A flat owner risks losing her home due to an unpaid service charge of £5,500

A flat owner has spoken of her pain at the prospect of losing her flat due to an unpaid service charge of £5,499.80.

Nicola Hawkins bought her flat in Romford in 2022 for £215,000. It is housed in a block that was converted in 2018.

Last year, she paid the service fee in full, but continues to dispute the charge with her so-called managing agent Court of first instance.

Miss Hawkins and her neighbors won £9,783.18 in court, but says she has yet to receive any of the money from the managing agent.

Nicola Hawkins bought her flat in Romford in 2022 for £215,000 and now risks losing it amid unpaid service charges of £5,499.80

Nicola Hawkins bought her flat in Romford in 2022 for £215,000 and now risks losing it amid unpaid service charges of £5,499.80

So, this year she decided not to pay the full service charge because she believed the managing agent still owed her money and was spending too much on works being carried out on the premises.

Speaking to MailOnline Property and This is Money, Miss Hawkins said: ‘I told them you still had £1,273.19 of my money – my share of the win – and then paid another £1,000 towards my latest service charge bill.’

“This was more than it was worth, but I wanted to appear reasonable when we get back to the lower court.

“I am being bullied and claiming that they cannot take my apartment for not paying my services when I already won a case against them in the first instance court.”

At the point of exchange, Miss Hawkins discovered that the service charge was much higher than initially anticipated

At the point of exchange, Miss Hawkins discovered that the service charge was much higher than initially anticipated

She continued, explaining the impact this had on her health, saying: “I have been receiving treatment for the past year, and this situation is destroying my life and consuming a lot of my time.”

“We are desperate to move but we can’t. No one is going to buy a flat above a shop with a £5,500 service charge.

She bought the flat for £215,000, and her current mortgage repayments are £685 a month, having taken out her home loan before mortgage rates increased.

“The estate agent initially told me the service charge was £600 a year, then later during the buying process my mortgage broker said the figure was £1,200 a year,” she said. It was a shock but manageable with £100 a month.

“At the point of exchange, I found out the service fee was £1,900 a year. The solicitor said he had forgotten to send me the administration package. That firm of solicitors has since folded.

This year, Miss Hawkins decided not to pay the full service charge and paid £1,000

This year, Miss Hawkins decided not to pay the full service charge and paid £1,000

At this point, Miss Hawkins says she felt pressured to complete the sale because she feared she would lose her deposit.

“I was sending £35,000 to the solicitor as a deposit when I first saw that figure of £1,900. I was going to lose my deposit so I went ahead with the project and moved on.

“I spoke to other apartment owners and discovered that there were major problems with the roof that were not disclosed to me during the sale as the seller had already paid £1,400 separately for the service charge to repair the roof.

“Then I get a service charge later in the year, and the roof repairs charge is included in it.

“So the £5,500 is an overspend on last year, plus the estimate for 2024, including electricity and sewerage cabinet repairs that we didn’t even know had happened.”

It comes as Draft law reforming the lease and freehold system It is currently passing through Parliament.

The draft law aims to achieve this Cheaper and easier for more tenants To extend the lease, buy the freehold and take over management of the building, as well as ban the sale of new leasehold homes.

Service charges on a rented apartment are separate from ground rents.

Ground rent is a regular payment made to the freeholder of a leasehold property as a condition of the lease. Ground rent applies exclusively to leasehold properties.

These are the fees applied to leasing the land on which the rented property is located. It does not cover the costs of any additional services that the freeholder may provide – these are covered within the service fees.

Increases in service fees It has become more of a problem in recent years. As the government begins to clamp down on freehold and developers’ other revenue streams such as ground rents, service charges have become a proven way for investors to make money.

If a flat owner refuses to pay the service charge, they risk losing their home through a process known as forfeiture.

Forfeiture occurs when the landlord exercises his right to regain peaceful possession against the tenant’s wishes.

This usually happens when the tenant violates a term of the lease or breaches a covenant.

Have you experienced a sudden spike in service fees recently? keep in touch: [email protected]

What is legal advice regarding unpaid service fees?

Joanna Hill, a tenancy law expert at Irwin Mitchell, provided legal advice on the unpaid service charges. Here’s what she said:

A service charge is a way for the landlord to recoup its costs in providing certain services (as stipulated in your lease) to the building.

The service fee usually covers costs such as general maintenance, lifts and cleaning of common areas.

The landlord or their managing agent will then calculate the amount owed by each apartment in the building and request the allocated amount from each tenant.

It is important to note that the managing agent works on behalf of the landlord to manage and collect the service charge and therefore does not have the power to take your apartment from you.

Service charges are variable in nature to take into account rises in service costs in line with inflation and allow for the level of repair work the building will require to vary from year to year.

However, service fees must be charged reasonably, and business must be conducted to a reasonable standard.

We suggest you start by checking which £5,500 service charge relates to when it was incurred.

If it is for services incurred before you purchased the apartment and this amount was not disclosed to you, you may have a claim against the seller.

Please check your transfer papers to check as we note you were expecting £600 per annum.

If the £5,500 is for fees incurred after you have taken possession, you should consider: (i) does the lease allow the landlord to charge you for this type of service; (2) If yes, were these costs reasonably incurred?

If the costs of works to the building are recoverable through the tenancy, the landlord must consult with you if this cost estimate is more than £250 for any contributing tenant (or seek relief to do so).

There is also a time limit for submitting Service Charge requests, and if the cost is incurred more than 18 months before the request is fulfilled, you will not be liable.

It is important that you do not admit that the amount is owed if you wish to dispute the order.

In order for your landlord to seek possession of your apartment, they will need to use a process called forfeiture.

A landlord cannot forfeit your tenancy based on non-payment of the service charge without first serving notice under section 146 of the Property Act 1925 setting out the breach.

For an ‘unacceptable’ service charge, your landlord will need to go to the First-tier Tribunal (Property Chamber) to determine the amount payable and you have been in breach before they can serve a Section 146 notice in reliance on it.

These legal obstacles make it difficult for a landlord to take possession of your apartment.

Therefore our advice is not to panic and seek legal advice if you think an order may not be properly payable.

If the amount is due, we suggest you contact your landlord or managing agent to try to agree a reasonable payment plan.

(tags for translation) Daily Mail

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