‘It’s the worst decision of my life,’ says furious homeowner after his flat service charges double to £8,000 a year
A FURIOUS homeowner says his flat service charges have doubled to £8,000 a year.
Richard Moore had purchased the leasehold property in Croydon, South London, for £300,000 in 2016 as an investment to provide him with a pension in his old age.
However, he now feels like “I’m being robbed”, adding it was “the worst decision of my life”.
A leasehold means he owns the flat for a specified number of years but doesn’t own the building or land it’s built on – which is belongs to the freeholder.
He added that issues with the building’s cladding also renders his flat effectively worthless unless it’s sorted.
The managing agent says the increase is due to the roof needing repairing, though the flats are less than a decade old, he claims.
It comes after reforms became law on Friday estimated to help five million leasehold property owners in England and Wales.
A 990-year lease on renewal will be standard, while extensions will be cheaper and more straightforward.
However, a vow to cap ground rents on leasehold flats, impacting around five million desperate homeowners, was thrown to the waste side.
A damning report by MPs had found leasehold homeowners had been left “trapped in unsellable and unmortgageable homes”.
“We have got above-inflation increases in service charges and that comes as no surprise to any leaseholders,” The Property Institute’s (TPI) Andrew Bulmer told the BBC today.
The TPI – a trade body for managing agents – says service charges have risen to more than 40% in five years.
But only 4% in the last year.
Mr Bulmer continued: “Some service charges have gone up a moderate amount, but there are some, especially those in tall and complex buildings that are difficult to insure, where the service charges have rocketed and those individuals will certainly be hurting.”
However, he is adamant “margins are tight” for managing agents and fees to cover their own admin has not seen above-inflation rises.
He believes the new legislation should have seen proper regulation, including penalties for agents.
TPI data suggests the largest factor driving up service charges are buildings insurance premiums, which are up 92% in five years.
Insurers argue they have no option following the Grenfell Tower fire and resultant building safety crisis.
The new laws also restrict insurance brokers’ ability to charge large commissions for writing policies.
Leasehold and rental reforms ditched ahead of election
Several Bills were rammed through on Friday as part of the “wash up” process before parliament closed ahead of the election on July 4.
These included compensation for victims of the Post Office and infected blood scandals.
However, the PM sparked fury as he ditched the 2019 Tory manifesto promise to ban no-fault evictions.
The move will leave around 12 million private tenants vulnerable to being kicked out of their home for no reason.
And a vow to cap ground rents on leasehold flats, impacting around five million desperate homeowners, was thrown to the waste side.
While Michael Gove‘s pledge to cap ground rents was abandoned, some reforms to home ownership made it through the wash up.
There will now be a ban on new-build houses operating as a leasehold.
And existing flat leaseholders will be granted the ability to extend their lease by 990 years, take control of their service charges and block management with enfranchisement.
Harry Scoffin, spokesperson for the Free Leaseholders campaign, said: “Millions of leaseholders, including Conservative voters, will be devastated by this news.
“The Big Freeholders are laughing all the way to the bank.
“A Conservative 2019 manifesto pledge to peppercorn ground rents scrapped at the last minute. But will Labour in power go where the Tories have ultimately failed?”
Mervyn Skeet from the Association of British Insurers told the BBC while Government figures show cladding issues have been fixed, this is only to “life safety” standard, but insurers have to go further.
“We need to assess the resilience of the building, price for the cost of the whole building being lost,” he said.
Insurers – many of who refused to provide cover for tower blocks after Grenfell – have launched a scheme to better share the risk of the most dangerous blocks yet to be repaired.
The End Our Cladding Scandal campaign claims there are thousands of such buildings.
Richard’s flat is among the unremediated with cladding issues.
He said he’s “not the only cladding hostage” in the UK.
PM Rishi Sunak sparked fury on Friday as he ditched the 2019 Tory manifesto promise to ban no-fault evictions.
The move will leave around 12 million private tenants vulnerable to being kicked out of their home for no reason.
It was among the long-promised laws shelved hours before parliament shuts down for the general election campaign.
Several Bills were rammed through in time as part of the “wash up” process, including compensation for victims of the Post Office and infected blood scandals.