Four Simple Leaseholder Tips

Last week I spoke to a leaseholder who said "after my experience as a leaseholder I'm never going to buy a leasehold flat again. Never." He had such a miserable experience with high service charges and a dodgy managing agent he decided never to do it again.

I too had a similar experience. Now, however, I am an expert in the field and run my own leasehold property management company. I decided I wanted to help him, and the many like him. I want leaseholders to understand their rights and show them how a basic understanding of leasehold law can make all the difference.

A bit about my experience

I bought my first leasehold flat ten years ago. I remember receiving my first service charge bill and wondering what it all meant. It talked about utility charges, communal maintenance, insurance, ground rent and other mysteries. At the bottom was a pound sign followed by a big number. Like everyone I don't object to paying bills - but only when I'm clear about where my money's going. Services were poor. The managing agent didn't call back. It was a miserable experience.

My conveyancer hadn't taken the time to explain leaseholder service charges. All I knew was I had a mortgage commitment to meet every month plus all the other costs of living. I didn't know my rights so I just paid the charges. I wish I had known then what I know now.

So, in a bid to help leaseholders, I've produced four actionable tips that will help any leaseholder seek redress.

Tip #1 Service charges must be "reasonable"

Section 19 of the Landlord and Tenant Act 1985 requires that 'relevant costs' that form service charges must be reasonably incurred. In essence this is saying landlords cannot profit from their service charges. If you believe your service charges are unreasonable - dispute them. Quote the Act.

Tip #2 The Right To Manage

Under the Commonhold and Leasehold Reform Act 2002 (CLARA) leaseholders have the Right To Manage. Leaseholders can join together to form a company, the Right To Manage Company, to forcibly take the management responsibilities from their landlord. They don't have to prove their managing agent has been incompetent.

Having the Right To Manage puts leaseholders in the driving seat. Leaseholders can hire and fire their managing agent and appoint their own contractors. There are plenty of online tools to check if you have the Right To Manage. Go and check and get the leasehold services you deserve.

Tip #3 Buy Your Freehold

Whether you live in a converted house with just two blocks or a 60 unit block of flats the Leasehold reform Act 1993 gives leaseholders the right to buy their freehold. But why buy the freehold? There are some very strong reason you should consider it.

•     It adds value to your flat Most surveyors add at least 1% to a flat's value where there is a share of freehold. If the lease was particularly short they may well add more. Getting an idea about the increased value is free. Just get a valuation from your local estate agent and ask them what they think it would be worth if you owned the freehold. Chances are the increased value will outweigh the costs of buying the freehold.
•     Freedom from your freeholder (landlord) So no more over overcharging. Plus you have all the control when you own a share of the freehold. You still need to pay for services like maintenance, cleaning, and gardening, but you get to select the contractors. And buying the freehold means you effectively get a lease extension thrown in.

Note: The importance of the number 80... if you do decide to buy your freehold and your lease has a bit over 80 years to run - hurry up. As soon as the lease drops below 80 years you'll have to pay marriage value. I won't explain it now - it's boring - but trust me when I say this - landlords lie awake praying their leaseholders let the lease slip below 80 years. So they can get their hands on a lot more of your cash.

Tip #4 Change your property management agents

You may already have the Right To Manage or own a share of freehold. If you're having a bad time my advice is bring in new management. Be sure to go through a beauty parade to make sure you get the right agent for your block. Get at least three property management companies to present to you. Make sure you get 'the right fit'.

Make sure you compare apples with apples. To ensure consistency ask the following questions:

•     What are your fees?
•     What's your charge for overseeing major works (roofing, external painting etc.)?
•     Do you take insurance commissions?
•     Do you have an approved contractor list?
•     Where are you based?
•     Do you offer Company Secretarial facilities?
•     Will you attend and minute our meetings? Will you charge extra to attend?
•     Can we see your service charges collection policies, procedures and charges?
•     How do we terminate if we're unhappy?

Follow these four tips. Get informed. Get the management service to which you aspire.

Leaseholders we understand your issues. We've been there too.

Use our services and expertise to get the managing agent performance to which you aspire.

By delivering premium communal areas we enhance the value of your property.

Here at http://www.yourhomepm.co.uk we deliver customer focused property management services for leaseholders in London and Essex.