Property Owners' Pockets Hit As Service Charges Soar
We've been approached by several disgruntled property owners in recent months, all unhappy with the increased service charges they're being made to pay on their Cardiff Bay apartments. Costs at developments such as Century Wharf, Prospect Place and Victoria Wharf have all been on the rise of late and the owners we've spoken to tell us they've seen nothing to justify the higher charges which are paid for the upkeep of communal hallways, car parks and any garden areas, amongst other things.
One Victoria Wharf owner, who purchased his property as a buy-to-let investment four years ago, paid £50 a month at the time of buying and now pays £130 a month – working out at £1,560 each year. Similarly, a leaseholder occupying his one-bedroom apartment in Century Wharf is paying £260 a month, amounting to a sum of £3,120 per annum.
As well as being better value for money, leaseholders and residents may feel it’s beneficial to have a locally-based company looking after their property. They’re often more accessible and provide a personal service, as opposed to the national companies managing developments up and down the country.
But whatever the reason for changing management companies, owners need to make sure they’ve done their homework before embarking on the challenge. The internet has a wealth of information and some may be surprised at what they find. Management companies tend to have a habit of keeping any maintenance work in-house by instructing it to their relative companies and/or friends, meaning the cost may not be all that competitive. It certainly raises question marks over the tendering process involved.
One option available to leaseholders is to go down the ‘Right to Manage’ path. The scheme is a right for leaseholders to force the transfer of the landlord’s management and take responsibility for the management of their block themselves. The process is relatively simple and the landlord’s consent is not required, nor is any order of court. However, there are important issues to consider and a substantial amount of work to be done before service of the notice if the takeover of management is to be successful. More information on the path can be found here.
A recent Dispatches documentary aired on Channel 4 illustrated just some of the problems facing owners. The programme, titled ‘Property Nightmare: The Truth About Leasehold’, was shown on 20th August 2012 and featured complaints from leaseholders whose charges have rocketed by 46% in the last two years. On the plus side, their research showed that exercising the ‘Right to Manage’ can pay off - documenting a 30% average saving on service charge expenditure.
We’re aware of at least two Cardiff Bay developments that have been talking about switching management companies for quite some time now. However, unless there are two or three owners dedicated to directing proceedings, the talk will remain just that and will proceed no further.
The information contained within this article was correct at the date of publishing and is not guaranteed to remain correct in the present day.
