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Leasehold property: service charge problems

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

Leasehold Property Service Charges

More than half (54%) of leaseholders say they have encountered problems with their leasehold property including service charges and maintenance fees according to the 2019 annual Homeowner Survey.  The most common complaints from leaseholders relate to high cost of works and management fees (26%) and a lack of control over which major works are done (23%).

Here are some top tips in dealing with your freeholder or management company:

1. Right to know leasehold property service charges

  • 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 freeholder 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.

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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39 Comments

  1. Dear Sir/Madam,

    I would like to ask for some advice? I bought my house in 2017. When I signed my contract, I clearly stated ‘freehold’, but I recently received va demand for payment for the ground rent.

    Could you please advise?

    Regards
    Tshilidzi

    Comment by Tshilidzi Masindi — September 16, 2020 @ 2:51 pm

  2. My husband and I bought a new-build property on a small development of 10 freehold detached houses and 3 leasehold semi-detached houses in 2019. The developer acted as our Management Company until recently but now that the sale of all the properties is complete, the have recently sent us a letter informing us that we must takeover as Directors and setup a Residents’ Management Company. As no one wishes to take on the roles of lead Director and Company Secretary, we would like to enlist a Managing Agent to run things on our behalf. However, I am struggling to find a company that only deals with the external areas, such as grass cutting etc. of common garden areas, gardening, regular sewage disposal for private system, general repairs to infrastructure such as the street lighting and unadopted road, drains, as well as service charge collection, submitting annual accounts and arranging AGM. Please can anyone suggest possible companies that could help us. Thanks

    Comment by Cal Davis — August 21, 2020 @ 12:10 pm

  3. My husband and I bought a new-build property on a small development of 10 freehold detached houses and 3 leasehold semi-detached houses in 2019. The developer acted as our Management Company until recently but now that the sale of all the properties is complete, the have recently sent us a letter informing us that we must takeover as Directors and setup a Residents’ Management Company. As no one wishes to take on the roles of lead Director and Company Secretary, we would like to enlist a Managing Agent to run things on our behalf. However, I am struggling to find a company that only deals with the external areas, such as grass cutting etc. of common garden areas, gardening, regular sewage disposal for private system, general repairs to infrastucture sch as

    Comment by Cal Davis — August 21, 2020 @ 12:07 pm

  4. The freeholder of a converted block of about 20 flats is intending to sell the freehold in December. The service charge up til now has been about £3000 a year for my flat. The management company has now given an estimate of repairs including roof repairs and external redecoration which my portion will be about 10k. The management company is normally pretty good in terms of responding to issues but they have only been in place for about 3 years and have been working through a backlog of remedials left undone by a previous company. If the work needs to be done it needs to be done – but the timing seems “convenient”.

    I’m suspicious that the freeholder is insisting on expensive repairs prior to selling the freehold in order to achieve a better sale price.

    Is this a common technique or am I just being conspiratorial.

    Leases are long (between 100 and 125 years unexpired)

    Comment by Richard Perry — August 5, 2020 @ 10:16 am

  5. I live in a new build mixed Estate of 8 houses and 6 apartments. The apartments were unhappy with their maintenance charge bills, the houses had a minimal charge. The apartment directors unilaterally called an EGM and only invited the apartment owners. The appointed themselves directors and changed maintenance company. Our bills went up 4 fold. Can they hold an AGM and only invite less than 50% of the unit owners

    Comment by Maria — August 3, 2020 @ 8:08 pm

  6. Dear Sirs

    I am a resident flat owner at a large residential development. I am one of the many frustrated neighbours wishing this development. We pay huge amounts of service charge, at present 231 a month ( which seems to be not enough as they are demanding more ). The level of service is poor to the point of being embarrassed. Communicating and financial information is not transparent. I feel stuck. I have emailed the management company on several occasions demanding explanations about my latest payment request which came out of the blue but I am not getting replies.
    All neighbours are talking to each other, making comments but nothing happens.
    I feel their accounts should be audited, how can we do this?

