Owners of new flats forced to fork out £2,800 a year in property management fees as one in three firms admit to raising costs

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Nearly one-third of property management companies have raised their management fees in the recent past. On average, management fees are now costing some owners of new flats £2,777 every year and those who own older flats are now paying around £1,863. This is something that those venturing into rental property ownership need to think about. These fees are used to handle repairs to communal parts of the flat such as the drainage system and the roof. The same fees can be used to set up funds to be later used for major renovations in addition to paying gardeners, landscapers etc. Flats that come with added amenities such as gyms will incur higher management fees.
Paying management fees can make what looks like a profitable venture on paper less attractive which is why any potential landlord has to think carefully about it. Service charges may also differ depending on the type of property. Some management companies will charge a flat fee while others will factor in the number of bedrooms or square footage. Service charges can sometimes be hidden and if these aren’t capped they can escalate beyond your reach. In London, service charges range from £1.55 to £7 per square foot.
With such high costs, it is essential that you get the desired quality of service from your property management company. If you feel like your property manager isn’t giving you what you deserve, there are several courses for recourse.
1. Buy the freehold: As a leaseholder, you have the right to purchase the freehold but in order to do this, at least half of the other leaseholders in the flat must agree to buy a share.
2. Right to manage application: If you can’t buy the freehold you can choose to do a right to manage application to the first tier tribunal so they can handle issues touching on the management of the property. When you can’t pay for lawyers, this method will provide you with a friendlier alternative and it’s also part of the court system. This will provide you with the right to manage the flat. You’ll need to establish a company to handle the management but in actual sense, you’ll just be hiring another management company that will provide you with more control over the management of the property. The freeholder can fight the application but it should still not cost more than £1,000 per flat.
3. The simplest route, however, may be to simply ask the tribunal to confirm whether the service charges are reasonable. This will negate the need for a solicitor and after the investigations, the management charges may be reduced or you could even end up getting paid back some money. Management companies have certain responsibilities that they must handle under the terms of the lease. Visit www.lease-advice.org to get more information and download the application for the lease advisory service.

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