Service charge - how much is yours

[crumpetsolo]

We own a house which is within a gated development in Exeter and subject to a service charge. For the past 20 odd years, it has been approximately £1000 pa, but a year ago we had a bill for £10,000. The previous management company hadn't kept a sinking fund and external repairs were due, coupled with previous bad management were given as the reasons for this.

This was understandable (ish) but we were then told the ongoing charge would be £700 pa. Lovely. We put our house on the market, told buyers this, accepted an offer and then the management company said that the £700 pa had been an estimate (It hadn't been expressed as an estimate at the time, but ho hum) and in fact the service charge was to be £3000 pa on an ongoing basis.

Long and short of it is that it lost us our buyer, and I'm despairing of ever finding anyone to buy the place.

I was just wondering whether this is a normal service charge outside London. What do other people pay? Has anyone ever challenged a service charge?

Christ, we pay £1000 inside London, and that includes ground rent AND a contribution towards the sinking fund.

We are just a converted Victorian house rather than a gated development, but still your charges seem completely unreasonable!

I'm not sure I quite understand your setup - are you leasehold or freehold within this development? Have you spoken to other residents about this? It might be worth collectively speaking to a solicitor about getting the right to choose a different management company.

FWIW we told our management company that we were considering exercising our right to buy out the freehold and they magically sharpened up their act no end - so even just a concerted display of crossness on behalf of the residents might put a rocket up them.

just out of interest- how many houses, who is in the management company- how much maintenance are they responsible for?

we dont live in a gated community but on a (very nice) estate. We have our own managment committee which is responsible for maintaining acres and acres of green space- it is mowed every 2 weeks in growing season. also responsible for all the trees, and miles of footpaths. Also get involved with planning and enforcing rules eg no caravans etc.
We are all shareholders ( shares passed on when houses sell). We pay the grand sum of £70 per year. people volunteer to be on the committee- there is an election process.

now, with 500 odd houses there is a certain economy of scale and the roads are adopted but even so- £3000 pa?

There are 20 houses and say 50 flats, our property is leasehold and the service charge supposedly covers the freeholder's 5 yearly obligation to decorate externally, but still, it's a humungous cost. So frustrating!

have you been in touch with the Leasehold Advisory Service?

www.lease-advice.org/

They might be able to tell you about your rights and what your first steps would be to challenge this service charge.

Also, have you asked to see the accounts? You have the right to request this.

You could look at things like:

What fee does the management company take? Is it reasonable per flat/house?

What % do they add onto any works as an arrangement fee?

Are you always given prior quotations for any works and the opportunity to choose your own contractor for any services? (The managing agent will usually take a % of any costs incurred in works to the property, so it's not in their interests to keep prices down. Quite the reverse. So you should always get your own quotes for any work and you have the right to request that they use your supplier).

How much is in the standing fund?

I imagine your community has both

• a property management company
• a board of directors made up of residents/owners

Our resident's board meets quarterly. It is this group that hires and directs the property management company.

I would think you and your neighbours would want to find out who is responsible for hiring/directing the management company, and then you can find out why things have been handled as they have.

Oh, and to answer the orginal question: we pay £3000 per year (paid in two installments) for a smallish flat in a portered block in London. This covers annual running costs and a contribution to the sinking fund. The residents own the freehold.