Majority of leaseholders consider service charges unfair

I own three leasehold properties and was Chairman of the Management Company of one having responsibility for formulating annual budget spending. Details of this clearly explaining everything is sent to all, repeat all, other leaseholders. Some then bleat down the line later about the level of service charge because they would rather not pay it or at least pay less. It became clear to me that in most cases they had not bothered to absorb the information they had been sent.

When you link this to building safety and the cladding scandal you can see how these charges are going through the roof as waking watch and obscene insurance costs are added. I would never, ever, ever buy or recommend anybody to buy a leasehold property!!!

Frankly some of those answers smack of serious ignorance. 74% of leaseholders think it’s unfair to charge service charges? How do they think buildings maintain themselves? Unless one has a management company that’s ripping them off, service changes are essential. I own a period building with five flats (own the freehold as well as all the flats) and manage it myself so I know exactly what has to be spent to keep a building in good shape (without forking out for management company charges). Previously I owned a share of freehold in a similar building where all of us leaseholders managed it ourselves. Insurance costs alone are high and ever increasing, but any maintenance costs don’t magically disappear when one has a different tenure. I get that transparency and proper process regarding expenditure matter, but many leaseholders seem to think that a home ownership should have no cost, but presumably want clean communal areas, well insured building in good repair, maintained gardens and outside spaces etc. There are also ways and means to deal with unreasonable service charges and charges that were not properly advised, so perhaps people just need to educate themselves and get of their backside if they think something is dodgy.

The biggest issue on a lot of Service Charge bills is the insurance which can be over £400 for a standard 2 bedroom flat. As the managing agent gets commission on this there is no incentive for it to be reduced.

Reply to the comment left by Binks at 24/04/2021 - 07:55
Absolutely spot on what you say.
"There are also ways and means to deal with unreasonable service charges and charges that were not properly advised, so perhaps people just need to educate themselves and get of their backside if they think something is dodgy".
Instead it seems many leaseholders have just responded to a survey in bleating mode.

Reply to the comment left by Richard Adams at 22/04/2021 - 11:19
You're lucky, 15 years of owning my leasehold flat we've had 3 managing agents of which two have NEVER properly explained their costs - just rounded figures and no receipts provided. (For both budget & expenditure accounts) regardless of being questions. Then the law allows us to take them to FTT....along with costs (no guarantee of passing them along) & hassles of getting there - LH have to fork out the costs first & we see how biaised the cases can be - very hit & miss. The third MA was the only transparent one - because they only charged £50 pa for arranging an insurance renewal, and for one year "orchestrating" the roof works which we all paid after seeing quotes. So no receipts or accounts required. Funny how the next two MAs needed to charge £84pm to manage the same 3 flats, same amount of work as the £50pa MA (each flat roughly 30sqm each, & 1 business roughly the same)

Reply to the comment left by Binks at 24/04/2021 - 07:55
The article clearly states that leaseholders understand that service charges are necessary but require more transparency. Obviously leaseholders do not believe that service charges as a concept are unfair, simply that *the service charges they receive* are unfair. Mine are, my managing agent add a nice 400% for themselves before they bill us for anything. Recently we had to pay £1400 for some shirtless lunky to brace a fence, something I would have done for less than 200. They are rip off artists and they go about their nefarious business with impunity. Leasehold needs to be abolished.

Reply to the comment left by Gracie at 24/04/2021 - 13:55
Like Binks said with my agreement leaseholders don't have to suffer what you have described. Managing agents are appointed by leaseholders through their Management Company which leaseholders can be directors of if they feel inclined so any bad agents can be sacked if no good which seems too have happened in your case. If your Management Company don't set budgets that are clear to understand (which are passed to agents to implement) then challenge them . Kick up a stink at AGM's.

Firstly leaseholders are Not Homeowners. They are tenants to a landlord and are refered to as such throughout their lease document. Secondly, service charges are of course essential but the works and services are To often decided by an unqualified, unscrupulous and unprofessional external management company who dances to the tune of the freeholder who’s sole aim is to make as much money as he can.
This country needs to keep up with the rest of the world and consign feudal leasehold tenure to the history books where it belongs, we need to promote Commonhold tenure.

To Richard Adams
Most managing agents are appointed by freeholders and leaseholders have little or no input. They are rarely able to be Directors unless they have a Right to Manage Company.