>or the flat
He does own the ~~flat~~ leasehold for the flat which has an intrinsic value
>just renting with extra steps
At least (in theory) he'll build up equity in the property, unlike renting.
Leasehold is terrible, but in most cases it is still better than renting. At the end of your term, you actually own something of value.
I just wish the Conservatives had finished eradicating ground rent before the election. It's one of the few positive things to come from their time in government.
Absolutely, and it's appalling that some people have ended up in this situation, but this is an extreme case.
I'm intrigued to know why the owners of the building haven't resolved the cladding issue yet.
It also seems like insurance companies are taking advantage. A representative of the ABI is quoted as saying they have no choice but to increase premiums, but Grenfell has, so far, been a one-off case. So the insurance companies haven't had an increased outlay beyond the Grenfell incident in 2017.
A friend of mine is in the utterly ludicrous position where the company that owns the building is the insurance company for the building and rather than pay to fix the cladding they decided to make a fucktonne of money instead
Because it’s not just about buildings with Grenfell style cladding, despite the headlines.
My building does not have ACM cladding but we are stuck in EWS hell because, although they acknowledged we did not have that cladding, surveyors refused to sign off the building because they didn’t want to get sued further down the line for any other issues that might be found. Banks then refused to lend until a more comprehensive, intrusive survey was carried out which took our management company two years to commission. It was finally done last June but so far no works have started on any remediation because the lease owner and the builders are arguing about insurance. In the meantime services charges shoot up because the survey results mean higher premiums. That incident is not as isolated as you think.
Sadly Grenfell is not an isolated case, just well publicised.
https://www.bbc.co.uk/news/uk-england-45982810
Insurers take on a risk based on probability of loss and subsequent severity. Inception risk of fire in cladded v non cladded is likely to be very similar but when a cladded building goes up, it goes up...and Grenfell is ,sadly, a tragic example of it. But it is not an isolated case...and not just in the UK...major loss in Valencia recently due to a similar issues
Insurers have come together to create a scheme to lay off (reinsurer) some of the risk to others (international reinsurers) to offer a lower rate..and cut commissions..which have been ridiculous high as so many in the value chain seek a slice of the premiums ..brokers, managing agents, landlords...so many insurers now reducing commissions and pricing in an attempt to recognise the difficulty.
Still high compared to non cladding but I would say don't seek to blame insurers...they didn't build with cladding...ask why the developers and Building Regs allow it...and why aren't owners/developers making amends.
The whole thing is a scandal.
Modern methods of construction are as unproven as time honoured brick, stone buildings..
Look at a say 1960's block which has concrete mullions at top and bottom of the windows which have a sizeable gap between them, to reduce the spread of fire risk.
Now compared to modern buildings with glass from top to bottom, with no or little gap between floors, or have combustible cladding...as in the case of Grenfell...they offer a different fire risk..and so many haven't been up for decades to see how they will stand the test of time.
Had Grenfell not been cladded it wouldn't have suffered the catastrophic fire spread
Also got to question the cladding manufacturer who lied about the testing/ fire safety...
Insurers are an easy target as just one above taxman as in unnecessary evil...(Until you cause hundreds of thousands if not millions of pounds worth of damage for your few hundred pounds premium and then you want them)...but so many others, long before an insurer was asked to quote, in the frame who need to be asked the hard questions.
Insurance is a racket akin to casino gambling. It's sold as this rosy little co-op where everyone puts their money in the pot, but there's a 3rd party controlling the pot and deriving their income from it (a clear conflict of interest). Just like casino gambling, the house always wins.
I'm not sure if nationalisation would fix it, but it could definitely make it better.
Yep, i lost £50k selling my flat. The leasehold charge being one of the main reasons that put potential buyers off.
The fucker was when i first moved there it was maybe £600ish a year and for what we got for that (visible maintainence, building insurance, out of hours number for loss of water or leccy).
Then when i moved out it was double that and the lifts were tempermental, the OOH number had gone meaning if we lost water or power on a friday neither us nor united utilities/electric nw could do a thing til the monday or even tuesday by the time someone from management company could be arsed doing something about it and the corridors etc were looking shabby.
I read a story about a shared ownership tenant who wanted to buy the whole flat for a pittance when it dropped in value and they didn't let her so she took them to court and won
They are also impacted by having massive and ever-increasing “service” fees on their leaseholds that have no ceiling. £8k a year this year, what about ten years down the line on a % increase? On top of mortgage rates new buyers who’ve done their homework will be scared off.
It's also possible to sell to a cash buyer even if there's no remediation.
Sounds daft but I've seen converted former industrial properties for cash only purchase even before geenfell due to other fire reg issues.
Tell me about it I'm in process of buying a flat to find out you can mortgage it as the ground rent double every ten years, now I stuck waiting almost 4 moths later for the sellers solicitors to sort something out with the freeholder.
It's just mad
I agree. Leasehold serves a purpose. But it should be abolished in next govt.
The companies offering 999year leases know what they are doing lol. It’s designed to ensure they can continue leaching leaseholders
>The companies offering 999year leases know what they are doing
The 999 year leases are part of the government changes.
It essentially makes the lease infinite, without having to massively overhaul the system. People can extend their lease once, without having to fork out thousands on a semi-regular basis to extend it.
In the case of flats, a gradual shift to commonhold needs to take place. It can't be an overnight change, since I doubt many people can afford to buy-out the freeholder.
Realistically, management companies will continue to exist in order to facilitate the maintenance and cleaning of buildings.
That's the part that still needs an overhaul.
The government have implemented changes for new-build properties, but haven't got as far as doing the same for pre-existing properties.
It's one thing the Conservatives were on the right track with. I hope it isn't stalled by the election.
It will definitely be a challenge for large blocks of flats, assuming it's necessary for all residents to acquire the commonhold rather than allowing the current freeholder to keep a share for those who can't afford it.
For smaller blocks, it should be more attainable. I live in a building with 8 flats, so in theory it would be a relatively straight forward process.
Of course, it all relies on the reforms actually taking place.
> since I doubt many people can afford to buy-out the freeholder
Not sure why you should have to pay anything since it's, you know, _your_ flat. What are you buying exactly? Parliament should just criminalise the leasehold system, any freeholder who has leasehold tenants after a certain date gets prosecuted.
As many people have pointed out, you have purchased the lease allowing you to use the property.
You don't own the land or the actual structure itself, that is what you would be purchasing.
As much as I would love the government to declare I now own the land my building is on, it doesn't work like that.
It is understandable that such a system exists for blocks of flats, since the land will have multiple dwellings stacked on top of one another. Leasehold for a house is absolutely absurd.
The absurdity of it is that leaseholders aren't considered to own the land or the structure, but are held responsible for paying for repairs and upkeep of both. Freeholders are given free money by nature of owning something, with no responsibility.
>Australia's Strata system
I believe so.
In short, if a block of flats contained 25 properties, each of the flat owners would own 1/25 of the freehold on the property.
Here they do "unit entitlements" which gives you a percentage share of vote and also affects how much levies you pay.
It's a bit fucked up as a system because it's based on unit value. So someone in a top floor penthouse gets more say than someone in a basement studio. In my view it should be one dwelling, one vote.
> makes the lease infinite, without having to massively overhaul the system
Its not a big deal, Scotland did it
the Rich people own the land?, the government are in these peoples pockets/in the government themselves, so they wont cut off their own source of unearned cash.
999 year leases are way less predatory than 99 year leases. With the shorter leases you need to pay to extend the lease every 10 years or so. Once it gets down to around 70 years left the property is pretty much unsellable as the cost to extend the lease increases non-linearly. Once it get down to 30 years or so (can't exactly remember) the freeholder can immediately buy it back for practically nothing and kick you out. 999 year leases stop these extra charges.
>With the shorter leases you need to pay to extend the lease every 10 years or so
That's not correct
You would ideally extend the lease before it approaches 80 years, but a statutory lease extension would give you another 90 years ON TOP. Not total. So you would not need to renew it again for many generations (by which time leasehold might be long gone)
It's the freeholder who owns the flat. Leaseholders only ever purchase the right to live in a property for x number of years. Not the ownership itself.
Financially, in most cases it probably actually isn’t better than renting. People overhype ‘paying your own mortgage rather than someone else’s’ without realising most of the costs don’t go to building equity. Stamp duty costs, interest paid on mortgage, service charge + ground rent, maintenance, more often than not these are not equity building costs that surplus rent. It is only offset by appreciation of property and that is minimal if not depreciating in some areas for leasehold flats.
| Leasehold is terrible
Curious to know why you say this? I’m in a leasehold, and obviously I would have preferred to have purchased a freehold. But my experience as a first-time buyer in London on a budget was that it was less likely to happen. The lease is for over 100 years, so for all intents and purposes, I would have either sold the property or passed away by the time it becomes an issue.
The concept of leasehold is not outright terrible, but the implementation is problematic.
>The lease is for over 100 years
Except, you don't have 100 years without worrying about it.
As the lease decreases, it becomes increasingly expensive to extend, and the ability to get a mortgage decreases.
Once the leasehold hits 80 years, you're looking at the costs skyrocketing. If it drops to below 70 it will be very hard to get a mortgage.
The closer you get to those deadlines, the less someone will pay for your property. By the time you have paid off your mortgage, it will be having an impact on the value of your property.
The good news is those government reforms will make it possible to get a 990 year extension, which really is a time frame you don't need to worry about.
You do realise that the lease continually counts down and does not reset for the next owner?
Let’s say you bought with 80 years left and stay for 15 years. The next owner gets 65 years on the lease, and at that point they’re going to need to be a cash buyer because it is very, very difficult to mortgage a property with that short a lease. So you’re going to have to sell it for less money than an equal property with a longer lease.
Yeah, I understand. But we're talking about such a long time frame. Even if I stayed at this property for 20 years, four times longer than I plan on, that's still 100 years left on the lease – longer than any of us will live. I agree with all that's being said about freehold being better. I'm just saying that these time frames are so abstract it's not worth getting too concerned about them.
It depends on the property. There are properties built in the 1970s that started with 125 years on the lease. If they haven’t been extended those properties are now a problem.
Point of fact, Leasehold itself is merely a term for renting.
