Who’s Affected?
It is largely assumed that it is only leasehold property owners that have to pay service charges to property management companies, but this is certainly not the case.
It would appear that since the year 2000 any new build developments that have been built are no longer becoming the responsibility of the local council, as planning permission is only granted on the condition of a Section 106 agreement.
This means that mixed developments where there have been leasehold and freehold properties built. Home-owners are required to pay service charges to property management companies, who have been appointed by the developers to maintain private roads, common areas, communal areas and other services.
Leaseholder and freeholder service charges continue to increase year after year (subject to the property management company) – without any justification and a reduction in services being provided.
However, there are other residents being exploited even further, namely retirement property owners.
Owners of retirement properties have proved that they are being exploited by contractual small print, whereby hidden charges have been written into the properties lease, so that on the sale and transfer of the property – the management company are entitled to up to 1% of the property value.
Therefore, if you are considering buying a new home, we strongly recommends that you undertake due diligence in terms of understanding if there is a property management company associated to the property and what the charges / services are like.
TTAS are currently campaigning to the Government to regulate this industry and try to prevent local councils from granting Section 106 Agreements, as it is resulting in home-owners being taken advantage of.
