Why Is My Service Charge Much More Expensive Than My Neighboring Block?
The difficulty with comparing service charge costs between individual blocks of flats could be explained by considering in several factors. The method of calculation may vary for each and every block in accordance with any variance in leasehold arrangements. The property size, type, height, condition, age, service facilities, plant, lifts, equipment and lease particulars can all have a very significant relation to the constant maintenance and running costs. In addition, taking care and repairs background sinking fund provision might also vary considerably making comparisons of the degree of freehold service charges very difficult. Not only will the freehold property and its particular condition be unique, nevertheless the property services necessary in managing and maintaining the building could be quite different along with the requirements in the property lease.
In summary you ought not compare apples with oranges and in many cases you'll probably find explanations for any two landlord service charges being different. Here are some possible explanations which might be applicable in comparing one typical block management scenario with another.
(i) You may possess a more comprehensive list of services funded through your service charge (e.g. site manager or porter, all windows cleaned, lifts, car parking, entry systems etc.).
(ii) Does your neighbour's service charge include sinking funds to allow for future repairs and maintenance? If not, their charge will probably fluctuate dramatically from year to year as large expenditure falls due. Large items may be charged for separately as and when they arise being additional to any regular landlord service charge.
(iii) How many individual flats have been in the neighbouring building? Smaller blocks of flats with less units tend to possess a higher maintenance charge per unit. Overall maintenance prices are often disproportionately higher priced in which the expense is shared by fewer lessees. If service charges are spread around across many flats it follows the proportion per leaseholder will likely be less. For example, a roof repair provided for only 6 flats is costly in comparison to the same facility provided for 32.
(iv) Do you have extensive gardens or possibly your block a mature building? If so, your service charge may be adversely affected. The presence of asbestos as an example can use a dramatic effect on the expenses of any works being carried out.
(v) What size can be your apartment? The method of service charge calculation should be stated in the exact property lease. It could be apportioned by mention of the floor division of your apartment. If you own a two bedroom apartment and your friend owns a studio apartment next the can make a significant difference. Some leases simply share all costs equally this also can clearly alter the portion payable quite significantly from block to a higher.
(vi) The location and access arrangements to undertake works can also have an affect on service charge. Where service contractors cannot erect scaffold, or carry out their works in the cost effective manner an extension cord and expenses will result. Difficulties with materials deliveries, parking, craneage, disposal of rubbish etc will all have an affect whereas simple standard procedures without any special requirements won't attract a premium.
Having checked your lease as well as the other matters described above, you might still consider you happen to be being overcharged. As a long suffering leaseholder there are many of solutions. Why not consider asking your landlord to employ a professionally qualified property managing agent. If you insist that a firm is appointed that is Regulated by RICS (The Royal Institution of Chartered Surveyors) the service standards they have to work to are set outside in the RICS Code. This Code serves to shield clients from unscrupulous practices and therefore requires auditing and protection measures are put in place being be subject to regular inspection through the institution.
Other options could also be ready to accept disgruntled leaseholders including taking up their Right to Manage or indeed Enfranchisement the location where the freehold can be purchased by the majority with the lessees. However these alternatives aren't always possible and may take some time requiring the co-operation of others to initiate. Whatever option is can be found, I trust that the above will serve like a useful point of reference to help people who feel they could be subject to overcharging.
I propose to further explore the main topic of Enfranchisement as well as the Leaseholders' Right to manage (RTM) in the separate article because this particular rights are very important and warrant specific attention and explanation.
It is needless to say prudent to look into all with the above matters either before or before getting a leasehold property in the block of flats. Generally the management and maintenance costs will tend to be reflected in the service charge associated with a property a duration of years. A conveyancing solicitor should request these records in their investigation and check using the freehold block management agent. Please be aware however how the opportunity and procedures involved will likely vary on location. The procedures described give full attention to England and Wales and they are therefore not applicable to other countries.
Additional service charge advice and support might be from an excellent block management agent providing residential freehold property services for blocks of flats. Readers are encouraged to search for block management agent services which can be benchmarked towards the quality standards set out by The Royal Institution of Chartered Surveyors (RICS). see this page or management agents benchmark their residence services towards the RICS Service Charge Residential Management Code. which has been approved from the housing minister in 2009.
RICS Chartered Surveyors which are 'Regulated by RICS' must adhere to this code that is rigorously enforced by the RICS which does regular inspections of these member firms.
Regulation also secures a great many other benefits for freehold management companies, landlords and leaseholders. Service charge monies has to be safely managed in the secure ring fenced client checking account with funds being insured and subject to regular checking and bank reconciliation. In addition the services provided must attain the required standards Typical block management agent duties are covered under the RICS Service Charge Code which could usually include some from the following:-
Effective Procedures for Property Maintenance and Repairs,
Responding to Leaseholder Enquiries from Solicitors on Property Sales,
All Aspects of Service Charges comprising Financial Control, Expenditure, Budgeting, Service Charge & Ground Rent Collection and Accounting,
Regular Client Reporting to Freehold Management Companies, Residents, Lessees, RTM's or Landlords.
Independent Lease Management
Control and Compliance Procedures in Upholding the Covenants from the Property Lease and
Company Secretary Services in Assisting Freehold, RTM and Property Management Companies with Essential Management Company Administration.