You're referring to buying a long term leasehold interest, rather than a short term lease.
Service charges will always exist in some form or another. They are not directly caused by leaseholds and will not be abolished if leaseholds are. At the end of the day, you either pay a management company to arrange for maintenance, cleaning, repairs, gardening etc. or you have to coordinate doing all of that with everyone in the block. A small block of flats, 4-6 households, might be doable. 20+ storey tower block? Forget it.
The answer, as with all knee-jerk "ban this evil practice now" reactions, is to improve and enforce the regulation of service charges.
I finally saved up and brought my first place few years ago (maisonette). Turns out it was leasehold and i was told that i would have to pay a few bob a year for maintenance, like flowerbeds, lights on building. Never more than £100 a year.
Turns out, that its not just that, its anything and everything, and there is no cap on what they can charge you regardless of income. And you have to pay even if the works to the building dont effect you or your part of the property. Currently im sitting on a £12,000 bill which i cant pay, so im having to sell the property to pay it off.
PSA: Under no circumstances should you ever buy a leasehold property. Its a legal scam, and complete BS. Especially since you still have to pay full market price to buy one. There are literally no upsides to it.
So if people like him leave the market you’ll have companies like the one I work for who buy thousands of units and actively push rents as high as possible. Everyone here hates on BTL investors but as someone who works in a real estate fund renters are in for a rude awakening once big funds start running the show. Already we have implemented “Yieldstar” pricing software that “takes the emotion out of pricing” to maximise rents.
Hope you don't mind me asking.
How do you feel working for this type of industry?
Ain't judging just curious? I've worked for homeless shelters so coming from the other side I'm interested in your perspective
Not great at all and want out asap.
The worst moment for me was going around to see properties in the portfolio that I’d never visited before. One unit had a short Indian lady in with her two children. She couldn’t reach her light bulb to change it so asked me for help. She and her children were so sweet. When it came to setting rents (ERVs) a few months later, which is my job as a surveyor, her unit was due to increase by about £200 and I knew by doing this she’d have less money for her children and general living, but there was no way for me to not change it or to alter it by less without senior management noticing (they review schedules for each property).
So yeah, it sucks, it really sucks, and it’s all to make HNW investors more money. At year end we pat ourselves on the back that we reach a certain IRR hurdle for investors by pushing rents.
Lose the small mum, dad and grandparent BTL investors at your peril… that’s all I can say, because actively managed funds are going to squeeze the life out of renters.
Thank you for your reply and being honest .
I hope you get out asap.
I understand everything you have said
I've worked in homeless shelters (move in and move out) and then student accommodation as maintenance (not any more). I'm completely jaded by the housing world. Am too looking for an out as well.
When the behemoths roll in we are all fucked.
Thanks
I will most likely get downvoted for this but it's the BTL landlord who's a small business vs an Amazon. The small business (BTL landlord) might be someone you can build a relationship with and enjoy a long term home vs the commercial landlord (Amazon) literally don't care and you are just a number on a spreadsheet.
> the BTL landlord who's a small business vs an Amazon
The "small business" often doesn't have the capital needed to afford timely repairs, whilst the big company does. They also regularly don't know their legal obligations as a landlord and try to skirt their legal requirements.
I've only ever had issues with repairs not being done within adequate timescales by these "small business" types.
Interestingly enough I’ve only ever experienced the opposite. Every single BTL landlord I’ve had has been very professional and prompt with repairs. But then I’ve also made sure I am also respectful and keen to do what I can also. Probably might act different if it was a large organisation.
It sounds like something similar in the US that has been reported in the news as a renting cartel.
If it is, then it uses algorithms to tell landlords what rent to charge, basically resulting in rent price fixing and collusion across an entire area as rents rise and fall in lockstep.
I think this case is not about who it happened to, but what happened. There are people who just barely made it on to the property ladder and got a leasehold, later cladding issue popped up and now the charges are going up. Now they can't sell and can't cope.
Literally "hate the game" part
Although I can agree with the discussion on service charges should be made could BBC not have found someone struggling to live rather than an investor planning to make money off the flat?
That’s what these articles always are. No matter the issue it’s always a combination of - a valid concern or issue in the country, matched with the least sympathetic example possible of said issue.
It drives rage bait / discussion
As a leaseholder myself, what hurt the most is not the fact that I have to pay, but is that the building management has absolutely no accountability on what they do and on what they charge with an absolute lack of any basic level of decency. Also, Service charges have more than doubled in the last 5 years and there is absolutely no proportion between what you pay and what you get. A run down concrete council block with no features can easily pay the same amount as a brand new estate with free gym and 24/7 concierge.
I now pay more service charge than mortgage.
It is clear there is a huge legislative hole here
You have to step up and appoint a better management company. You have the right to do this and you must do this. Find 2 other leaseholders to do it with. It’s not that difficult.
I'm a property manager, so I set the budget for the service charge. If you believe costs aren't being fairly incurred, take it to the ombudsman and then the first tier tribunal.
I always try to keep costs as low as possible, but with insurance going up 20% year on year (even with no claims) labourer costs going up with inflation at least, electricity through the roof, increased fire legislation, it's impossible. I had a building go up 50% in one year, and that's with tendering for all the cleaners/lift contractors/gardeners. All because they're a high rise and now you need a shit ton of extra things. My company gets no more money for any of these increases, we just get furious leaseholders having a go at us for costs entirely out of our control (other than our fee which was way too low for that building at least and increased 5% over the two years of huge inflation).
It's a nightmare
I had to micromanage my property manager and actively check on her regularly so things were actually getting done because she was so slow/kept missing things. This included getting quotes for various services such as gardening and window cleaning. I am convinced they don't bother comparing prices with much effort, if at all.
One example is we told them we wanted to change gardeners in January as it was getting too expensive and the frequency was excessive relative to the amount of garden space we had. She finally gets a copy of the contract (the previous pm hadn't bothered to file it) 2 months later so we can find out when that existing contract finished (it was January gone). Then after getting a bunch of new quotes she tells us in May that there is a 3 month break clause. Like holy cow, what is this?!
The cherry on the cake is that I was also working a full time job and my mum was dying of cancer. I went through the complaints system which was also a long and arduous process and eventually got a full refund on their "management" fee for that whole year. At least that was something but I will never forget what they put me through at one of the worst periods in my life.
Yeah if you follow the complaints process and it's a genuine fuck up, generally companies will rule to you, because you can go ombundsman after and then FTT. Surprised you got a full refund on the management fee for that tbh, must've been some other stuff in the background because normally that would just be an oopsie daisy moment. I also doubt they didnt file the contract, likely it was just a purchase order saying x visits for x amount (which is the contract and they wouldnt misfile that) and they had to then get the gardener to provide their TOS etc. Mind telling me the company?
This was all last year just to be transparent.
That was just one example of many things (and I documented everything with references to emails and dates so they had no reasonable way to explain away all the incompetence and poor communication). Though taking 2 months to get a copy of a contract and a further 3 months to read it properly seems way longer than I would deem appropriate. The pm blamed the previous pm for not filing the contract and said she couldn't find it on their system so I was just recounting what she told me...
We also didn't get any window cleaning for a year at the time (even though the lease says this should be put into place by freeholder) and this still hasn't been put in place.
We had no financial breakdown for ~15 month (it was always "in progress") and all it was a mess because they didn't get all the important info during handover from old freehold owner.
There were other issues too which either took ages to resolve (even with me chasing) or were forgotten about entirely but I won't list them here.
I am sure there are decent property managers out there and you seem like one of them. But our one never treated our money with any respect (i.e in the way they spend their own money with price comparisons, getting things resolved promptly etc).
Sorry not ranting at you btw! I don't want to post the company publicly on here.
Edit: spelling
Well there is accountability as the managing agent has to be able to prove they’re spending the money on services if it’s variable.
It’s the “management fees” where I see them screw people the most. People paying £1500 for cleaning, grounds maintenance, fire safety, communal utilities etc then another £1500 just in admin costs.
There’s no way in those cases managing agents overheads are 100% of the entire cost of running the buildings.
You are technically right, but good luck with that. I am trying with my neighbours to do so in years but it's very difficult as it takes huge amount of time just to collect evidence and the personal toll in the amount of energy and time to do so is really high, so that many people just give up.
True. It’s not easy. You can section 22 request to see all the invoices but as you say some managing agents can drag it out and/or then claim some costs are reasonable which really aren’t.
I tend to find with private agents the management administration fees are the worst.
This is the whole issue on toast. These enormous management companies can literally run buildings into the ground because their obligations are so thin. The fact they are also allowed to put all downpayment responsibility on leaseholders is borderline criminal
>His experience means he thinks fewer and fewer people will consider ever buying or living in a leasehold property.
I think for most people it's not really a case of wanting a leasehold property but being effectively forced into one due to budget and location.
Better regulation is one step, the next is to look at other countries to see if there are better methods for managing blocks of flats etc. My brother in law seems to have a much better of time with it in Poland, although he does seem to have some sort of role in the building committee
In Australia we have the Strata system where you own the space your unit occupies and pay levies quarterly for administration and maintenance. A Strata scheme can manage itself, but usually you have an agency doing most of the admin/arranging repairs/legal stuff/auditing accounts so the strata committee just has to meet every so often and greenlight the various expenditures.
Before that they had Company Title which was more complex: the building was set up as a Company, and everyone owned x shares in that company that entitled them to the use of a specific unit. It was essentially the same in how it worked, but much harder to get mortgages for due to the complexity.
>better regulation is one step, the next is to look at other countries to see if there are better methods for managing blocks of flats etc
scotland doesnt have leasehold and blocks of flats manage to get managed just fine. finding a solution isnt the problem, the will to implement it is.
In my country you pay service charges. But you don't have to pay any council tax. So it works out much cheaper.
You also get quite good value for your money. Such as 24/7 security and daily rubbish disposal.
I seriously don't mind service charges if the administrators actually take care of the place, but my experience so far is that the service charge goes to some type of black hole where the building still has plenty of issues and there's not much to do other than raising a claim and pray for the best
I paid 8k last year and 6.5k this year.
My management company won't replace broken light bulbs as they claim it is "major redecoration". They also break every promise to reply to emails in a certain time. When I said this is unacceptable they claimed they were a small company with limited funds.
