I fully understand why the level of service charges paid by leaseholders can on occasions be a major issue but until somebody comes up with a better approach people have to go over it.
Ask yourself this question, how much would you pay to secure the value of what is probably the single most expensive purchase you will make? I suspect people who own freehold houses find themselves in a position where they have to spend money maintaining the outside of their property. They will certainly be required to insure their property. Some people might employ a gardener or cleaner, somebody to clean their windows and if a roof tile slips they will pay somebody to fix it. This costs money. The major difference between freehold and leasehold is the freeholder deals with these things as and when they occur. With leasehold management these things have to be budgeted for in advance.
So what of the increase in service charges? Contrary to the popular opinion of the leasehold layperson, leasehold management is far from easy. The legislation involved is, at times draconian, on other occasions varied and complex. Managing agents do not simply come up with a figure that will benefit their own coffers. Through their own experiences and knowledge, they expertly put together a breakdown of forthcoming expenses which in most cases is agreed with the overriding freeholder or the residents themselves as Directors of the development's Management Company. It will include regular ongoing maintenance costs, potentially along with agents fees, accountant's fees, other professional expenses, health and safety reports and so on. When you are reliant on third party companies to conduct the various required works you are also exposed to their charges. Such charges are likely to increase year on year simply through normal business practice or an increase in overheads. Now consider the newer, prestigious blocks in London. Many of these have added luxuries such as swimming pools, concierge, cinemas or gyms. The upkeep involved there does not come cheaply, neither does staffing them.
Services charges can be high but nobody can charge a leaseholder for something that their lease does not allow. There are methods of recourse people can take if that happened. Don't lets point the finger at the landlords or managing agents who in the main do an exemplary job but more towards the lack of understanding and education surrounding leasehold. If we help people to learn what leasehold is, what a lease is and what a leaseholder's obligations are then they can make a more informed decision prior to purchase.
Research, by Direct Line for Business, found that property service charges have jumped substantially, with a third of management companies increasing fees in the past two years. The average service charge, or fees leaseholders pay to cover their share of the overall building maintenance, now stands at £1,863 for all properties in Britain and £2,777 for new-builds.