way the excess is paid in the event of a claim. If the insurance is arranged in conjunction with the management fees, the excess is recoverable from the maintenance fund, if done seperate the claiming leaseholder must pay the excess themselves.I may have got the technicallities wrong there, but there is a big difference somewhere!
I work for a Housing association and can say the overall premise will be to collate all the details of expenditure for the block and then to recharge this to the owners/tenants with the 15% you mention being the fee for the time to prepare these basic accounts and calculate the apportionment. There is normally a 'sinking fund' amount you pay which is a contribution made to allow for major works/repairs in the future ie the roof perhaps a lift replacement etc basically anything with a long lifespan but that will ultimately need renewal at some point. This I believe legally has to be held in a seperate bank account by the management company for a little more admin there but also perhaps something for you to check is happening?
I think if you can get everyone on board in the block you can setup your own, as like you say the management company do not have a particular need to seek the most reasonable priced cleaning, locksmith etc services they will just use whoever is on their books. You could also 'save*' the admin fees but at the same time you should not underestimate the work involved and the obilgations to the owners. You would almost certainly end up with a few people who contribute little more than they do now and others that do all the work the management company currently does (* although some fee could be charged and given to them and the overall charge still be cheaper)
It may be worth researching similar blocks and their charges (does the HA have any current Shared ownership flats for sale?) and it may not hurt to complain to the HA as they are quite strongly regulated and have strict timeframes in which to respond to complaints.
In my experience the HA's will normally manage their own blocks, service charges and sinking funds accept where the block is perhaps part of a larger development overseen by a single management company.......its not in my experience normal to just ship them out to a third party man company.
I think if you can get everyone on board in the block you can setup your own, as like you say the management company do not have a particular need to seek the most reasonable priced cleaning, locksmith etc services they will just use whoever is on their books. You could also 'save*' the admin fees but at the same time you should not underestimate the work involved and the obilgations to the owners. You would almost certainly end up with a few people who contribute little more than they do now and others that do all the work the management company currently does (* although some fee could be charged and given to them and the overall charge still be cheaper)
It may be worth researching similar blocks and their charges (does the HA have any current Shared ownership flats for sale?) and it may not hurt to complain to the HA as they are quite strongly regulated and have strict timeframes in which to respond to complaints.
In my experience the HA's will normally manage their own blocks, service charges and sinking funds accept where the block is perhaps part of a larger development overseen by a single management company.......its not in my experience normal to just ship them out to a third party man company.
Also my opinion on these schemes is a little pesimistic.......
The rent portion payable and the service charges will always remain the same worth ie if it 30% of your salary now it will be give or take the same 30% of whatever your salary is in 25 years.........unlike the story told by those near the end of their 100% mortgages where the amount they are paying seems very low (as will the amount payable on the 30% shared ownership mortgaged/owned amount in 25years).
The obviously lower monthly costs initially can however mean that often after doing the sums its only perhaps a decade may be less after a normal 100% mortgage would have finished that the Shared owner has paid the same but is also sat there facing the continued rent on the % not owned and this is increasing at rpi.
Family 2/3bed shared ownership house is a possible sensible idea as the equity in it may make it viable to downsize later on.........that or remortgaging and buying further %'s to increase your holding to avoid the long term rent costs.
The rent portion payable and the service charges will always remain the same worth ie if it 30% of your salary now it will be give or take the same 30% of whatever your salary is in 25 years.........unlike the story told by those near the end of their 100% mortgages where the amount they are paying seems very low (as will the amount payable on the 30% shared ownership mortgaged/owned amount in 25years).
The obviously lower monthly costs initially can however mean that often after doing the sums its only perhaps a decade may be less after a normal 100% mortgage would have finished that the Shared owner has paid the same but is also sat there facing the continued rent on the % not owned and this is increasing at rpi.
Family 2/3bed shared ownership house is a possible sensible idea as the equity in it may make it viable to downsize later on.........that or remortgaging and buying further %'s to increase your holding to avoid the long term rent costs.
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