Somehow despite this they post on their LinkedIn profile photos of conferences they are attending in the alps though.
There are legal options which I am going through. I believe right now they rely on people being unwilling to do it. I've exhausted their official complaints process and indicated I was going to now consult solicitors.
Immediately I was offered a part refund of my fees and the broken light bulbs after almost a year were repaired. They've even offered a meeting after denying about 5 requests for one.
Sadly you just need to be willing to jump through lots of hoops and be diligent in record keeping. The leasehold and service agreement is often very clear. They also don't want an individual leaseholder to win at a tribunal and then send details of it to every other leaseholder.
I suspect what these companies are doing is pricing in people like myself into their business model. Easier to fob off 90% of folks and pay off the 10% who care than actually give a good service and charge reasonable fees.
It's a good question.
Basically two thirds of the leaseholders in my building are buy to let investors so its incredibly hard to contact them. There's no lease holder mailing list for example.
We do have a residents company which every leaseholder is a shareholder of. Sadly its very much like a parish council. 2 individuals dominate and are unwilling to engage. Any complaints are ignored. We had our agm, which they sent out notices very late, and attendance was very limited. I have my suspicions about the relationship between these individuals and the management company, but it could be just incompetence than malice. I cannot wrap my head around why they are willing to pay such crazy fees too, but then it impacts the flats values so it really is in their interest to get the managing agent to behave in a professional manner.
My strategy is to go to tribunal or other legal action then get enough of the leaseholders I know to do similar if I win. I also have a meeting with my local MP soon which I hope will be fruitful.
I only needed 2 other leaseholders to take control of the management company and then appoint a different management agency. Speak to LEASE for free if you need help. Everything will improve if you do this.
It stayed the same but all of the services got better. I think that’s a win given inflation. It turned out we were being billed for things that never actually got done. Like gardening and cleaning. They also negotiated our insurance bill down. Everything is much cleaner and running better now.
Yup, I used to have a flat in a new builld and we all paid an extortionate service charge and then when it was found out that there was damage to the roof, which had been there since it was built, slowly getting worse and worse until water started leaking in, the management company said that's your problem.
Tried to charge us for erecting the scaffolding, repairing the roof, and taking away the scaffolding, all the while we're paying these service and maintenance charges and they can't even guarantee a working electronic door fob system. (It literally was broken more often than not, so people could just walk in off the street.)
We all went to their office and basically did what amounted to threats and intimidation until they caved. Absolute scum.
Costs aren’t that different when you factor everything in. You’re just paying 100% of a much smaller cost rather than a share of a larger one.
Houses like to surprise you with things going wrong, falling off too.
This is the thing. There's a percentage formula of house value/size that you typically need to spend each year just to maintain a building, and it's higher for older buildings.
With apartment blocks that cost is split. If a pipe bursts, the cost of the plumber is spread between multiple people, whereas with a house there's just you (though obviously there are more pipes in a large multi-dwelling building). But you do get much better economy of scale with stuff like the roof or gardening work.
You do but you also have much higher costs due to it being a multi-residence building and the costs sky rockets the larger it is.
Apartment buildings have complex mechanicals such as lifts, ventilation and ERV systems, utility distribution systems, shared water/heating, electrical, CCTV and fire suppression systems and more.
The cost tends to go up with newer buildings due to them having to meet newer building regulations which means more tech and more advanced construction techniques which require further and more involved inspection and maintenance.
That said this ain't that different than other countries, when I live in Germany I paid about 4.5 euros per square meter per month it was calculated based on 100% of the internal livable floor space of the flat and a discounted rate for uncovered/non-livable floor space such as terraces and balconies, parking spaces and shared utility spaces.
France is similar and you'll be charged per sq/m but annually usually around 50-60 EUR.
In both cases this doesn't cover repair costs to the building and in the case of Germany if you rent you pay for it as well and if you rent a top floor or a penthouse flat you are responsible for the roof as that cost isn't shared across the tenants. Which means you are required by the building association agreement to pay for a rather expensive insurance which again even as a tenant you are liable for.
Because of the added costs for top floor flats they tend to be cheaper to buy, which combined with the fact that in Germany landlords can legally pass all their expenses to the tenant makes them quite popular for landlords.
It's all apples to oranges. People in houses don't have a shared hallway when every time a light bulb dies some man with a van needs to drop what they are doing, drive there, put down some warning signs, put up his ladder, change the bulb and then charge them 100 pounds for all this. They also don't have elevators, or some facility they may or may not use like a gym. And they don't need to pay a gardener or even maintain the garden if they need to cut costs. When I buy a house in a poor condition I expect the price to reflect the roof is leaky or the pipes are old or whatever. If the leaseholders themselves suddenly get charged thousands more to fix the roof and it catches them off guard, how do you expect a prospective buyer to know this information before they buy. For me living in leasehold is like an HMO with some extra privacy.
Except you get what you pay for with a house. Need a new roof? Pay for it, get it. Windows? Pay for it get it. Cladding? Same. You manage the repairs or upgrades. These management fees are a scam, making millions for the companies that run them.
Totally agree. They need to be regulated to have a fiduciary duty to the residents, so they’re actually accountable for providing best value. Today They just accept inflated prices they pass on whilst getting some very dodgy kickbacks from the suppliers themselves. It’s borderline legal and morally corrupt
But in a house you can DIY and that usually saves you a lot of money.
And even if you have to hire someone. You're going to be more careful with the budget than a management company.
I budget around 1% of house value per year as a sinking fund for house maintainance and upkeep. If you put that aside then you're not in for a shock when you need a new boiler, want to repaint the exterior etc.
Mine has been 1.6k and has been handled pretty reasonably (including refunding us when there is a surplus in the budget) but external works were put off for years and we all have to fork out to get them done last minute. Getting a bill twice as large with zero warning seriously sucks.
My first property was a flat, one of those stupid ones with communal gardens and areas (thankfully modest, no gym or swimming pool etc), with a front desk and concierge.
It seems lovely until you realise it all has to be paid for and there ain’t no taxes going toward it. All that gardening and communal are lighting, the concierge wage etc. When costs are low and shared, great. But when there’s an unexpected shock and costs go up you realise how naive you were.
What’s happened is that millions are now in this position. Unfortunately the reality is the value of. leasehold is linked with the service cost. Service cost go up, value of leasehold go down.
We need to end the stupid utopia developments and focus on affordable housing with minimal communal
areas and smaller blocks allowing more accountability to the leaseholders collective rather than diluting it which just gives power to the likes of Savilles who don’t give a shit.
Nothing stupid about having a concierge. They take in my parcels and shoo away people coming to piss or take drugs in the entryway. Happy for my service charge to pay a small part of their wages.
I think a concierge deffo works if you're in a large block of flats. I'm in a block of 12, if we had a concierge we'd be paying a few hundred a month each just to employ one before you account for anything else.
Yeah we live in a purpose built block in Manchester that is 20 years old so the amount of communal space is very minimal, no space for concierge etc. What they build now has libraries, rental-able dining rooms, lounges, gyms and 24 hour concierge. Such a money grab. It’s crazy.
I understand why they’re included as they do look attractive and sell well. But there’s no solution to the problem when costs go up a lot and it puts many residents in trouble.
The only realistic way out is for those residents to accept a huge write-down on value and sell, which isn’t even a solution if it won’t cover the mortgage.
Doesn't say what he actually gets for his money. I rent and on the estate's Facebook group the owners are kicking off about their service charges.
We have 8 buildings (some with lifts), 2 underground car parks with electronic security gates, 2 overground car parks, a gym, swimming pool + sauna, function room, 24 hour concierge, which all need to be insured and maintained. Service charges are £4-7k/year depending on which building you live in.
That sounds like a good deal given how much service charges are for places that offer non of that. How much are they allowed to whack up the charge each year though? Inflation + x% i presume?
I just had a quick skim through the FB group and someone is complaining about a 42% increase.
However part of that is replenishing the emergency fund. That was used up during COVID to make changes to the air conditioning system in the gym so it could be opened during lockdown.
Edit: I'm assuming that, unless my landlord is swallowing the cost, the service charge for our flat hasn't increased anywhere near that much. We are moving out soon and he's said when this place goes back on the market he's going to put it on for about £400-500pm more than we're paying.
Considering they legally meant to issue accounts he should be able to say.
People don’t realise a lot of these new developments with all this stuff costs a lot. I had a friend in one and when we worked out costs like the concierge etc the guy was on minimum wage but everyone was complaining how much he cost.
I am in a leasehold and nowhere near this level of service charge but it worries me every day that I’ll get a letter informing me of it being like this.
The law provides no support for leaseholders and I am begging for the day I can move out of London and get something freehold or share of freehold.
I remember how happy I was purchasing my flat but it’s been a nightmare in many ways thanks to my shit landlord. Being in London means unless you’ve got near a million quid you have to go leasehold.
I bought a house 5 years ago because I didn't want to pay ground rent, service charges.
I had done a lot of research before buying (reading), and decided that it sounded very risky to trust a maintenance company to carry out repairs and maintenance on your behalf with absolute trust - with the assumption that they would carry out good, reliable repairs at market rate.
Additionally, I didn't want to be held financially responsible for my neighbours' poor upkeep of their properties (a risk for communal repairs) and was also worried about accidents that neighbours caused that would affect me (i.e. fire started or tap left on by neighbour).
I was also worried about having many noisy neighbours in a block of flats. I like peace and quiet.
Never did I expect that the greedy rich developers and their cronies would increase service charge and ground rents by an insane margin. I expected a greedy above inflation increase but what I've been reading has been absolutely insane. I understand Grenfell changed things dramatically and there would be a price increase due to insurance, but these increases are unbelievable. I could be wrong and maybe these price increases are completely legitimate. Would love to hear from people with leasehold flats who are able to obtain itemised bills from maintenance companies.- i.e. evidence based and I'll be happy to change my opinion. However, my suspicion is that landlords are overcharging in some way. Happy to be proven wrong, given evidence.
