The Service Charge Trap...

Increasing numbers of people who own or part-own flats in the UK have faced/ are facing enormous hikes to their service charges.

In one extreme example of an individual who owns a 30% share of a housing association property, their service charge was £4200 a year, but this will rise to £16000 this year. (Source)

The managing agent, JAR, says this amount is due to 'major works' needing to be carried out, in addition to the usual maintenance of communal areas and insurance.

Another individual, who part-bought through ONE Housing has seen their £94 a month service charge bill increase to almost £650 a month, an increase of over 500%.

To make matters worse, a lot of people caught in this service charge trap are getting letters asking them for top up money because their previous service charges were estimates, some have had bills of several thousands of pounds.

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Trapped in their properties...

Anyone with such MASSIVE service charge obligations is basically fucked. No one in their right mind is going to buy a property with a service charge of £7000 a year, it's just a total liability.

THat's unless they want to practically give their flats away.

I feel for these people as this used to be me, but I got out!

My own service charge before I sold my flat was £3K a year, and that was back in 2017. I dread to think what it is now. There was an issue with our biomass heating system needing HUGE sums to rectify, it wouldn't surprise me if that has now been passed on to whoever bought it.

Are these MASSIVE service charges justifiable...?

In many of the above cases IF the victims can get their hands on the service charge breakdown, they will find unjustifiable sums being spent on things like lightbulbs and cleaning.

But much of the cost will be legit, insurance is apparently a big hitter, although I don't get why it's so much more in flats compared to houses...?

My suspicion is not much care is taken when it comes to getting cheap prices for major works either, and probably not for day to day maintenance either, once these management companies have got you, they've got you, they don't give a toss.

But to my mind this is TOTALLy out of hand, just common sense tells you no one should be paying £7K a year for insuring and maintaining a property, something is VERY wrong here.

We need some legislation to bring these property management companies to heal.

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wow, that is a lot. everything is going up like there is no tomorrow. is scary!

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That sounds like a really bad legalised skam! It doesn't surprise me though and is why I am glad we have a house without crazy surcharges!


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There's another similar one to watch out for; service charges on retirement flats.

Selling a retirement flat can be a slow process because they come with so many strings attached - usually that they can only be sold to single people over a certain age (usually 55+), can't be sub-let, and the owner of the block gets a % of sale price.

But the real issue is the service charges. Because they provide wardens, lifts, emergency alerts, social facilities etc, the service charges are relatively steep.

If a relative living in one dies, the company owning the block will usually expect the service fee to continue to be paid. It is often due even while probate is still going through, which can take anything up to 12 months during which time the flat can't even be put on the market. Deferring the charge (even with interest) is not usually allowed.

This becomes the responsibility of whoever is the executor of the will, often a relative. So it lumbers the relative with an additional monthly expense of £200-£400 depending on the charge. While this can be reclaimed eventually from the value of the estate, if the executor can't pay, it will adversely affect their credit rating.

Personally I think it's morally wrong that someone can get their credit rating wrecked due to a contract they didn't take out any may not benefit from.

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Do the owners have any voice in the housing associations?

The closest that I can think of here in the US are home owners associations (HOA) or Condominium Associations, which can be nasty sometimes. But they are usually run by elected officers who must also be owners. They will have regularly scheduled meetings to discuss and decide on expenses. Sometimes the owners will volunteer to do work in order to reduce the cost to the association.

Is this similar to the housing associations?

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It's different hear - HAs are like another layer of management! They part own the properties in the above cases but the part owners are liable for all the charges!

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I have a friend who once was my boss, he lives in the UK and always used to tell me how expensive it was and this was 7 years ago, it's like they need ppl to go homeless and restart a new home market, some prices don't make sense now days and it's globally, down here food keeps going up every month

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same here rent is 50% up in 4 years or something and food prices are each month eating up more budget

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It is my flat/house, what is the service charge? 🙄

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It's the charge to flat owners to manage the block of flats you live in, somebody needs to take care of the communal public places like communal gardens, staircase lighting, general cleaning and maintenance, pay the building insurance etc.

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More of the "you will own nothing, and you will be happy" plot.

People cannot deal with 100% increases very well.
Banks require you to have insurance. Insurance goes up faster than your income, you can no longer afford your house.

This is happening in Florida.
Florida is becoming unlivable because of insurance rate hikes. If you can even get insurance.

People and small banks are going to lose everything.

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I bought my property freehold for about the same price as that annual service charge!

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My parents own some flats that they let out and they have had to pay a lot for various building works. I get that there will be maintenance required, especially on older buildings, but it has to be reasonable.

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At least they are just for income, I guess they can sell them if those fees get too much! I don't think the companies who do the works care too much about getting the lowest quotes!

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