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Homeowners have felt the sting of rising living costs, skyrocketing mortgage rates, and, more recently, ‘fleecehold’ property management fees.
With these fees often charged to maintain communal areas like roads and gardens, many homeowners are frustrated with over-inflated fees, or maintenance standards that don’t reflect the sum of money gathered from residents.
In one news feature, leaseholders complain about their building management collecting over £9000 a year to cut the grass twice yearly.
So what are your rights if you’re unhappy with your property management fees?
What are property management fees?
Property management fees, also known as service charges or maintenance costs, are associated with the upkeep of shared or communal areas within a development. They are particularly common if you live in a flat, or on a newbuild estate.
Common examples of such fees include:
- Maintenance of communal gardens
- Repairs to shared driveways or roads
- Cleaning and lighting of shared spaces
- Security services or CCTV systems
- Administrative costs for the managing agent
For leaseholders, these charges are typically outlined in your lease.
An increasing number of freeholders these days will also need to pay property management fees under the guise of ‘estate rent charges’.
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Why are property management fees a controversial topic?
For many homeowners, property management fees are a source of frustration. The term ‘fleecehold’ has been popularised in recent months, rising from property owners unhappy with:
- Disproportionately high charges and imposed fees that appear unjustified or inflated.
- A lack of transparency and difficulties in getting a clear breakdown of costs.
- Subpar service where, despite paying fees, some owners report poor maintenance or unfulfilled promises.
- Restrictive contracts where many homeowners feel trapped by agreements that favour the managing company.
Often these fleecehold arrangements charge freeholders in particular fees without statutory protections, which has exacerbated these concerns.
And in some cases, these rising management fees also lead to higher rental costs as landlords seek to cushion rising costs.
What are your rights as a homeowner in the UK?
Your rights depend on whether you own a leasehold or freehold property.
Leaseholders
Under British law, leaseholders have certain protections relating to service charges:
Reasonableness: Managing agents can only demand reasonable charges. If you feel the fees are excessive, you can challenge them.
Right to a summary: Leaseholders can request a summary of how service charges are calculated and spent.
Tribunal access: Leaseholders can take disputes to the First-tier Tribunal (Property Chamber) if negotiations fail.
Freeholders
Freeholders, especially those subject to estate rent charges, currently have fewer statutory protections. However, you can:
Request transparency: You’re entitled to a clear breakdown of charges.
Challenge costs in court: Though not ideal, legal action can be taken if charges seem unreasonable or terms are breached.
What can you do if you’re unhappy with property management fees?
If you feel your property management fees are unfair or services are inadequate, follow these steps:
1. Review your agreement
Carefully examine your lease or transfer deed to understand the basis of the charges. Look for:
- Clauses detailing what the fees cover
- Your rights to question or dispute charges
2. Request a breakdown of costs
Managing agents should provide a clear breakdown of how fees are calculated. For leaseholders, this is a statutory right and you can make a request at any time.
Landlords must comply with any requests for a summary of costs within 1 month of the request being made. Freeholders can also request this information, although there’s no automatic legal obligation for agents to comply.
Once you receive the summary breakdown, if you are a leaseholder, you are entitled to inspect any receipts and accounts from the last accounting year. Again, landlords have 1 month in which to provide this information.
3. Communicate with the managing agent
Raise your concerns directly with the managing agent. Document your grievances, be specific about the issues, and request a written response.
4. Join forces with neighbours
If others in your development share your concerns, consider forming a residents’ association. A collective voice often has more influence when challenging management practices.
5. Take legal action or seek mediation
If negotiations fail:
- Leaseholders can approach the First-tier Tribunal.
- Freeholders may need to explore legal action through the courts. Mediation is also a potential route to resolve disputes without escalating costs.
6. Report unfair practices
You can report managing agents to professional bodies like the Property Ombudsman, Property Redress, or the Royal Institution of Chartered Surveyors (RICS) depending on what they’re members of.
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Leasehold enfranchisement and the Right to Manage
If you own a leasehold property, and you remain unhappy with your property management fees, you might consider enfranchisement or exercising your Right to Manage. These two legal remedies allow leaseholders greater control over property management fees, but are more involved and can come with high costs.
Leasehold enfranchisement
This process involves purchasing the freehold of your property, either individually or collectively with other leaseholders. Owning the freehold may allow you to take control of management decisions and eliminate or reduce reliance on an external managing agent.
However, enfranchisement can be complex and costly. You may also still need to pay estate rent charges even if you do purchase your leasehold.
Right to Manage
Leaseholders of flats have a legal right to form a Right to Manage company under the Commonhold and Leasehold Reform Act 2002. This allows you to take over management responsibilities from the current managing agent or freeholder without having to purchase the freehold.
While the process doesn’t require proving mismanagement, it involves legal and administrative costs, and time to carry out the actual property management activities.
Proposed reforms and the future of property management fees
The UK government has acknowledged concerns about property management practices, particularly fleecehold arrangements. The Leasehold and Freehold Reform Act 2024 received royal assent on 24 May 2024, however the act still needs to pass further legislative measures.
Further discussions are set to take place in 2025. But, so far the reforms promise to provide freeholders with:
- The right to challenge unreasonable estate charges and work standards
- Apply to the First-tier Tribunal to appoint a different estate management company if it is failing
- Improved transparency of estate charges and the right to receive key information regularly
- Transparency in administration charges and the right to challenge unreasonable charges
- The requirement for freeholders or developers who directly manage an estate to belong to a redress scheme
Take control of your property management fees
While property management fees are a necessary part of maintaining shared spaces, they shouldn’t be a source of stress or financial strain. By understanding your rights, raising concerns, and taking collective action where necessary, you can push for fairness and transparency.
Our property team at Britton and Time are here to help. Whether you’re disputing charges, interpreting lease agreements, or dealing with estate rent charges, we provide clear advice tailored to your needs. Contact us today on 0203 007 5500 for more information on how we can assist.
How can Britton and Time Solicitors help?
We know how stressful and costly property disputes can be. That’s why our initial consultations with our solicitors offer you:
- Unlimited time to go through the details of your case and ask any questions
- An overview of your legal standpoint and your available options
- A precise time and fee estimate for your case
To arrange your initial consultation with one of our solicitors, simply call us on 0203 007 5500.
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