Leasehold and service charges nightmare...

[tiredstudentmum]

Hi all,

Will try and cut to the chase....My bf bought a property in Liverpool 3 years ago and has had one issue after the next. It's a 2 bed flat in a converted victorian mansion (of 16 other flats) with a lift. The property is huge and looks lovely, huge staircase and edwardian features and some small gardens.

Upon signing, they asked if he wanted to become a director as some residents have appointed their own management company and they are directors, but he declined (wanting an easy life!)and not wanting to get involved, but felt reassured that we had allies so to speak in the building.
Or so we thought!

Within the first 2 months the boiler died completely so he had to replace this. He had a certificate saying it was recently checked and everything was fine prior to putting in an offer on the property, so he chalked it up to bad luck.

Service charge was 160 monthly when he moved in.

Fast forward to now...We live together and service charge has risen to 205 a month.
My bf deals with the charge which is collected 6 months in advance (so we get 2 invoices a year and have to pay half a year upfront).

Initially he did not know this, and was paying the charge monthly which was ok at first. Then about a year later he randomly got hit with an arrears bill with almost £1000 in interest and additional charges alone (for a 6 month period that wasn't even over yet).

He freaked out and contacted them to deal with it before further charges were added...but they refused to speak to him, having appointed a solicitor. So he had to deal with the solicitor direct to pay the arrears who refused to break down or explain the bill as they said that was the management companies bill that they were just enforcing. It all got really stressful. He couldn't get any answers and asked why they hadn't picked up the phone before going to the solicitor, and they said they had sent him a text to contact them weeks back (which he missed somehow) then approached a solicitor.
An expensive lesson learned! I don't see why the solicitor was necessary as their accounts state they have over 50k in the reserve fund. He had to get a loan and pay that off or else they said they would add further charges...this to me seemed extortionate and I told him to seek legal advice but after speaking to his solicitor (who is a bit useless) he just paid up.

That aside...our flat is situated at the top of the house and since all the bad weather recently we have been hit with damp issues where water has collected in old chimney breasts etc. Water currently dripping from the ceiling in my son's bedroom and yellow patches on the plastering, with peeling paint in our bedroom.

There is also an exterior door on the roof with access to the property that has completely rotted away in the bad weather, so the handle has come off and it bangs all night, as well as allows rain into the building.

We reported the door issue 6 MONTHS ago and have regularly chased it up and still nothing has been done! We are told that the directors are aware and are pricing it up, but this is 6 months waiting for a single door when they have had thousands from us in service charges. The damp and leaking issues are more recent but no work has been scheduled.

So I did some research and emailed them asking for lead times for work to be done and their complaints procedure, as well as threatening them with the housing ombudsman. They sent someone out the next day to look at the issues, who confirmed that we need new windows in our bedroom and the roof repaired, which the management company is liable for, but still nothing since and this is over a month ago.

The property management company has very poor reviews when I looked online. We have approached the directors in the building and are fobbed off with 'speak to the management company'.

Not sure what to do, apparently other residents are trying to sell up but are having difficulty with the ever increasing service charge.

FYI the leasehold states they are responsible for everything outside our flat, we are responsible for everything inside.

Anyone got any advice on what to do? They are so quick to take our money but we get nothing back.

My bf is so stressed, he hates the flat now and we argue about it all the time. I just want to get rid of it!

have you thought about claiming from the management company for the damage to the flat?

From what I remember they are responsible for the exterior including the roof, and as the damage is being caused by their lack of maintenance you should be able to claim off them.

It would also be worth getting decent legal advice.

Who is the freeholder? Do you each own a share of the freehold or is it owned by the original developer?

You mentioned becoming a director - is that of the Resident's Association?

You do neeed decent legal advice, I agree.

Thanks for replies. I think the freeholder is owned by the city council, and owners of properties within the building are leaseholders.

When he was asked to be a director, he was under the impression that the residents had formed their own management company and that was how the building was being maintained so he didn't want the hassle and trusted them to keep doing their thing so to speak.

However, the management company are a chain company so this isn't the case, but they do say the directors have the final say so I assume the directors appointed them? I am not sure how it works... He is going to dig all the paperwork out for me tomorrow to look through because I am still confused by it all.

I've seen a leaseholder advisory service online, they give 15 mins to chat or you can write to them for free. I might give that a go once I can get my head round it.

The residents will have a say in which management company to use and they will have appointed them initially. There should also be annual meetings where the company accounts are signed off and this is usually a good time to air any issues.