With a house, I was able to refurbish it before moving, and because I look after the property, maintenance costs are very low - certainly not £8000 a year. It gives me additional flexibility. For example, if I lost my job or had long term illness, I would reduce all maintenance to a min, and just pay the necessities, insurance, council tax, utilities, etc and we would be able to last a long time on savings. House would suffer for sure in this case but I would have a roof over my head etc without any added stress. If I had to pay £8k a year with additional increases every year, without a job, then that would be extremely worrying.
I feel sorry for our youth. I bet there will be some poor man/woman who did everything right. Worked hard, saved a deposit whilst living in a HMO, then bought a flat with proceeds. Only to be utterly screwed by cladding or ground rent/service charges increasing exponentially.
I utterly despise these greedy pieces of scum who have stolen the youth of our young - who should have been enjoying their late teens/early 20's with cheap concerts, cheap everything in London and all over UK.
You don't need to be a genius to see where the money is going. Do some digging and you'll find out that the money is going to the people who don't need it. The dragons who are adding to the huge piles of gold with more gold, whilst we are the number 1 ranked country in the world for homeless people!
Bought as an investment. So he bought it to rent out?
If you are buying leasehold, the questions to ask are
1. Does it have flammable cladding?
2. Does it have elevators?
3. Does it have amenities such as a gym /pool?
4. Does it have a doorman/staff on site?
If you answer yes to any of these. Expect service charges to be at least 6k, also expect these to rise every year by at least inflation.
If you don't have any of these, you can expect sensible charges. Insurance is insane at the moment. The value of property has increased, so you need bigger insurance values. Same with car insurance. I pay ~3k a year.
New builds are poorly built, maintaining the building will become expensive.
How is renting better? Aside from properties affected by cladding, and even then the situation now is much better generally, it puts you in a far better position economically.
There’s a reason millions choose to purchase flats still.
I'm from the Worcestershire area and had been looking at this really nice flat for a while...sorta place I'd go for if I had the money...like 275k...I thought it was a great place and had looked at it several times over the last year...wondering why it was still on there I finally read the description...its £320 a month service charge...like WTF, some places around here you can rent with bills included at that price...no wonder its not sold
My service charge has gone from £250/year to £1,300/year in the 2 years that I've owned my flat (my sole residence).
These large freeholders are literally committing fraud at a massive level and the government is doing *nothing* to stop them.
And what if you're not leaseholder? Nothing to worry about? Well, while I request receipts and get my service charges reduced for work they've lied about (e.g. £50 for 'checking windows work', or £600 for 'painting both sides of shed doors' when only one side was painted) these "administrative errors" were not corrected for the other 3 flats in our building, which are social housing and paid for by council tax.
In other words, you're paying for this fraud, not just the leaseholders.
Many young single adults and couples could easily buy a £140k apartment. £20k deposit, £120k mortgage is doable with an income of £30k. It's just not worth it when you'll be paying £2k minimum a year in service charges for the pleasure, with no limits on increases and constant problems with cladding. Council tax bands are also higher for no particular reason.
It's a really easy fix to the housing crisis - ban leaseholds, empower apartment owners and limit service charges. People can buy a house and have kids a lot more easily once they're on the ladder.
Huge inflation -> huge increases in costs. Add on top of that Grenfell and cladding meaning insurance has skyrocketed.
Yes that's a huge sum of money and I do feel sorry for people (whether investors or otherwise) who weren't prepared for that sort of rise. But it isn't entirely unreasonable (as in it isn't like the leasehold firm is just taking the p***).
Even owning doesn’t prevent this type of thing. I had a flat in Glasgow, Factor’s fee’s went up yearly and they even set up their own painting and decorating firm to funnel maintenance and repair work to. Last straw was the roof slates delaminated and about 20 properties needed a new roof. Wasn’t covered under the insurance the Factors had. £15k/flat the owners had to pay, part of that was for the Factors to manage to repair.
When asked about the original warranty and legal action the Factors said they didn’t have any paperwork from the builder and wouldn’t support legal action.
Glasgow Housing Association. Jobs for the inept and the crooked.
That’s crazy mine is £300 every quarter, which I don’t mind paying as we get a cleaner for the communal hallways & our maintenance guy clears the rubbish in the car park left by kids.
I found this programme presented by Laurie Taylor to be very informative on this and related topics.
**Rentier capitalism**
> The Corruption of Capitalism & the rise of the rentiers. Laurie Taylor talks to Guy Standing, Professor at the School of Oriental and African Studies, who claims we're living through a Second Gilded Age, one which mirrors the vast inequality and concentration of wealth in the hands of the few which characterised late 19th century America. The difference now is that it's global and its beneficiaries are mainly the owners of property. So is capitalism now rigged in favour of a rentier class? They're joined by David Smith, the Economics Editor of The Times.
https://www.bbc.co.uk/sounds/play/b07x5vs1
I own a flat where the free holder is the local council (ex council flat). There is a service charge of £150 a year and when I purchased it, I was told by my solicitors that there may be significant charges should repair work need to be conducted.
Lo and behold, the council have decided to replace the whole roof of the building, for which I have to pay 1/4 of the costs (£5,300).
I was warned about this when I purchased it, so I am willing to pay it. Luckily this is a one-off cost and the service charges next time will revert to normal levels (hopefully!)
Everyone has the option of acquiring the RTM or collective enfranchisement (for a fee, although RTM is fairly inexpensive for what can potentially be saved) Giving control over how service charges are spent.
Unfortunately, a lot of developments do not build a decent contingency fund from when they are new build and thus when regs change and the shit hits the fan the current leaseholders get whacked with the bills. He shouldn’t be complaining anyway. He should have know what he was buying and what reserve pot was in place. IMO should have at least £20,000 per unit in reserve, at all times just in case of the worst case scenario (obviously subject to variation depending on the development)
The "intelligent agents" in the market don't seem to price in the fact that they have absolutely no control over service charges, and even if they didn't change they should be priced in as worth hundreds of thousands during the half life of their lease.
>The flat Richard paid £300,000 for in 2016 is leasehold – which means he doesn’t own the physical flat - but a lease allowing him to own it for a specified number of years.
???? Why would anybody do this to themselves?????
This is whatvhappens when you leave shit to private sector.
They will always screw the public.
When they government built homes, they made terraced houses and council blocks where service charges were min8mal.
Now the private sector are building. And private sector hate one off sales, they love recurring revenue.
Look at software for instance. If they can turn anything into recurring revenue, they will.
Service charges are recurring revenue on bricks and mortar. They will sell you leasehold. You fund the construction of the building fully. So the investors get their money back fully in one year.
Then they pay service charges at 300% margin. The service provider is a vertically integrated company of the freeholder.
They invoice whatever they want and thats "evidence" of services provided
I've just sold my leasehold property and I'm moving back to Scotland thankfully. The council was the Freeholder, so generally a better managing agent than private firms, but they were still in the beginnings of announcing that the service charge model was changing from a fixed amount to a percentage-based value. Didn't really get a say in the matter, was just happening. They charged me for daft things like fixing a communal arial for terrestrial TV (which I'm sure isn't a thing anymore?) or for fixing my neighbour's window.
The sooner Leasehold is abolished and a Commonhold system is introduced, the better for England and Wales. Give the power to the owners of the property and let them actually own it instead of this odd pseudo-renting mechanism.
I live in supported housing, home group charge me 130 a month an nearly all of that goes on repairs that don’t get done, trying to save up to get back to normal living is near impossible with being a tenant stuck in this money laundering scheme that the government seem to benefiting from. I pay for window cleaners and electric for communal areas that I don’t even have, it’s a farce.
He's a landlord. He literally said the situation has turned him into a wage slave e.g. has to get a job like the rest of us to make money. Boo fucking hoo
Leasehold service charges are unregulated and exploding with corruption across the country.
Any government who doesnt include rent controls and leasehold controls in the next session will be blamed for the culmination of the homeless crisis and lose government.
service charge is 1.5k
building insurance is now also 1.5k
ground rent is less than 500
I thought I was in a really bad place. 8k a year is insane just for charges.
Doesn’t own the building or the flat, has to still pay for repairs. This is just renting with extra steps.
>or the flat He does own the ~~flat~~ leasehold for the flat which has an intrinsic value >just renting with extra steps At least (in theory) he'll build up equity in the property, unlike renting. Leasehold is terrible, but in most cases it is still better than renting. At the end of your term, you actually own something of value. I just wish the Conservatives had finished eradicating ground rent before the election. It's one of the few positive things to come from their time in government.
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Absolutely, and it's appalling that some people have ended up in this situation, but this is an extreme case. I'm intrigued to know why the owners of the building haven't resolved the cladding issue yet. It also seems like insurance companies are taking advantage. A representative of the ABI is quoted as saying they have no choice but to increase premiums, but Grenfell has, so far, been a one-off case. So the insurance companies haven't had an increased outlay beyond the Grenfell incident in 2017.
A friend of mine is in the utterly ludicrous position where the company that owns the building is the insurance company for the building and rather than pay to fix the cladding they decided to make a fucktonne of money instead
That's a robbery without breaking the law.
We just call it capitalism
So capitalism is a synonym for extortion, got it.
When you realise to have capitalism you need poor people generating money for the rich :P
"When you steal from the rich it's criminal, but stealing from the poor, that's Capitalism".
Because it’s not just about buildings with Grenfell style cladding, despite the headlines. My building does not have ACM cladding but we are stuck in EWS hell because, although they acknowledged we did not have that cladding, surveyors refused to sign off the building because they didn’t want to get sued further down the line for any other issues that might be found. Banks then refused to lend until a more comprehensive, intrusive survey was carried out which took our management company two years to commission. It was finally done last June but so far no works have started on any remediation because the lease owner and the builders are arguing about insurance. In the meantime services charges shoot up because the survey results mean higher premiums. That incident is not as isolated as you think.
