The Service Charge Trap - And How RTM + Freeholdr Can Help You Escape It!

With the UK government considering the banning of leasehold properties. Thought we should discuss the problems we have with service charges. Should we take the plunge of moving to Right to Manage in preparation for these changes for those already in a leaseholder agreement?

The Problem With Service Charges:

Service Charges are the bane of any leaseholders existence. If you're a leaseholder in the UK, you know all about service charges. These are the fees that keep your communal areas clean, bins collected, and security running — but too often they’re overpriced and underdelivered. But everyone has the same issues!

Lack of Transparency:

One of the biggest gripes is figuring out what you're actually paying for. Service charges can cover everything from cleaning and gardening to major repairs. But often, the breakdown of these costs isn't crystal clear. You might get a bill with little explanation, leaving you wondering if you're getting your money's worth. They might hire ridiculously expensive suppliers, they might inflate charges, and keep giving themselves a pay rise even though they are cutting the services they are providing. There’s a sense of lack of segregation of duties.

Rising Costs:

Service charges can shoot up over time, sometimes without much notice. This could be down to inflation, unexpected repairs, or changes in management. For leaseholders, these rising costs can be tough to plan for, especially if you're juggling other financial commitments.

Disputes and Delays:

It's not uncommon to have disagreements over service charges. You might feel some charges are unjustified or that the work done doesn't match the cost. Sorting these disputes can be a hassle and often needs legal advice. Plus, delays in essential repairs can add to the frustration, as you keep paying for services that aren't being delivered. My building had to go through five iterations of disputes to the service charge bill and we still felt a lack of clarity when paying the bill in the end.

Limited Control :

As a leaseholder, you don't have much say in how service charges are managed. Decisions are usually made by the freeholder or managing agent, and you might feel your concerns aren't being heard. This lack of control can be particularly annoying if you think costs could be cut or services improved.

What Can You Do? Despite these challenges, there are steps you can take to get a better handle on service charges:

⦁ Request Detailed Statements: Ask for a clear breakdown of charges to see what you're paying for.

⦁ Engage with Management: Attend meetings and speak up. The more involved you are, the more chance you have to influence decisions.

⦁ Seek Legal Advice: If disputes crop up, consider consulting a solicitor who knows leasehold law. ⦁ Join Forces: Connect with other leaseholders to share experiences and strategies. There's strength in numbers when tackling common issues.

⦁ Consider RTM: Look into moving to Right to Manage to gain more control over service charges and building management.

Moving to Right to Manage One way to tackle these issues is through Right to Manage (RTM). This lets leaseholders take control of their building's management, including service charges. By forming an RTM company, you and your fellow leaseholders can decide how your building is maintained and who manages it. This can lead to more transparency, competitive pricing, and better service quality.

Understanding Right to Manage(RTM):

RTM is a legal right for leaseholders to take over their building's management without proving any fault on the current management's part. It involves forming an RTM company and meeting certain criteria, like having a majority of leaseholders on board. Once set up, the RTM company can appoint its own managing agents, negotiate contracts, and oversee maintenance work. This empowers leaseholders to ensure service charges are fair and reflect the building's actual needs.

Introducing Freeholdr.co.uk:

To make moving to Right to Manage simpler, we're developing Freeholdr—an app designed to streamline every step. Freeholdr will guide you through forming an RTM company, managing communications with fellow leaseholders, and handling the legal bits. Down the line, it'll also offer property management features (Even removing the need for a managing agent!), helping you oversee services, repairs and costs with ease. With Freeholdr, you can 'Live like a freeholder', taking control of your building's management to ensure transparency and efficiency. Keep an eye out for updates and get ready to transform your leaseholder experience.

Navigating service charges can be tricky, but by staying informed and proactive, you can better manage the financial and emotional impact. Remember, you're not alone in this—many leaseholders face similar challenges, and there are resources available to help you along the way. We’re launching very soon, Join us and take the plunge into Right to Manage.