    I am even happy to pay

    I know they are not clean

    Marta

    Comment by Marta Rogado Rodriguez — July 15, 2020 @ 10:32 am

  7. i own a 38 year lease of a flat. When the freehold was bought i was not able to participate.
    Now the management has been taken over by a new management company FARADAY. the increase of service charges over the last 24 months has been about 35%.
    1. What can I do to check/inspect the service charges individually? I found out already that a plumbing job which was quoted by a plumber to cost ca. Pounds 3.000,– / Pounds 4.000,–
    but the mangement company charged us Pounds 20.000,– for it approx.
    2. Is it obligary to the management company to invite me to all owner/tennan meetings taking
    taking place ca, 2 x p. a. or can they exclude me?
    3. How can Ii find out which other buildings this company FARADAY manages.
    I would some very negative review about the company but no addresses of the buildings .
    I would appreciate to hear from you .
    Karin

    Comment by karin — May 19, 2020 @ 4:11 pm

  8. i own a 38 year lease of a flat. When the freehold was bought i was not able to participate.
    Now the management has been taken over by a new management company FARADAY.

    Comment by gninoeb — May 19, 2020 @ 4:02 pm

  9. Do you have any information about Private property maintenance companies. We are buying a new house in a development of 44 properties. We all have to accept a Deed of Covenant applied to the Land register of our property. I am concerned about the extent to which the deed controls us, the owner but it gives the company free rein to do what it wants, or not. I have researched a bit on-line and have misgivings about the company operating the contract as they have a very significant number of bad reviews. I also learned that this policy is well established but this does not seem to be a fair deal for the owners. They can charge what they like and potentially do as little as possible. I understand it has been debated in parliament but nothing has happened. Do you have a view on this and should I be concerned?

    Comment by Robert Cherry — March 25, 2020 @ 9:34 pm

  10. I live in a private block of flats with a leaseholder, made up of 6 flats. There are two other block of flats, 1 is also private and 1 is housing association. The service charges are shared 1/12 amongst the 2 private block of flats. The grounds has 2 bin store, 1 for my block and 1 for the other 2 blocks. The block I live in has its own and has no other access to the other bin store yet have to pay maintenance on it, is this legal? Surely you cannot pay for something that you have no access or control over? The reason I seek advise is that fly tipping is a regular occurrence and that the block I live in gets billed for this, again surely this is not right? Should the lease stipulate any information on what they can and can’t charge for? Also, is it worth seeking further advice?

    Comment by Morris — March 10, 2020 @ 12:34 pm

  11. Peter – your situation sounds very difficult and it may be worth speaking to a leasehold specialist lawyer to consider next steps. It’s worth reading your lease to see exactly what it provides for in terms of service charge and access and then you may wish to submit your query to a leasehold specialist law firm – you could use this form on our site to get a free call back from leasehold lawyers (they cover more than just lease extensions). Very best of luck!

    Comment by HomeOwners Alliance — March 2, 2020 @ 1:24 pm

  12. I live in 1 of 7 properties. Freeholder owns and lives in 1 and there are 6 of us leaseholders. Service charge just increased by 134%. We get billed without any detail, just gardening and maintenance £XXX which is divided by 7. Firstly there is no advance estimates, no breakdown of costs, no tenants rights, no receipts and no response to requests for any detail from the freeholder. Secondly the freeholder property & garden is 10 times the size of mine but we pay the same 1/7th, My lease states that I should pay “a just and fair proportion according to use by the tenant” but the freeholder refuses to comment or adjust my share. 6 of the 7 properties overlook and share a courtyard , which is where a large proportion of the maintenance is carried out. I live outside the courtyard (the lodge house) my lease says I cannot use or sit in the courtyard but despite not owning it being unable to use it or even see it I still have to pay 1/7th of it.
    finally the only reaction from the son of the freeholder (who has no legal standing) is “read your lease anything you ask me will be passed onto his solicitor and I will have to pay all his costs” He has also said that ” all legitimate costs will in future be added to the service charge and split by 7″ without any reply to what is considered ‘legitimate’ what for, how much, who by and when. Should I contact a tribunal and how do I go about it please?

    Comment by Peter Meachem — February 26, 2020 @ 4:44 pm

  13. I need legal advice, please. I own a flat in a leasehold building managed by Regency/Residential Living. I have had numerous problems with them.
    Yesterday night, I could not access the building. Front door vandalised, not opening. No other residents in the building. No emergency contact number for management agents. No access to the building from outside through back door.
    Police on 101 could not help me as I did not own the front door or building. I had to come to spend the night in a hotel.
    I need help to make Regency Living accountable for their failed responsibilities and claim a refund of the expenses incurred and compensation for all the inconvenience.
    I would greatly appreciate your help.