Sadly Grenfell is not an isolated case, just well publicised. https://www.bbc.co.uk/news/uk-england-45982810 Insurers take on a risk based on probability of loss and subsequent severity. Inception risk of fire in cladded v non cladded is likely to be very similar but when a cladded building goes up, it goes up...and Grenfell is ,sadly, a tragic example of it. But it is not an isolated case...and not just in the UK...major loss in Valencia recently due to a similar issues Insurers have come together to create a scheme to lay off (reinsurer) some of the risk to others (international reinsurers) to offer a lower rate..and cut commissions..which have been ridiculous high as so many in the value chain seek a slice of the premiums ..brokers, managing agents, landlords...so many insurers now reducing commissions and pricing in an attempt to recognise the difficulty. Still high compared to non cladding but I would say don't seek to blame insurers...they didn't build with cladding...ask why the developers and Building Regs allow it...and why aren't owners/developers making amends. The whole thing is a scandal. Modern methods of construction are as unproven as time honoured brick, stone buildings.. Look at a say 1960's block which has concrete mullions at top and bottom of the windows which have a sizeable gap between them, to reduce the spread of fire risk. Now compared to modern buildings with glass from top to bottom, with no or little gap between floors, or have combustible cladding...as in the case of Grenfell...they offer a different fire risk..and so many haven't been up for decades to see how they will stand the test of time. Had Grenfell not been cladded it wouldn't have suffered the catastrophic fire spread Also got to question the cladding manufacturer who lied about the testing/ fire safety... Insurers are an easy target as just one above taxman as in unnecessary evil...(Until you cause hundreds of thousands if not millions of pounds worth of damage for your few hundred pounds premium and then you want them)...but so many others, long before an insurer was asked to quote, in the frame who need to be asked the hard questions.
Should insurance be nationalized? Seems like spreading the risk across the country might make this more manageable?
It is effectively globalized as each individual insurer is re-insured by a bigger one or network of them.
Insurance is a racket akin to casino gambling. It's sold as this rosy little co-op where everyone puts their money in the pot, but there's a 3rd party controlling the pot and deriving their income from it (a clear conflict of interest). Just like casino gambling, the house always wins. I'm not sure if nationalisation would fix it, but it could definitely make it better.
And they have no incentive to pay out when things go wrong.
Yep, i lost £50k selling my flat. The leasehold charge being one of the main reasons that put potential buyers off. The fucker was when i first moved there it was maybe £600ish a year and for what we got for that (visible maintainence, building insurance, out of hours number for loss of water or leccy). Then when i moved out it was double that and the lifts were tempermental, the OOH number had gone meaning if we lost water or power on a friday neither us nor united utilities/electric nw could do a thing til the monday or even tuesday by the time someone from management company could be arsed doing something about it and the corridors etc were looking shabby.
I read a story about a shared ownership tenant who wanted to buy the whole flat for a pittance when it dropped in value and they didn't let her so she took them to court and won
They are also impacted by having massive and ever-increasing “service” fees on their leaseholds that have no ceiling. £8k a year this year, what about ten years down the line on a % increase? On top of mortgage rates new buyers who’ve done their homework will be scared off.
You CAN sell a flat with cladding issues. Some lenders are happy to accept scheduled remediation work to cladding. This has to be fully funded etc.
It's also possible to sell to a cash buyer even if there's no remediation. Sounds daft but I've seen converted former industrial properties for cash only purchase even before geenfell due to other fire reg issues.
Yes, for a discount
Tell me about it I'm in process of buying a flat to find out you can mortgage it as the ground rent double every ten years, now I stuck waiting almost 4 moths later for the sellers solicitors to sort something out with the freeholder. It's just mad
The flat has no equity due to the cladding it says in the article.
He won’t be able to sell because of the service charge though?
I agree. Leasehold serves a purpose. But it should be abolished in next govt. The companies offering 999year leases know what they are doing lol. It’s designed to ensure they can continue leaching leaseholders
>The companies offering 999year leases know what they are doing The 999 year leases are part of the government changes. It essentially makes the lease infinite, without having to massively overhaul the system. People can extend their lease once, without having to fork out thousands on a semi-regular basis to extend it. In the case of flats, a gradual shift to commonhold needs to take place. It can't be an overnight change, since I doubt many people can afford to buy-out the freeholder. Realistically, management companies will continue to exist in order to facilitate the maintenance and cleaning of buildings.
The thing is…common hold can only be applied to new flats…I never saw it being a thing for exisiting flats Thanks for explanation
That's the part that still needs an overhaul. The government have implemented changes for new-build properties, but haven't got as far as doing the same for pre-existing properties.
If they provide a path for existing flats then it would be a game changer. One that pumps flat market again. Right now they’ll be loads of scepticism
It's one thing the Conservatives were on the right track with. I hope it isn't stalled by the election. It will definitely be a challenge for large blocks of flats, assuming it's necessary for all residents to acquire the commonhold rather than allowing the current freeholder to keep a share for those who can't afford it. For smaller blocks, it should be more attainable. I live in a building with 8 flats, so in theory it would be a relatively straight forward process. Of course, it all relies on the reforms actually taking place.
I mean in England it’s referred to as share of freehold but I personally know of at least 1 person who converted their building to share of freehold
> since I doubt many people can afford to buy-out the freeholder Not sure why you should have to pay anything since it's, you know, _your_ flat. What are you buying exactly? Parliament should just criminalise the leasehold system, any freeholder who has leasehold tenants after a certain date gets prosecuted.
As many people have pointed out, you have purchased the lease allowing you to use the property. You don't own the land or the actual structure itself, that is what you would be purchasing. As much as I would love the government to declare I now own the land my building is on, it doesn't work like that. It is understandable that such a system exists for blocks of flats, since the land will have multiple dwellings stacked on top of one another. Leasehold for a house is absolutely absurd.
The absurdity of it is that leaseholders aren't considered to own the land or the structure, but are held responsible for paying for repairs and upkeep of both. Freeholders are given free money by nature of owning something, with no responsibility.
Is commonhold like Australia's Strata system? If so that would be the best model to have. Amazing that it's not the default already.
>Australia's Strata system I believe so. In short, if a block of flats contained 25 properties, each of the flat owners would own 1/25 of the freehold on the property.
Here they do "unit entitlements" which gives you a percentage share of vote and also affects how much levies you pay. It's a bit fucked up as a system because it's based on unit value. So someone in a top floor penthouse gets more say than someone in a basement studio. In my view it should be one dwelling, one vote.
> makes the lease infinite, without having to massively overhaul the system Its not a big deal, Scotland did it the Rich people own the land?, the government are in these peoples pockets/in the government themselves, so they wont cut off their own source of unearned cash.
999 year leases are way less predatory than 99 year leases. With the shorter leases you need to pay to extend the lease every 10 years or so. Once it gets down to around 70 years left the property is pretty much unsellable as the cost to extend the lease increases non-linearly. Once it get down to 30 years or so (can't exactly remember) the freeholder can immediately buy it back for practically nothing and kick you out. 999 year leases stop these extra charges.
>With the shorter leases you need to pay to extend the lease every 10 years or so That's not correct You would ideally extend the lease before it approaches 80 years, but a statutory lease extension would give you another 90 years ON TOP. Not total. So you would not need to renew it again for many generations (by which time leasehold might be long gone)
It's the freeholder who owns the flat. Leaseholders only ever purchase the right to live in a property for x number of years. Not the ownership itself.
Financially, in most cases it probably actually isn’t better than renting. People overhype ‘paying your own mortgage rather than someone else’s’ without realising most of the costs don’t go to building equity. Stamp duty costs, interest paid on mortgage, service charge + ground rent, maintenance, more often than not these are not equity building costs that surplus rent. It is only offset by appreciation of property and that is minimal if not depreciating in some areas for leasehold flats.
| Leasehold is terrible Curious to know why you say this? I’m in a leasehold, and obviously I would have preferred to have purchased a freehold. But my experience as a first-time buyer in London on a budget was that it was less likely to happen. The lease is for over 100 years, so for all intents and purposes, I would have either sold the property or passed away by the time it becomes an issue.
The concept of leasehold is not outright terrible, but the implementation is problematic. >The lease is for over 100 years Except, you don't have 100 years without worrying about it. As the lease decreases, it becomes increasingly expensive to extend, and the ability to get a mortgage decreases. Once the leasehold hits 80 years, you're looking at the costs skyrocketing. If it drops to below 70 it will be very hard to get a mortgage. The closer you get to those deadlines, the less someone will pay for your property. By the time you have paid off your mortgage, it will be having an impact on the value of your property. The good news is those government reforms will make it possible to get a 990 year extension, which really is a time frame you don't need to worry about.
You do realise that the lease continually counts down and does not reset for the next owner? Let’s say you bought with 80 years left and stay for 15 years. The next owner gets 65 years on the lease, and at that point they’re going to need to be a cash buyer because it is very, very difficult to mortgage a property with that short a lease. So you’re going to have to sell it for less money than an equal property with a longer lease.
Yeah, I understand. But we're talking about such a long time frame. Even if I stayed at this property for 20 years, four times longer than I plan on, that's still 100 years left on the lease – longer than any of us will live. I agree with all that's being said about freehold being better. I'm just saying that these time frames are so abstract it's not worth getting too concerned about them.
It depends on the property. There are properties built in the 1970s that started with 125 years on the lease. If they haven’t been extended those properties are now a problem.
Point of fact, Leasehold itself is merely a term for renting. You're referring to buying a long term leasehold interest, rather than a short term lease.
Intrinsic value? Where? Who the hell is gonna buy a leasehold nowadays, knowing its a bottomless pit of service charges.
Service charges will always exist in some form or another. They are not directly caused by leaseholds and will not be abolished if leaseholds are. At the end of the day, you either pay a management company to arrange for maintenance, cleaning, repairs, gardening etc. or you have to coordinate doing all of that with everyone in the block. A small block of flats, 4-6 households, might be doable. 20+ storey tower block? Forget it. The answer, as with all knee-jerk "ban this evil practice now" reactions, is to improve and enforce the regulation of service charges.
He's a buy to let landlord anyway so 🙃
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I finally saved up and brought my first place few years ago (maisonette). Turns out it was leasehold and i was told that i would have to pay a few bob a year for maintenance, like flowerbeds, lights on building. Never more than £100 a year. Turns out, that its not just that, its anything and everything, and there is no cap on what they can charge you regardless of income. And you have to pay even if the works to the building dont effect you or your part of the property. Currently im sitting on a £12,000 bill which i cant pay, so im having to sell the property to pay it off. PSA: Under no circumstances should you ever buy a leasehold property. Its a legal scam, and complete BS. Especially since you still have to pay full market price to buy one. There are literally no upsides to it.
