Leasehold, a unique form of tenure unique to England and Wales is preoccupying us this week as so many buyers of flats are hit with unexpected bills. First of all I am helping a group of flat owners who have been hit with a 30% surcharge on their service charges, which seems bad until you hear of a young couple forced out of their home by the cost of their service charge.
Yes, the charges must under law be reasonable and management companies must account for their spending but both the cases above demonstrate how hard it is for people getting onto the property ladder – especially in London where 95% of new build properties are leasehold. Last year the average service charge for a new build property is £2,777 a year or £53.40 a week. The ground rent has to be added to that.
Over the summer I have helped several buyers in their attempts to get information on the service charge on their new homes. It has typically added a month to the property purchase and has cost the vendor dear, as the management companies charge for information about the charges.
Service charges information hard to get
Most estate agents selling leasehold flats have little grasp of what the service charges are likely to be. They will detail council tax and energy performance certificate details but can be hundreds if not thousands of pounds out when it comes to the service charge.
Details of what the charge will be spent on should be in the lease, but often incompetence or greed can make the actual charges very different from the expectation.
Help to Buy rush
The desire to get a first real home can blind buyers, or leaseholders as the property managers like to call them, to what they are getting themselves into. The rush to beat the end of the Help-to-Buy scheme on December 31 may lead some new buyers to fall foul of excessive charges. The Help to Buy scheme enables people with a 5% deposit to get a home with a Government guarantee that gives lenders confidence.
There is help for those who are struggling to get information or to establish the veracity of charges from the Leasehold Knowledge Partnership and the Campaign for the Abolition of Residential Leasehold www.carl.org.uk wants to put the power back with people who live in apartment.
Leaseholders who get surprise charges should share information with fellow tenants and begin to fight back. It may take a little time. As a last resort if all the tenants are angry about excessive charges there is a right to employ your own management company if two thirds of the tenants want to do so.