    Comment by Marta Ugarte — February 25, 2020 @ 7:14 am

  14. Hi,
    Our property management company is including items such as lift repair and window cleaning on our service charges. Our building does not have a lift, although one of the other buildings in the complex does, and in 7 years we’ve never had the windows cleaned, either the flat’s or in the communal areas.

    Given that they’ve just upped our service charges by £20 a month (£240) supposedly due to a recalculation of building insurance, I feel that they have a cheek charging us for services we’ve never received.

    Are they within in their rights to charge for these items?

    Thanks

    Comment by Sharon — February 10, 2020 @ 1:41 pm

  15. Hello Denis, we’d recommend that you ask your conveyancing solicitor to advise you on this matter.

    Comment by HomeOwners Alliance — January 21, 2020 @ 3:25 pm

  16. I’m selling my house and the buyers solicitor wants to know whether we had informed the leaseholder we were having an extension which was back in 1976 but we have no record just the council approval documents for the extension can anyone help.
    Thankyou.

    Comment by Denis — January 17, 2020 @ 7:58 pm

  17. I live in a house an estate of 12 houses and 8 flats. The road is adopted and the freeholder has offered to transfer the freehold of the common areas of the estate to the residents association. We have a covenant on our leases regarding a service charge. The House owners want to manage these common areas amongst themselves through the residents association, leaving the flats to be managed by a management company, so no demand would be made to them for a contribution. Any advice on how best to make this work would be gratefully appreciated.
    Thanks

    Comment by David Harris — November 22, 2019 @ 2:08 pm

  18. I am a lease holder of a block of 24 flats, we are all share holders in the management company that administers the block of flats, ie, building insurance, servicing etc, I have been there 20 years and up until 18 month ago, we had annual rises, AGM’s and was paying £50 a month in fees, then some share holder appointed a management company to do the task as the previous person doing it had personal issues, we all thought it would be ok, until they increased the fee to £60 within 3 months, then again to £100 within the next 3 months and 6 months on they are now trying to increase it to £200 a month, the charge to do this task has increase from £1k a year to then now wanting £6k a year, yet we are seeing no more benefits for these extra charges, under the lease agreement they should call a AGM but seem to be bypassing all the safeguards to just ask for my money without giving all the share holders they say, what can we do ????

    Comment by Paul S — November 13, 2019 @ 5:36 am

  19. Dear Paul – Thanks for the question. If you would like to consider joining the Homeowners Alliance we should be able to provide some help with this. In terms of the charges, he can only charge based on the agreement within the lease. You can look at a tribunal at a later date if you think he is charging for things not covered within the lease documents

    Comment by HomeOwners Alliance — August 23, 2019 @ 2:37 pm

  20. Hi
    I own the lease hold a flat. the previous freeholder sold it on. despite my attempts trying to contact the new freeholder with no reply’s. he has now sent me his management pack after 5 years!
    As I understand it he can only claim for the last 18 months. his monthly service charge is also around £20 over the going rate for that area. I have told him this, but he’s not having it, and he’s saying it will have to go through solicitors.

    any advice ?

    Regards

    Paul

    Comment by Paul — August 22, 2019 @ 9:10 pm

  21. Hello Amara, as a first step, have a read through the terms of your lease. The lease will say whether your service charges are fixed or variable. If it says your service charges are variable then it can go up or down and so your freeholder/landlord can increase your service charge provided of course it is reasonable. If you’d like some advice, do consider becoming a member.

    Comment by HomeOwners Alliance — August 6, 2019 @ 4:22 pm

  22. As a leaseholder in zone 4 in a new apartment, I feel like I have absolutely no voice, no rights against this giant bullies private freeholders. I was definitely told that the service charge for a whole year would be £2500 and now it’s £3700. This happened within the space of two years. Just two days ago, I was once again ordered to pay this “insurance costs” at extra £300 pounds. They randomly charge us whenever they want with no advance warnings. We aren’t even consulted, we are not given any options. I am told that legally there’s no way of stopping them charging us extraordinary amounts, there’s no cap? This is shocking, there is literally zero protection for the leaseholders. How is this fair?

