Why Is My Service Charge Much More Expensive Than My Neighboring Block?Posted by Vedel Pagh on June 11th, 2021 The difficulty with comparing service charge costs between individual blocks of flats may be explained by considering in many factors. The method of calculation can differ for every block in keeping with any variance in leasehold arrangements. The property size, type, height, condition, age, service facilities, plant, lifts, equipment and lease particulars can all have a significant affect on taking care and running costs. In addition, the maintenance and repairs background and sinking fund provision might also vary considerably making comparisons from the amount of freehold service charges almost impossible. Not only will the freehold property and its condition be unique, however the property services necessary in managing tweaking the building may be quite different combined with the requirements with the property lease. In summary you shouldn't compare apples with oranges and in many cases you'll probably find good reasons for any two landlord service charges being different. Here are some possible explanations that could be applicable in comparing one typical block management scenario with another. (i) You may have a very more comprehensive set of services funded through your service charge (e.g. site manager or porter, all windows cleaned, lifts, airport parking, entry systems etc.). (ii) Does your neighbour's service charge include sinking funds to allow for future repairs and maintenance? If not, their charge may well fluctuate dramatically from year to year as large expenditure falls due. Large items is probably charged for separately when they arise being additional to the regular landlord service charge. (iii) How many individual flats are in the neighbouring building? kew property management of flats with less units tend to have a higher maintenance charge per unit. Overall maintenance pricing is often disproportionately higher priced the location where the cost is shared by fewer lessees. If service charges are distributed across a lot of flats it makes sense that the proportion for every leaseholder will likely be less. For example, a roof repair deliver to only 6 flats is expensive when compared to the same facility provided for 32. (iv) Do you have extensive gardens or perhaps your block a mature building? If so, marketing charge could possibly be adversely affected. The presence of asbestos for instance can have a dramatic effect on the expenses associated with a works being completed. (v) What size can be your apartment? The method of service charge calculation needs to be stated in the house lease. It might be apportioned by reference to the ground division of your apartment. If you own a 2 bedroom apartment and your friend owns a studio apartment next the can create a significant difference. Some leases simply share all costs equally and this can clearly modify the portion payable quite significantly from one block to another. (vi) The location and access arrangements to handle works can also have an impact on service charge. Where service contractors can't seem to erect scaffold, or execute their works inside a cost-effective manner extra time and costs will result. Difficulties with materials deliveries, parking, craneage, disposal of rubbish etc will all have an affect whereas simple standard procedures without any special requirements won't attract reasonably limited. Having checked your lease and the other matters described above, you might still consider you might be being overcharged. As a long suffering leaseholder there are a variety of options available. Why not consider asking your landlord to employ a professionally qualified property managing agent. If you insist which a firm is appointed which is Regulated by RICS (The Royal Institution of Chartered Surveyors) the service standards they have to work to are set out in the RICS Code. This Code serves to guard clients from unscrupulous practices and likewise requires auditing and protection measures are put available being susceptible to regular inspection with the institution. Other options could also be available to disgruntled leaseholders including taking on their Right to Manage or indeed Enfranchisement the location where the freehold could be purchased by a majority with the lessees. However these alternatives aren't always possible and will take some time requiring the co-operation of others to initiate. Whatever solution is found, I trust how the above provides like a useful point of experience of help those who feel they might be be subject to overcharging. I propose to further explore the subject of Enfranchisement and also the Leaseholders' Right to manage (RTM) in the separate article since this particular rights are crucial and warrant specific attention and explanation. It is obviously prudent to look into all of the above matters either before or at the time of buying a leasehold property in a block of flats. Generally the management and maintenance costs will tend to be reflected inside service charge associated with a property during a period of years. A conveyancing solicitor should request this information within their investigation and appearance while using freehold block management agent. Please be aware however the opportunity and procedures involved will likely vary on location. The procedures described focus on England and Wales and therefore are therefore not applicable to other countries. Additional service charge advice and support could possibly be obtained from a fantastic block management agent providing residential freehold property services for blocks of flats. Readers really should search for block management agent services which can be benchmarked on the quality standards lay out by The Royal Institution of Chartered Surveyors (RICS). These professional practices or management agents benchmark their property services towards the RICS Service Charge Residential Management Code. which was approved through the housing minister in '09. RICS Chartered Surveyors that happen to be 'Regulated by RICS' must comply with this code which can be rigorously enforced with the RICS which performs regular inspections of the member firms. Regulation also secures all kinds of other benefits for freehold management companies, landlords and leaseholders. Service charge monies has to be safely managed in a secure ring fenced client bank-account with funds being insured and subject to regular checking and bank reconciliation. In addition the help provided must attain the required standards Typical block management agent duties are covered beneath the RICS Service Charge Code which will usually include some of the following:- Effective Procedures for Property Maintenance and Repairs, Responding to Leaseholder Enquiries from Solicitors on Property Sales, All Aspects of Service Charges comprising Financial Control, Expenditure, Budgeting, Service Charge & Ground Rent Collection and Accounting, Regular Client Reporting to Freehold Management Companies, Residents, Lessees, RTM's or Landlords. Independent Lease Management Control and Compliance Procedures in Upholding the Covenants in the Property Lease and Company Secretary Services in Assisting Freehold, RTM and Property Management Companies with Essential Management Company Administration.Like it? Share it! More by this author |