Service charge horrors!

Speak to many flat owners in Portsmouth and they will have a tale of woe about what they pay for the ‘services’ they receive.  Some people are happy with the way their flats are managed but it would seem to me that the overwhelming majority are not.

Issues range from Landlords using their ‘pet’ contractors to inflate costs, payments made and no work carried out, landlords failing to undertake essential repairs – the list goes on.

Flat owners are increasingly fighting back. This is good news! They are using their collective muscle to take control and avoid the service charge chaos many face and which cause so much stress and hassle.

The first option people are using is to take over the management of their building – the ‘Right to Manage’ (RTM). 

The number of RTM’s has increased dramatically in the past few years as people become more aware of their rights.  Most blocks of flats quality and it is a simple procedure whereby if the majority of flat owners agree, they can simply file a claim and take on the management.  Usually they appoint their own agent after the process – one they can trust!  It is a relatively cheap process to complete and the flat owners don’t have to prove any fault in the part of the landlord.  Typically it should cost about £200 – £250 per flat depending on what is required.  Some of the preparation can be done by the flat owners if they wish. 

The second option people are using – and it has to be said the more costly one – is to buy the freehold.  This is termed ‘enfranchisement’.  Again most blocks qualify.

The big advantage is that not only is the management of the building completely within the control of the flat owners, they can also extend their lease terms at their leisure. 

To illustrate the potential cost, let us say we have 8 flats worth in the order of £120,000 each and with 75 years remaining on the leases.  The cost is likely to be around £6000 per flat.  In addition the landlord’s professional costs would need to be paid, and around £500 per flat would be a reasonable estimate.  It doesn’t matter if not all flat owners want to join in but it is better if they do to keep costs down per flat owner.  In this example if only 6 flats participate the cost per participant would be around £8,600.  Those owning the freehold can recoup their investment when the other flat owners wish to extend their leases.

It is worth noting that often the landlord will negotiate a figure.  For example here the landlord would be better off accepting £6250 per flat rather than getting £6000 and the other £500 going to his lawyer and surveyor

Whether you go the RTM or enfranchisement route you will find the experience very liberating once the dust settles – no more horrors!

Jon Tawse


Thursday, 26 July 2012