    Comment by Amara — August 5, 2019 @ 8:29 pm

  23. On buying our freehold new build a year ago the developer estimated a service charge of £125 pa for each of the 7 houses. Management of the communal courtyard, electric gates and drainage pump was then passed to a property management co who have just billed us £313 for next year, an increase of 150%. Not only are the company levying a management fee of £350 but also an unjustified accounting charge of £300. The other charges are unjustified and seem to be far too high.On complaining to the developer he has offered us and the other residents the chance to manage the courtyard etc ourselves. To do this we would need to set up a company limited by guarantee, appoint directors, keep accounts and I imagine file tax returns. As we are all pensioners without relevant business or legal experience could you please tell us how to go about it, and what limit to place on the guarantors’ liability.

    Comment by James — May 5, 2019 @ 5:17 pm

  24. Hear, hear, Jamal! We’re campaigning for reform https://hoa.org.uk/campaigns/

    Comment by AKerr — July 26, 2018 @ 11:38 am

  25. I am new to this leasehold and Freehold circumstances. But after reading many articles. I think the Leaseholder gets a tough time from the freeholder. It is totally unfair and this Conservative Government stand for the RICH. It’s very stupid that the Freeholder can do anything and the unfortunate leaseholder gets punished. Even the Government mediators are all ex-solicitors who have worked in some capacity for the Freeholders. A Leaseholder is doomed, ever before raising a complaint. The Government should change the Law and make the Freeholder responsible for ALL SOLICITORS CHANGES. Then you will not see the Freeholder miss managing the Leaseholder. But then can you see the Government doing anything? These are the companies that fund the Government. This is a form of bribery from these companies to the Government (who said you can’t buy an MP in England).

    This is very shameful of our Government that they are siding with the evil Freeholders (because they pay the Government Money). I think they should be ashamed of themselves. Who said that Great Britain was a fair Country. They are one of the biggest Crooks sitting in Parliment. It’s like a group of Gangster, stealing money from the Poor and feeding the Rich. STOP FREEHOLDERS ABUSSING LEASEHOLDERS.

    All the Laws regarding Leaseholder and Freeholders should all be reviewed by the Government (but the Government won’t do that). Even some of the new Laws they have added to the statue, have been in favour of the freeholder. They make out that they are creating Laws that will help the Leaseholder, but really they are lying.

    Comment by Jamal Khan — July 24, 2018 @ 9:44 pm

  26. Hi John, we’d need more information but being a pensioner is unlikely to affect payment, though most freehold properties don’t have service charges – are you in a new build home?

    Comment by AKerr — July 19, 2018 @ 9:25 am

  27. Do I have to pay the full service charge amount when I become a pensioner and also a freeholder.

    Comment by john sinclair — July 13, 2018 @ 7:29 pm

  28. Your lease sets out the way the service charge is organised and what can be charged. If you pay a service charge, you have the right to:

    – ask for a summary showing how the charge is worked out and what it’s spent on
    – see any paperwork supporting the summary, such as receipts

    Your landlord must give you this information – according to gov.uk it’s a criminal offence if they don’t.

    Comment by Sara Hind — May 23, 2018 @ 3:27 pm

  29. I am having issues with my management company. They are charging 123.8% in contributions from the property owners – this surely is not legal?

    Any help in pointing me to information that can help will be most appreciated.

    Comment by Heddi Greenwood — May 21, 2018 @ 6:50 pm

  30. Hi John. Unfortunately this is one of the downsides of shared ownership. See our guide for more information – https://hoa.org.uk/advice/guides-for-homeowners/i-am-buying/shared-ownership-what-to-watch-out-for/

    Comment by Sara Hind — May 2, 2018 @ 2:50 pm

  31. I own a flat in a block of 30 on a 99 lease with 70/30% ownership.

    We have a Service Charge of £2300 pa.

    The managing agents are also the Freeholder.

    My question is should the repairs be shared equally 70/30% ?

    regards

    John

    Comment by John Hughes — May 2, 2018 @ 9:50 am

  32. Hi, myself and other fellow leaseholders have recently acquired back the right to manage from the previous management company who mis managed our building. We are trying to find a transparent and reliable new property management company to assist us and partner with us to get our property in good shape and establish good practises and systems. Could you recommend any websites to help us select a good company? many thanks

    Comment by Louise Minton — November 13, 2017 @ 4:54 pm

  33. 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

  34. 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

  35. 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

  36. 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

  37. 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

  38. 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

  39. 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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