You're talking about the government site LEASE who give 15 minute (prebooked on line) telephone appointments.
Also join National Leasehold Campaign Facebook group - over 16,000 of us campaigning for more (fairer) rights for leaseholders.

nationalleaseholdcampaign.org

Boiler - nothing to do with free holders

Payment of service charge will have been in the lease. Which I assume he read before buying.

What does the lease say about frames and foors/windows. As often frames are free holder and window/door is leaseholder property .

Any job done to the property as a whole costing each leaseholder over 250 per leaseholder will be subject to a section 20. The roof is likely to come under this which may cause delays.

When was the last AGM and did you raise any issues then?

Also. Doesn't matter how much money they have. If he owed it. He owed it. Its how leasehold works. You wouldn't accept work not being completed due to other leaseholders not paying their service charge if you had stuck to the terms of your lease.

Unfortunately this is one of the risk of moving into blocks like that. I am in a similar set up, I own the flat and have to pay an installment of about £700 every six months.

I've been there about 9 years and it's gone up about £200 per year in that time. Your rise seems steep. Has there been any large expense to justify this hike? Such as installing a new lift or whatever.

So you have the company accounts? Have you got the breakdown of where the money has gone? In mine, they tell you £x was spent on washing the windows etc.

I suggest you take photos (with dates on) of the damage to your property, send these by registered post, to the management company along with a formal letter outlining your issues.

In my building when you buy a property there you are invited to become a part of the management company somehow and you can vote on things. They have c£200k in reserves.

Start a paper trail anyway in case you need to escalate. I don't think this is unusual where people buy a property, get told the annual charge is £x, people think that's ok I can cope with that amount, move in and management companies shove it up each year and it starts becoming unmanageable.

You need to ascertain the facts fully. Who is the :
Freeholder
Management company
Who controls the management company. This should not ally be the freeholder

In the set up you describe it would sound better for leaseholders to buy the freehold and appoint their own management company (although when you first described it, it sounded like that).

He should be clear about this from when he bought it as to be appointed a director would suggest there is a free holding company owned by the leaseholders.

He should be clear about this from when he bought it as to be appointed a director would suggest there is a free holding company owned by the leaseholders.

Not necessarily. In our block run by a management company, we have a separate residents association which has Directors who deal with all the issues raised on behalf of the leaseholders. There is an AGM once a year.

This website has lots of useful information - www.lease-advice.org/

The way service charges is work is dealt with by the Landlord and Tenant Acts and the provisions of the lease.

A budget for the service charges should be issued prior to the demands for the year, showing what costs are anticipated for the year. At the end of the period accounts are prepared and most leases then require any deficits to be demanded from lessees or overspends to be credited back. There is a requirement that this is done within 18 months of the start of the accounting period, so realistically 6 months after the end of the accounting year if it's a standard 12 month period.

If your BF was hit with a large demand early on, it's possible that the previous owner of the flat had failed to keep up with the demands themselves. Ordinarily when you buy a leasehold property the amounts previously demanded and unpaid by the outgoing lessee should be taken in to account on the completion statement on the purchase, or a retention is held back, just in case it is needed later, so I'd recommend checking the original purchase correspondence and documents on this.

The leak to the roof should be repairable through the building's insurance policy but it is normally the management company who would ordinarily arrange that. Keep on at them. Some have terrible reputations but if you can find out who they're regulated by (hopefully they are) - ARMA hopefully, you can take a complaint to them (or at least threaten them with it).

While £50k in reserves sounds good, in a building with a lift it wouldn't go far if the lift suffers a major breakdown or needs an overhaul or replacement. Reserves are normally planned to cover a programme of works over a number of years, so will be being built up to cover major projects, not deal with general day to day repairs. The regular repairs schedule is dealt with through the regular service charge demands each year.

Definitely try and identify which neighbours are on the board of directors and try and collar them and see if they've got a shortcut to someone at the Property Managers who will get things moving for you. It's really not acceptable to be living with a property in the condition you describe.

(I agree with others though - the boiler was just bad luck and nothing to do with the management company, etc. It's no different from saying the built in oven broke when you moved in. Some properties do have centralised heating systems but if it's separate and within your flat and doesn't form part of the fabric of the building as a whole, then it's your own responsibility).

You may find this useful if you have not resolved your management issues - Right to Manage

https://www.tunafishproperty.co.uk/management/right-to-manage-liverpool