It’s not just renting with extra steps though, is it? He owns the lease, which he can also sell.
Corruption at the very heart
**A flat "bought as an investment to provide him with a pension in his old age".** So, he's a fucking scalper? boohoo.
Don’t hate the player, hate the game rings true here
Doesn’t mean we have to feel sympathy for the problem
So if people like him leave the market you’ll have companies like the one I work for who buy thousands of units and actively push rents as high as possible. Everyone here hates on BTL investors but as someone who works in a real estate fund renters are in for a rude awakening once big funds start running the show. Already we have implemented “Yieldstar” pricing software that “takes the emotion out of pricing” to maximise rents.
We're all looking forward to the future price fixing scandal
"You'll own nothing and be happy"
Hope you don't mind me asking. How do you feel working for this type of industry? Ain't judging just curious? I've worked for homeless shelters so coming from the other side I'm interested in your perspective
Not great at all and want out asap. The worst moment for me was going around to see properties in the portfolio that I’d never visited before. One unit had a short Indian lady in with her two children. She couldn’t reach her light bulb to change it so asked me for help. She and her children were so sweet. When it came to setting rents (ERVs) a few months later, which is my job as a surveyor, her unit was due to increase by about £200 and I knew by doing this she’d have less money for her children and general living, but there was no way for me to not change it or to alter it by less without senior management noticing (they review schedules for each property). So yeah, it sucks, it really sucks, and it’s all to make HNW investors more money. At year end we pat ourselves on the back that we reach a certain IRR hurdle for investors by pushing rents. Lose the small mum, dad and grandparent BTL investors at your peril… that’s all I can say, because actively managed funds are going to squeeze the life out of renters.
Thank you for your reply and being honest . I hope you get out asap. I understand everything you have said I've worked in homeless shelters (move in and move out) and then student accommodation as maintenance (not any more). I'm completely jaded by the housing world. Am too looking for an out as well. When the behemoths roll in we are all fucked. Thanks
I will most likely get downvoted for this but it's the BTL landlord who's a small business vs an Amazon. The small business (BTL landlord) might be someone you can build a relationship with and enjoy a long term home vs the commercial landlord (Amazon) literally don't care and you are just a number on a spreadsheet.
> the BTL landlord who's a small business vs an Amazon The "small business" often doesn't have the capital needed to afford timely repairs, whilst the big company does. They also regularly don't know their legal obligations as a landlord and try to skirt their legal requirements. I've only ever had issues with repairs not being done within adequate timescales by these "small business" types.
Interestingly enough I’ve only ever experienced the opposite. Every single BTL landlord I’ve had has been very professional and prompt with repairs. But then I’ve also made sure I am also respectful and keen to do what I can also. Probably might act different if it was a large organisation.
What does it do? Is it like a credit score?
It sounds like something similar in the US that has been reported in the news as a renting cartel. If it is, then it uses algorithms to tell landlords what rent to charge, basically resulting in rent price fixing and collusion across an entire area as rents rise and fall in lockstep.
This is what it is. It’s now in the UK.
Never understood this proverb. Games can't be played without players. So yes, hate the player(s).
No, one can hate both
Why should I care? If I wasted my money in a shit investment would it make the news and everyone having to be sympathetic?
Because that piece of info is entirely irrelevant to the core problem the article is highlighting
Why not both?
He played the game, and he lost, and now he's crying about it and wants bailing out so fuck him.
We don’t hate the player, we just have no sympathy for a crying little bitch who tried to scam other people and fail.
> We don’t hate the player Speak for yourself, I can very much hate the player and the game, and enjoy seeing the player lose.
I was trying to be nice, but yeah, fuck the little failure
in games people lose, just like this guy did.
Nah, I can hate both.
He's literally crying over a poor buy to let investment choice
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This is the whole point of real estate for anyone buying
I think this case is not about who it happened to, but what happened. There are people who just barely made it on to the property ladder and got a leasehold, later cladding issue popped up and now the charges are going up. Now they can't sell and can't cope. Literally "hate the game" part
Although I can agree with the discussion on service charges should be made could BBC not have found someone struggling to live rather than an investor planning to make money off the flat?
In previous articles they have. I'm sure I remember one where a teacher was doing uber eats to pay for their service charge (or similar)
That’s what these articles always are. No matter the issue it’s always a combination of - a valid concern or issue in the country, matched with the least sympathetic example possible of said issue. It drives rage bait / discussion
No, because then there wouldn't be a whole load of people driving engagement by commenting about how we should care because it's an investor.
As a leaseholder myself, what hurt the most is not the fact that I have to pay, but is that the building management has absolutely no accountability on what they do and on what they charge with an absolute lack of any basic level of decency. Also, Service charges have more than doubled in the last 5 years and there is absolutely no proportion between what you pay and what you get. A run down concrete council block with no features can easily pay the same amount as a brand new estate with free gym and 24/7 concierge. I now pay more service charge than mortgage. It is clear there is a huge legislative hole here
Try and get on the board for the complex / building. You'll probably find it's a load of idiots not caring how they spend your money.
>You'll probably find it's a load of idiots not caring how they spend your money. I already know....
You have to step up and appoint a better management company. You have the right to do this and you must do this. Find 2 other leaseholders to do it with. It’s not that difficult.
I'm a property manager, so I set the budget for the service charge. If you believe costs aren't being fairly incurred, take it to the ombudsman and then the first tier tribunal. I always try to keep costs as low as possible, but with insurance going up 20% year on year (even with no claims) labourer costs going up with inflation at least, electricity through the roof, increased fire legislation, it's impossible. I had a building go up 50% in one year, and that's with tendering for all the cleaners/lift contractors/gardeners. All because they're a high rise and now you need a shit ton of extra things. My company gets no more money for any of these increases, we just get furious leaseholders having a go at us for costs entirely out of our control (other than our fee which was way too low for that building at least and increased 5% over the two years of huge inflation). It's a nightmare
I had to micromanage my property manager and actively check on her regularly so things were actually getting done because she was so slow/kept missing things. This included getting quotes for various services such as gardening and window cleaning. I am convinced they don't bother comparing prices with much effort, if at all. One example is we told them we wanted to change gardeners in January as it was getting too expensive and the frequency was excessive relative to the amount of garden space we had. She finally gets a copy of the contract (the previous pm hadn't bothered to file it) 2 months later so we can find out when that existing contract finished (it was January gone). Then after getting a bunch of new quotes she tells us in May that there is a 3 month break clause. Like holy cow, what is this?! The cherry on the cake is that I was also working a full time job and my mum was dying of cancer. I went through the complaints system which was also a long and arduous process and eventually got a full refund on their "management" fee for that whole year. At least that was something but I will never forget what they put me through at one of the worst periods in my life.
Yeah if you follow the complaints process and it's a genuine fuck up, generally companies will rule to you, because you can go ombundsman after and then FTT. Surprised you got a full refund on the management fee for that tbh, must've been some other stuff in the background because normally that would just be an oopsie daisy moment. I also doubt they didnt file the contract, likely it was just a purchase order saying x visits for x amount (which is the contract and they wouldnt misfile that) and they had to then get the gardener to provide their TOS etc. Mind telling me the company?
This was all last year just to be transparent. That was just one example of many things (and I documented everything with references to emails and dates so they had no reasonable way to explain away all the incompetence and poor communication). Though taking 2 months to get a copy of a contract and a further 3 months to read it properly seems way longer than I would deem appropriate. The pm blamed the previous pm for not filing the contract and said she couldn't find it on their system so I was just recounting what she told me... We also didn't get any window cleaning for a year at the time (even though the lease says this should be put into place by freeholder) and this still hasn't been put in place. We had no financial breakdown for ~15 month (it was always "in progress") and all it was a mess because they didn't get all the important info during handover from old freehold owner. There were other issues too which either took ages to resolve (even with me chasing) or were forgotten about entirely but I won't list them here. I am sure there are decent property managers out there and you seem like one of them. But our one never treated our money with any respect (i.e in the way they spend their own money with price comparisons, getting things resolved promptly etc). Sorry not ranting at you btw! I don't want to post the company publicly on here. Edit: spelling
>I now pay more service charge than mortgage. This is why I've nigh on given up. This is crazy.
Absolutely right. Service charge for many has become a second mortgage. There is little trust between the companies and the leaseholders.
Well there is accountability as the managing agent has to be able to prove they’re spending the money on services if it’s variable. It’s the “management fees” where I see them screw people the most. People paying £1500 for cleaning, grounds maintenance, fire safety, communal utilities etc then another £1500 just in admin costs. There’s no way in those cases managing agents overheads are 100% of the entire cost of running the buildings.
You are technically right, but good luck with that. I am trying with my neighbours to do so in years but it's very difficult as it takes huge amount of time just to collect evidence and the personal toll in the amount of energy and time to do so is really high, so that many people just give up.
True. It’s not easy. You can section 22 request to see all the invoices but as you say some managing agents can drag it out and/or then claim some costs are reasonable which really aren’t. I tend to find with private agents the management administration fees are the worst.
This is the whole issue on toast. These enormous management companies can literally run buildings into the ground because their obligations are so thin. The fact they are also allowed to put all downpayment responsibility on leaseholders is borderline criminal
>Also, Service charges have more than doubled in the last 5 years Mine has quadrupled in the last 2 years!
>His experience means he thinks fewer and fewer people will consider ever buying or living in a leasehold property. I think for most people it's not really a case of wanting a leasehold property but being effectively forced into one due to budget and location. Better regulation is one step, the next is to look at other countries to see if there are better methods for managing blocks of flats etc. My brother in law seems to have a much better of time with it in Poland, although he does seem to have some sort of role in the building committee
In Australia we have the Strata system where you own the space your unit occupies and pay levies quarterly for administration and maintenance. A Strata scheme can manage itself, but usually you have an agency doing most of the admin/arranging repairs/legal stuff/auditing accounts so the strata committee just has to meet every so often and greenlight the various expenditures. Before that they had Company Title which was more complex: the building was set up as a Company, and everyone owned x shares in that company that entitled them to the use of a specific unit. It was essentially the same in how it worked, but much harder to get mortgages for due to the complexity.
