Industry News

40 per cent of leaseholders unclear what their service charge pays for


esearch has found the majority of leasehold homeowners consider service charges unfair, with a lack of transparency around

how they are spent also a prominent issue. Along with ground rents, service charges will be

paid by most leaseholders to cover the cost of maintaining the building in which their property is located. They can also be charged by the owner of a building for any work required to maintain the value of the property. While there is no cap on what can be charged, the owner or landlord does have to prove the cost is justified in line with any work carried out. Generally, service charges will cover the ongoing

upkeep of a building with multiple residences, including but not limited to the cleaning of communal areas, heating the building, staff costs such as a concierge, building insurance, maintenance and repairs and groundskeeping. This cost can vary regionally and Keller’s

research shows that the average service charge will cost leasehold homeowners in excess of a thousand pounds in London (£1,900), the South East (£1,301), the East of England (£1,182) and the South West (£1,121), while in the North East it averages only around £650. So while service charges can be hefty they do play an important role in maintaining

Do you think it’s fair to charge service charges for the upkeep of leasehold homes?

Answer No Yes

Respondents 74% 26%

leasehold homes and it is perhaps surprising that Keller Williams found that 74 per cent of leasehold homeowners do not think it is fair to charge them. However, the research also shows this could be

down to how their money is spent, rather than the requirement of paying to upkeep the building itself. A huge 96 per cent of leasehold homeowners said they would like to see more transparency on how their service is calculated and why they are paying the required sum. CEO of Keller Williams UK, Ben Taylor,

commented: “Service charges are an integral part of maintaining the wider community areas and

Do you think there should be more transparency on how service charges are charged and spent?

Answer Yes No

Respondents 96% 4%

standards of living in many leasehold buildings and so it’s quite surprising that so many leasehold homeowners believe them to be unfair. “Of course, this attitude seems to stem from

a lack of transparency on how they are spent, rather than having to pay them in the first place. I think many appreciate that their service charge could increase should there be a substantial maintenance job required. However, this friction point between leaseholder and freeholder could be greatly reduced by placing an emphasis on educating and informing leaseholds as to how their money is being spent.”

Housing Review for 2021 highlights huge fall in number of social rented homes

The supply of social rented homes – council housing and housing association homes let at genuinely affordable ‘social’ rents – has fallen by almost 210,000 in England between 2012 and 2020, according to the Chartered Institute of Housing’s annual UK Housing Review 2021. Despite 70,000 new social rented homes being

built, over 280,000 have either been sold, converted to higher rents, or demolished since April 2012, creating a net loss of 209,351. The two biggest reasons for this being right to buy sales (121,000) and conversions of letting to higher (‘affordable’) rents (116,000). The review warns that the position is likely to get

worse due to the pandemic. Just 10,531 affordable homes of all types were started under grant-funded programmes in the first half of 2020/21, compared with 17,980 for the equivalent period in 2019/20. The Government has promised 32,000 new social

rented homes outside London in the next five years, but this is just 4,000 more than in the previous five years and will not replace future losses through Right to Buy sales.

Gavin Smart, chief executive of the Chartered

Institute of Housing (CIH) said: “The Review shows the drastic effects that policy

changes over the past few years have had on the supply of homes at lower ‘social’ rents. CIH has called for the investment needed to build 90,000 homes per year at social rents to address the backlog of housing need that has built up. It has also asked the Government to suspend Right to Buy to help deal with the housing crisis, which the pandemic has only made worse.” As in previous years, the UK Housing Review

features chapters on a variety of housing-related issues written by leading analysts. It contains statistics and analysis about housing, households, and welfare benefits across the UK and internationally, making it the prime source of information and analysis for all concerned with housing policy and finance. Mark Stephens, professor of urban studies at the

University of Glasgow and one of the Review’s main authors said: “Our work shows that only 11 per cent of new ‘affordable’ homes built in England are at

12 | HMM June/July 2021 |

genuinely affordable social rents, compared with nearly 70 per cent in Scotland and over 80 per cent in Wales. “In contrast to England, Scotland’s social rented

stock has grown by 25,000 over the last five years. Scotland and Wales have both halted the Right to Buy. The Review makes clear that building social rented homes addresses the most urgent housing needs and is the best use of public money.”

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