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The monthly charge on my leasehold flat has gone up by more than £60 a month – what are my rights?
Every Monday we put your financial dilemmas or consumer disputes to industry experts. You can find out how to submit yours at the bottom of this post.
This week, Sky News reader SBwrry asks…
“I own a flat in a block where the developer contracted a company to manage the communal facilities. The first year the monthly charge was £149 per month. From April they will increase the monthly charge to £216 per month. What rights do I have to challenge this increase?”
Mark Chick, senior partner at Bishop and Sewell law firm, picks up the first half of this one…
Firstly, we need to understand whether this is a shared ownership property or not.
However, assuming the lease has a service charge, and that the common facilities form part of the costs which are recoverable under the terms of the lease, then the leaseholder would have the right to challenge the costs in the first-tier tribunal.
In accordance with the provisions of the Housing Act 1985, service charges must be “reasonable” and you have the right to bring a challenge.
In this situation, the leaseholder would need to pay their own costs of going to tribunal and therefore it may make sense to act collectively; if the tribunal did order the service charge is “unreasonable” and should be reduced, this should benefit all those that pay it.
But the first step is to write to the freeholder or manager querying why the increase has been levied, and also to review carefully the provisions of the lease to ensure these are costs which they can legitimately pass on to you as the flat owners.
The Money team’s Katie Williams has looked at another avenue you could explore…
Leaseholders in a block of flats can take over management of the building under a process introduced in 2002 called right to manage (RTM).
The leaseholders have to set up a RTM company in order to be able to take over management duties. It can be done without the permission of the landlord, but they will have a right to be a part of the company. They’ll also have the option to dispute the claim if they think the RTM company isn’t entitled to manage the building.
The RTM process can be used to take back control of a poorly managed block, but flat owners don’t need to prove mismanagement to exercise their right.
There are some conditions that have to be met before management can be taken over:
- The building must be self contained and include at least two flats;
- At least two-thirds of the flats in the building have to be leasehold;
- At least 75% of the building must be residential;
- At least half the leaseholders must participate, or all if the building consists of two flats only.
The advantage of right to manage is that you have greater control over the cost of running the building which could lead to big savings – but a potential disadvantage is that it could be time-consuming and stressful in the long run.
This feature is not intended as financial advice – the aim is to give an overview of the things you should think about. Submit your dilemma or consumer dispute, leaving your name and where in the country you are, in the form above or by emailing [email protected] with the subject line “Money blog”. Alternatively, WhatsApp us here.