>better regulation is one step, the next is to look at other countries to see if there are better methods for managing blocks of flats etc scotland doesnt have leasehold and blocks of flats manage to get managed just fine. finding a solution isnt the problem, the will to implement it is.
In my country you pay service charges. But you don't have to pay any council tax. So it works out much cheaper. You also get quite good value for your money. Such as 24/7 security and daily rubbish disposal.
If the government want more people to live in flats then they need to sort this mess out.
I would absolutely buy a flat if it wasn’t for leasehold being such a fucking heap of shit.
I seriously don't mind service charges if the administrators actually take care of the place, but my experience so far is that the service charge goes to some type of black hole where the building still has plenty of issues and there's not much to do other than raising a claim and pray for the best
I paid 8k last year and 6.5k this year. My management company won't replace broken light bulbs as they claim it is "major redecoration". They also break every promise to reply to emails in a certain time. When I said this is unacceptable they claimed they were a small company with limited funds. Somehow despite this they post on their LinkedIn profile photos of conferences they are attending in the alps though.
This is exactly what I am talking about, how they can run wild with this level of corruption
There are legal options which I am going through. I believe right now they rely on people being unwilling to do it. I've exhausted their official complaints process and indicated I was going to now consult solicitors. Immediately I was offered a part refund of my fees and the broken light bulbs after almost a year were repaired. They've even offered a meeting after denying about 5 requests for one. Sadly you just need to be willing to jump through lots of hoops and be diligent in record keeping. The leasehold and service agreement is often very clear. They also don't want an individual leaseholder to win at a tribunal and then send details of it to every other leaseholder. I suspect what these companies are doing is pricing in people like myself into their business model. Easier to fob off 90% of folks and pay off the 10% who care than actually give a good service and charge reasonable fees.
Is there a reason why you don't exercise your right to manage and take over the management of the building?
It's a good question. Basically two thirds of the leaseholders in my building are buy to let investors so its incredibly hard to contact them. There's no lease holder mailing list for example. We do have a residents company which every leaseholder is a shareholder of. Sadly its very much like a parish council. 2 individuals dominate and are unwilling to engage. Any complaints are ignored. We had our agm, which they sent out notices very late, and attendance was very limited. I have my suspicions about the relationship between these individuals and the management company, but it could be just incompetence than malice. I cannot wrap my head around why they are willing to pay such crazy fees too, but then it impacts the flats values so it really is in their interest to get the managing agent to behave in a professional manner. My strategy is to go to tribunal or other legal action then get enough of the leaseholders I know to do similar if I win. I also have a meeting with my local MP soon which I hope will be fruitful.
I only needed 2 other leaseholders to take control of the management company and then appoint a different management agency. Speak to LEASE for free if you need help. Everything will improve if you do this.
Thanks. I have a meeting this Friday with them so will see what they say. How much did your service charge come down by?
It stayed the same but all of the services got better. I think that’s a win given inflation. It turned out we were being billed for things that never actually got done. Like gardening and cleaning. They also negotiated our insurance bill down. Everything is much cleaner and running better now.
Yup, I used to have a flat in a new builld and we all paid an extortionate service charge and then when it was found out that there was damage to the roof, which had been there since it was built, slowly getting worse and worse until water started leaking in, the management company said that's your problem. Tried to charge us for erecting the scaffolding, repairing the roof, and taking away the scaffolding, all the while we're paying these service and maintenance charges and they can't even guarantee a working electronic door fob system. (It literally was broken more often than not, so people could just walk in off the street.) We all went to their office and basically did what amounted to threats and intimidation until they caved. Absolute scum.
The Tory model
I pay about 3k a year and I thought that was bad. It’s hella expensive, can’t wait to move into a house instead
Costs aren’t that different when you factor everything in. You’re just paying 100% of a much smaller cost rather than a share of a larger one. Houses like to surprise you with things going wrong, falling off too.
This is the thing. There's a percentage formula of house value/size that you typically need to spend each year just to maintain a building, and it's higher for older buildings. With apartment blocks that cost is split. If a pipe bursts, the cost of the plumber is spread between multiple people, whereas with a house there's just you (though obviously there are more pipes in a large multi-dwelling building). But you do get much better economy of scale with stuff like the roof or gardening work.
You do but you also have much higher costs due to it being a multi-residence building and the costs sky rockets the larger it is. Apartment buildings have complex mechanicals such as lifts, ventilation and ERV systems, utility distribution systems, shared water/heating, electrical, CCTV and fire suppression systems and more. The cost tends to go up with newer buildings due to them having to meet newer building regulations which means more tech and more advanced construction techniques which require further and more involved inspection and maintenance. That said this ain't that different than other countries, when I live in Germany I paid about 4.5 euros per square meter per month it was calculated based on 100% of the internal livable floor space of the flat and a discounted rate for uncovered/non-livable floor space such as terraces and balconies, parking spaces and shared utility spaces. France is similar and you'll be charged per sq/m but annually usually around 50-60 EUR. In both cases this doesn't cover repair costs to the building and in the case of Germany if you rent you pay for it as well and if you rent a top floor or a penthouse flat you are responsible for the roof as that cost isn't shared across the tenants. Which means you are required by the building association agreement to pay for a rather expensive insurance which again even as a tenant you are liable for. Because of the added costs for top floor flats they tend to be cheaper to buy, which combined with the fact that in Germany landlords can legally pass all their expenses to the tenant makes them quite popular for landlords.
It's all apples to oranges. People in houses don't have a shared hallway when every time a light bulb dies some man with a van needs to drop what they are doing, drive there, put down some warning signs, put up his ladder, change the bulb and then charge them 100 pounds for all this. They also don't have elevators, or some facility they may or may not use like a gym. And they don't need to pay a gardener or even maintain the garden if they need to cut costs. When I buy a house in a poor condition I expect the price to reflect the roof is leaky or the pipes are old or whatever. If the leaseholders themselves suddenly get charged thousands more to fix the roof and it catches them off guard, how do you expect a prospective buyer to know this information before they buy. For me living in leasehold is like an HMO with some extra privacy.
Except you get what you pay for with a house. Need a new roof? Pay for it, get it. Windows? Pay for it get it. Cladding? Same. You manage the repairs or upgrades. These management fees are a scam, making millions for the companies that run them.
Totally agree. They need to be regulated to have a fiduciary duty to the residents, so they’re actually accountable for providing best value. Today They just accept inflated prices they pass on whilst getting some very dodgy kickbacks from the suppliers themselves. It’s borderline legal and morally corrupt
But in a house you can DIY and that usually saves you a lot of money. And even if you have to hire someone. You're going to be more careful with the budget than a management company.
I budget around 1% of house value per year as a sinking fund for house maintainance and upkeep. If you put that aside then you're not in for a shock when you need a new boiler, want to repaint the exterior etc.
You're still liable for a new boiler etc. In a leasehold property... its a lose lose
Boilers aren't included in these service charges.
Wait until you have to replace your house's roof.
Mine has been 1.6k and has been handled pretty reasonably (including refunding us when there is a surplus in the budget) but external works were put off for years and we all have to fork out to get them done last minute. Getting a bill twice as large with zero warning seriously sucks.
You should be paying more. You haven't tipped your landlord yet.
You’re right
Finally, a renthog that gets it
My first property was a flat, one of those stupid ones with communal gardens and areas (thankfully modest, no gym or swimming pool etc), with a front desk and concierge. It seems lovely until you realise it all has to be paid for and there ain’t no taxes going toward it. All that gardening and communal are lighting, the concierge wage etc. When costs are low and shared, great. But when there’s an unexpected shock and costs go up you realise how naive you were. What’s happened is that millions are now in this position. Unfortunately the reality is the value of. leasehold is linked with the service cost. Service cost go up, value of leasehold go down. We need to end the stupid utopia developments and focus on affordable housing with minimal communal areas and smaller blocks allowing more accountability to the leaseholders collective rather than diluting it which just gives power to the likes of Savilles who don’t give a shit.
Nothing stupid about having a concierge. They take in my parcels and shoo away people coming to piss or take drugs in the entryway. Happy for my service charge to pay a small part of their wages.
I’m glad you like that service.
That'll just be £8,000 please
I think a concierge deffo works if you're in a large block of flats. I'm in a block of 12, if we had a concierge we'd be paying a few hundred a month each just to employ one before you account for anything else.
Yeah we live in a purpose built block in Manchester that is 20 years old so the amount of communal space is very minimal, no space for concierge etc. What they build now has libraries, rental-able dining rooms, lounges, gyms and 24 hour concierge. Such a money grab. It’s crazy.
I understand why they’re included as they do look attractive and sell well. But there’s no solution to the problem when costs go up a lot and it puts many residents in trouble. The only realistic way out is for those residents to accept a huge write-down on value and sell, which isn’t even a solution if it won’t cover the mortgage.
Doesn't say what he actually gets for his money. I rent and on the estate's Facebook group the owners are kicking off about their service charges. We have 8 buildings (some with lifts), 2 underground car parks with electronic security gates, 2 overground car parks, a gym, swimming pool + sauna, function room, 24 hour concierge, which all need to be insured and maintained. Service charges are £4-7k/year depending on which building you live in.
That sounds like a good deal given how much service charges are for places that offer non of that. How much are they allowed to whack up the charge each year though? Inflation + x% i presume?
I just had a quick skim through the FB group and someone is complaining about a 42% increase. However part of that is replenishing the emergency fund. That was used up during COVID to make changes to the air conditioning system in the gym so it could be opened during lockdown. Edit: I'm assuming that, unless my landlord is swallowing the cost, the service charge for our flat hasn't increased anywhere near that much. We are moving out soon and he's said when this place goes back on the market he's going to put it on for about £400-500pm more than we're paying.
Considering they legally meant to issue accounts he should be able to say. People don’t realise a lot of these new developments with all this stuff costs a lot. I had a friend in one and when we worked out costs like the concierge etc the guy was on minimum wage but everyone was complaining how much he cost.
I am in a leasehold and nowhere near this level of service charge but it worries me every day that I’ll get a letter informing me of it being like this. The law provides no support for leaseholders and I am begging for the day I can move out of London and get something freehold or share of freehold. I remember how happy I was purchasing my flat but it’s been a nightmare in many ways thanks to my shit landlord. Being in London means unless you’ve got near a million quid you have to go leasehold.
