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Service charges and maintenance companies: problems with your leasehold property

With a leasehold property, your landlord (the freeholder) takes care of the common areas of your building. Make sure you know what you will be liable to pay for in advance and what to do if you don't agree with the charges with our top tips

Despite having a fair idea of what they are signing up to before they purchase a leasehold property, many people feel ripped off by their freeholder or management company. Here are some top tips:

1. Know your rights inside out

  • Your landlord/freeholder is obliged to give you a statement of your rights every time they demand a service charge. Don’t just file it away, get to know what to expect.
  • Watch out though, not all contracts are the same: although some aspects of the law are universal, some  only apply to the private sector and some are just for the public sector. And not all public sector leases are the same. For example, if you’re a secure tenant in a local authority home you can’t challenge your service charges but if you’re a housing association tenant you can.

2. Get an idea of how much things are likely to cost

  • ARMA (the Association of Residential Managing Agents) estimates the average service charge bill in London at around £1,800 to £2,000 a year. This will of course vary around the country but anything over £5,000 is expensive and you should definitely be asking questions.
  • Ask for a list of any planned major works (i.e. anything costing more than £250 per leaseholder) and ask your landlord to set out estimated service charges for the next five years as well as details of service charge costs for the last three years.
  • If the freehold is owned by a public sector landlord they are legally obliged to estimate major works for the coming six years.

3. Scrutinise every bill your landlord sends you

  • Section 20 of the 1985 Landlord and Tenant Act says your freeholder must provide you with at least two estimates and give you 30 days notice before major works.
  • But demand more and make sure value for money is a priority: shop around for the cheapest quote and ask for an explanation as to why certain companies have been contracted.

4. If you do have a complaint

  • Speak to your landlord/freeholder – try and settle things face-to-face
  • Speak to other leaseholders – if they are having the same problem you will have a stronger case if you complain together
  • Consult your building’s tenants’ association if you have one – landlords have to consult them about all works and long-term agreements. If you don’t have one set one up
  • Look for advice from other people in your situation.   

5. If consulting fellow leaseholders and the freeholder doesn’t work – what next?

  • Consider a mediation provider – they will help settle the dispute with your landlord for a fee, but it still might be cheaper than court.
  • Appeal to the first-tier Tribunal (Property Chamber). The 1996 Housing Act says you can take your landlords to tribunal if you don’t think the price of the service charge tallies with the level of service provided. Taking the freeholder to tribunal is less formal than going to court, it will never cost more than £500 and, regardless of the outcome, you won’t be told to pay the leaseholder’s fees.

The HomeOwners Alliance can provide members with guidance on leasehold issues. To see how we can help, find out more about becoming a member

6. Consider setting up a “Right to Manage” company

  • If your building has a private sector freeholder, and you can get more than 50% of your fellow leaseholders on board, you have the right to manage your own property by setting up a ‘right to manage’ (RTM) company. You can establish an RTM if:

– The building contains two or more flats
– Two-thirds (or more) of the flats have long leases (typically more than 21 years)
– At least 75% of the block is residential

  • You can also ask your landlords to sell you the freehold at any time and you might even be eligible to demand that they sell it to you.


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8 Comments

  1. Dear Chris,

    It would be interesting to discuss the context to your situation and go over the options available to you, including looking at the lease provisions, valuations and options for buying and selling on. We are also calling for reforms in leasehold systems so perhaps you would consider joining us!

    Best wishes,
    Sophie
    HomeOwners Alliance

    Comment by Sophie Khan — June 21, 2017 @ 1:26 pm

  2. In 1990, all 9 owner-occupier leaseholders of the purpose-built apartments where I live bought equal shares in the freehold. Since then, 6 of the 9 apartments have passed into the buy-to-let market. Determined to extract maximum short-term profit, the absentee landlords have voted themselves onto the Board of the Management Company that owns the freehold and they are neglecting all maintenance by simply failing to take the initiative as regards organising it. As one of the surviving owner-occupiers, here since 1984, I’m outvoted both at leaseholder and freeholder level. The place looks a mess and the value of my apartment is suffering in consequence, I suspect by about x3 more than my share of the cost of the circa £100k works needed. What should I do?

    Comment by Chris — June 21, 2017 @ 12:32 pm

  3. Hi,
    Me and my wife bought a house this November which is freehold however we pay a service charge of almost 50 pounds every month to the notting hill housing as a service charge which we think is outrageous as we pay council tax band D to the council too which is 1452 pounds.
    Is there anyway we can avoid this service charge as I believe they dont do anything which we pay as a service charge to them.
    Avash

    Comment by Avash shrestha — April 27, 2017 @ 4:31 pm

  4. Can you pls signpost me to where I can get legal information on right to manage my property. Most sight say I can do this if I am in a flat.
    I own 50% of my house and rent the other half to my housing association. There is 6 flats and 9 houses to our development at least one of us owns 100% of his house and the rest of us have half. All of us in the houses would like to have right to manage our property but there is no where I can find information on houses having right to manage
    Many Thanks
    Brenda Matambanadzo

    Comment by Brenda Matambanadzo — April 17, 2017 @ 11:37 am

  5. Hi

    We bought leasehold apartment November 2015
    Service charges have still not been set up, our Insurance has been paid but
    services are almost nil

    I have cleared leaves, vaccummed the stairs and paid to have my own windows cleaned
    Last December I was told Solicitor is working on it. Is there a set period of time for this

    E Sullman

    Comment by E J Sullman — April 10, 2017 @ 3:58 pm

  6. I’m not sure if you can help, where I live I have to pay a service charge even though I own my house , I don’t think I need to pay this as its going up every year , and only the flats benefit , they wont reduce it or even disgush the problem, can you help in any way . many thanks

    Comment by sheryl keyte — January 14, 2017 @ 6:39 pm

  7. We have problems with tenants put in a flat nearby by Southwark Council, but the council do not want to deal with them and instead threaten us with forfeiture should we pursue our complaint about those tenants’ harassment, anti social behaviour and criminal acts. We need urgent advice on the issue and some help if possible.

    Comment by Celia — January 11, 2017 @ 1:36 pm

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