Thursday, 05 March 2015

Landlords urged to be more open with leaseholders

Private property management associations should work with social landlords to improve the way they consult about leasehold service charges in London.

That is one of a number of recommendations in a report published today by the London Assembly’s planning and housing committee.

The report, Highly charged, suggests ways transparency of service charges can be improved to prevent leaseholders being hit by unexpected bills.

It estimates Londoners pay £500 million a year in service charges.

Assembly member Steve O’Connell, in a foreword to the report, says: ‘While many express dissatisfaction with aspects of the system, and a few allege malpractice, others offer harrowing accounts from ordinary people, with limited financial means, that have received bills for tens of thousands of pounds for unexpected works.

‘When buying leasehold property many people are not aware of the rights and obligations that come with this form of tenure and so for many the complexity of the service charge regime comes as a shock.’

The report recommends that the Royal Institute of Chartered Surveyors, the Association of Residential Managing Agents and the Association of Retirement Housing Managers should review if the effective guidance on service charges is being implemented.

It says if necessary the private sector should work with the ‘best performing’ social landlords to adopt best practice on guidance.

Key recommendations

  • The mayor of London takes into account the financial effect on leaseholders when granting funding for housing improvements
  • The Leasehold Valuation Tribunal provides more mediation and advice to resolve disputes and review how its rulings are enforced
  • The government reviews barriers to right to manage in London
  • The government reviews whether it is possible to make mediation a compulsory first step in the dispute resolution process.

Readers' comments (9)

  • What about Tenants paying these Excessive Service Charges they pricing us out of London under Social Cleansing and believe some of these RSL ripping off the Local Authority the Taxpayers paying part of full Housing Benefit's because no one looking into these Excessive Services Charges that Tenants getting charged

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  • Chris

    Sssh, you will upset the general dehumanisation of all things tenant if you start informing people that tenants pay these service charges also, just like 'real' human beings do!

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  • Jimmy Cricket

    ..and vice versa. There are some RP landlords that could learn from the private sector also. I would suggest that those that perform the best are specialist set-ups, and within the RP sector, those that have a seperate leasehold arm. The processes, accounting, management style and consultative approaches are a world apart from the rented sector - however ARMA and ARHM both have excellent best practice guides.

    Junior, sorry, Colemankim14 - you will find that the H/B dept will regularly look at what is included in a s/c and will determine reasonableness before deciding if they will pay all or only part of the total cost.

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  • C'mon sense

    How do they do this determine reasonableness before deciding. We had three separate tenant in the same size property all paying different amounts for the last three years and not ever our landlord didn't pick up on this. I just again send off another year of mistakes

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  • Also I looking on the Form which is a Form 4B Section 13 (2) of the Housing Act 1988
    its only given the local authority housing benefit section a breakdown of
    Rent amount
    Water amount
    Service charge amount

    No full breakdown

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  • After nearly 8 years at the forefront of fighting for leaseholders to get a better deal from their landlord in South London that were formerly local authority homes and now managed by an RSL, Im pleased I was able to sell my flat back to my landlord and get out and buy a house. I would never recommend buying leasehold property to anyone as it is a license to print money for useless incompetent landlords that have something of the night about them ! Its never going to change and the political will power is not there to make it ! Leasehold/ Housing Legislation is stacked against leaseholders as is the Leasehold Valuation Tribunal and the Housing Ombudsman.

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  • Chris

    I agree with Stephen - indeed, if you look at all the new schemes being built in the Capital you will not fail to notice how the majority have been designed to maximise service charges, with token communal facility for which maximum charge may be later applied.

    I will not name the well known RSL concerned, but when I worked in their development department blocks were designed with service charge potential as a growth income from years 3 onwards. The only balancing act was the move towards mixed tenure where the service charge to tenants had to be seen to be consistent and so dampened the potential maximum charge levied.

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  • ‘When buying leasehold property many people are not aware of the rights and obligations that come with this form of tenure and so for many the complexity of the service charge regime comes as a shock.’

    HOW COME? the lease obligations are clear-you pay for improvements that increase the value of your property- what planet were these people on prior to purchase- did they think RSL landlords were models of efficiency? or were never going to replace the roof etc
    BUYER BEWARE- RTBLL read the bloodly lease and/or get advice before you sign up- unless of course you think the gravy train days are back again

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  • Leaseholders - even ones who exercised the RTB and got huge discounts - made a grown up decsion. Of coursse landlords have to recover their costs and if you are in a large block of flats this will be expensive. It is expensive because large modern buildings have a lot of complex kit in them and old buildings need updating and refurbishment.

    RSLs DO NOT make profits from service charges and spend alot of time trying to keep costs down.

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