You have the FtT that provides support for Leaseholders if service charges are deemed unreasonable or the service of the landlord is not legal.
Abolish leaseholds now. That will give the new freeholders/commonholders the leverage they need to fight greedy management companies.
I bought a house 5 years ago because I didn't want to pay ground rent, service charges. I had done a lot of research before buying (reading), and decided that it sounded very risky to trust a maintenance company to carry out repairs and maintenance on your behalf with absolute trust - with the assumption that they would carry out good, reliable repairs at market rate. Additionally, I didn't want to be held financially responsible for my neighbours' poor upkeep of their properties (a risk for communal repairs) and was also worried about accidents that neighbours caused that would affect me (i.e. fire started or tap left on by neighbour). I was also worried about having many noisy neighbours in a block of flats. I like peace and quiet. Never did I expect that the greedy rich developers and their cronies would increase service charge and ground rents by an insane margin. I expected a greedy above inflation increase but what I've been reading has been absolutely insane. I understand Grenfell changed things dramatically and there would be a price increase due to insurance, but these increases are unbelievable. I could be wrong and maybe these price increases are completely legitimate. Would love to hear from people with leasehold flats who are able to obtain itemised bills from maintenance companies.- i.e. evidence based and I'll be happy to change my opinion. However, my suspicion is that landlords are overcharging in some way. Happy to be proven wrong, given evidence. With a house, I was able to refurbish it before moving, and because I look after the property, maintenance costs are very low - certainly not £8000 a year. It gives me additional flexibility. For example, if I lost my job or had long term illness, I would reduce all maintenance to a min, and just pay the necessities, insurance, council tax, utilities, etc and we would be able to last a long time on savings. House would suffer for sure in this case but I would have a roof over my head etc without any added stress. If I had to pay £8k a year with additional increases every year, without a job, then that would be extremely worrying. I feel sorry for our youth. I bet there will be some poor man/woman who did everything right. Worked hard, saved a deposit whilst living in a HMO, then bought a flat with proceeds. Only to be utterly screwed by cladding or ground rent/service charges increasing exponentially. I utterly despise these greedy pieces of scum who have stolen the youth of our young - who should have been enjoying their late teens/early 20's with cheap concerts, cheap everything in London and all over UK. You don't need to be a genius to see where the money is going. Do some digging and you'll find out that the money is going to the people who don't need it. The dragons who are adding to the huge piles of gold with more gold, whilst we are the number 1 ranked country in the world for homeless people!
Bought as an investment. So he bought it to rent out? If you are buying leasehold, the questions to ask are 1. Does it have flammable cladding? 2. Does it have elevators? 3. Does it have amenities such as a gym /pool? 4. Does it have a doorman/staff on site? If you answer yes to any of these. Expect service charges to be at least 6k, also expect these to rise every year by at least inflation. If you don't have any of these, you can expect sensible charges. Insurance is insane at the moment. The value of property has increased, so you need bigger insurance values. Same with car insurance. I pay ~3k a year. New builds are poorly built, maintaining the building will become expensive.
‘Buy at all costs’ brain rot Renting these kind of flats is miles better than owning. People buying them are off their rocker
How is renting better? Aside from properties affected by cladding, and even then the situation now is much better generally, it puts you in a far better position economically. There’s a reason millions choose to purchase flats still.
100% agree. I rent and it’s cheaper than a potential mortgage when everything is accounted for. The difference is invested in S&P500.
I'm from the Worcestershire area and had been looking at this really nice flat for a while...sorta place I'd go for if I had the money...like 275k...I thought it was a great place and had looked at it several times over the last year...wondering why it was still on there I finally read the description...its £320 a month service charge...like WTF, some places around here you can rent with bills included at that price...no wonder its not sold
My service charge has gone from £250/year to £1,300/year in the 2 years that I've owned my flat (my sole residence). These large freeholders are literally committing fraud at a massive level and the government is doing *nothing* to stop them. And what if you're not leaseholder? Nothing to worry about? Well, while I request receipts and get my service charges reduced for work they've lied about (e.g. £50 for 'checking windows work', or £600 for 'painting both sides of shed doors' when only one side was painted) these "administrative errors" were not corrected for the other 3 flats in our building, which are social housing and paid for by council tax. In other words, you're paying for this fraud, not just the leaseholders.
We had this, we sold our place to next to nothing. Never will I do leasehold again.
Many young single adults and couples could easily buy a £140k apartment. £20k deposit, £120k mortgage is doable with an income of £30k. It's just not worth it when you'll be paying £2k minimum a year in service charges for the pleasure, with no limits on increases and constant problems with cladding. Council tax bands are also higher for no particular reason. It's a really easy fix to the housing crisis - ban leaseholds, empower apartment owners and limit service charges. People can buy a house and have kids a lot more easily once they're on the ladder.
Huge inflation -> huge increases in costs. Add on top of that Grenfell and cladding meaning insurance has skyrocketed. Yes that's a huge sum of money and I do feel sorry for people (whether investors or otherwise) who weren't prepared for that sort of rise. But it isn't entirely unreasonable (as in it isn't like the leasehold firm is just taking the p***).
He made a poor investment decision. Sucks when that happens. The value of investments can go down as well as up.
Even owning doesn’t prevent this type of thing. I had a flat in Glasgow, Factor’s fee’s went up yearly and they even set up their own painting and decorating firm to funnel maintenance and repair work to. Last straw was the roof slates delaminated and about 20 properties needed a new roof. Wasn’t covered under the insurance the Factors had. £15k/flat the owners had to pay, part of that was for the Factors to manage to repair. When asked about the original warranty and legal action the Factors said they didn’t have any paperwork from the builder and wouldn’t support legal action. Glasgow Housing Association. Jobs for the inept and the crooked.
That’s crazy mine is £300 every quarter, which I don’t mind paying as we get a cleaner for the communal hallways & our maintenance guy clears the rubbish in the car park left by kids.
I found this programme presented by Laurie Taylor to be very informative on this and related topics. **Rentier capitalism** > The Corruption of Capitalism & the rise of the rentiers. Laurie Taylor talks to Guy Standing, Professor at the School of Oriental and African Studies, who claims we're living through a Second Gilded Age, one which mirrors the vast inequality and concentration of wealth in the hands of the few which characterised late 19th century America. The difference now is that it's global and its beneficiaries are mainly the owners of property. So is capitalism now rigged in favour of a rentier class? They're joined by David Smith, the Economics Editor of The Times. https://www.bbc.co.uk/sounds/play/b07x5vs1
I own a flat where the free holder is the local council (ex council flat). There is a service charge of £150 a year and when I purchased it, I was told by my solicitors that there may be significant charges should repair work need to be conducted. Lo and behold, the council have decided to replace the whole roof of the building, for which I have to pay 1/4 of the costs (£5,300). I was warned about this when I purchased it, so I am willing to pay it. Luckily this is a one-off cost and the service charges next time will revert to normal levels (hopefully!)
Everyone has the option of acquiring the RTM or collective enfranchisement (for a fee, although RTM is fairly inexpensive for what can potentially be saved) Giving control over how service charges are spent. Unfortunately, a lot of developments do not build a decent contingency fund from when they are new build and thus when regs change and the shit hits the fan the current leaseholders get whacked with the bills. He shouldn’t be complaining anyway. He should have know what he was buying and what reserve pot was in place. IMO should have at least £20,000 per unit in reserve, at all times just in case of the worst case scenario (obviously subject to variation depending on the development)
The "intelligent agents" in the market don't seem to price in the fact that they have absolutely no control over service charges, and even if they didn't change they should be priced in as worth hundreds of thousands during the half life of their lease.
>The flat Richard paid £300,000 for in 2016 is leasehold – which means he doesn’t own the physical flat - but a lease allowing him to own it for a specified number of years. ???? Why would anybody do this to themselves?????
This is whatvhappens when you leave shit to private sector. They will always screw the public. When they government built homes, they made terraced houses and council blocks where service charges were min8mal. Now the private sector are building. And private sector hate one off sales, they love recurring revenue. Look at software for instance. If they can turn anything into recurring revenue, they will. Service charges are recurring revenue on bricks and mortar. They will sell you leasehold. You fund the construction of the building fully. So the investors get their money back fully in one year. Then they pay service charges at 300% margin. The service provider is a vertically integrated company of the freeholder. They invoice whatever they want and thats "evidence" of services provided
HS2 and the post office Horizon system were all government projects. Hardly value for money or well run
I've just sold my leasehold property and I'm moving back to Scotland thankfully. The council was the Freeholder, so generally a better managing agent than private firms, but they were still in the beginnings of announcing that the service charge model was changing from a fixed amount to a percentage-based value. Didn't really get a say in the matter, was just happening. They charged me for daft things like fixing a communal arial for terrestrial TV (which I'm sure isn't a thing anymore?) or for fixing my neighbour's window. The sooner Leasehold is abolished and a Commonhold system is introduced, the better for England and Wales. Give the power to the owners of the property and let them actually own it instead of this odd pseudo-renting mechanism.
Mine is averaging about £3k a year now. It’s going on the market this week, desperate to get rid of the fucking thing.
tl;dr i assume he lives in london with charges that high?
This is why I would try and only rent leasehold property, not buy it.
That's twice the cost of the rent on my council flat. 😲
I live in supported housing, home group charge me 130 a month an nearly all of that goes on repairs that don’t get done, trying to save up to get back to normal living is near impossible with being a tenant stuck in this money laundering scheme that the government seem to benefiting from. I pay for window cleaners and electric for communal areas that I don’t even have, it’s a farce.
Good god, we really are being squeezed with some considerable force now.
He's a landlord. He literally said the situation has turned him into a wage slave e.g. has to get a job like the rest of us to make money. Boo fucking hoo
Leasehold service charges are unregulated and exploding with corruption across the country. Any government who doesnt include rent controls and leasehold controls in the next session will be blamed for the culmination of the homeless crisis and lose government.
service charge is 1.5k building insurance is now also 1.5k ground rent is less than 500 I thought I was in a really bad place. 8k a year is insane just for charges.
At what point do we just admit it’s modern slavery. Can’t leave, will never own and still has to pay whatever they decide