A flat owner has told of her pain at the prospect of losing her flat due to an unpaid service charge of £5,499.80.
Nicola Hawkins bought her Romford flat in 2022 for £215,000. It is in a block that was converted in 2018.
Last year, she paid her service charge in full, but went on to dispute the charge with her managing agent in what is known as a First Tier Tribunal.
Miss Hawkins and her neighbours won £9,783.18 at the tribunal, but says she has yet to receive any of the money from the managing agent.
Nicola Hawkins bought her Romford flat in 2022 for £215,000 and now risks losing it amid an unpaid £5,499.80 service charge
So this year, she decided not to pay the service charge in full as she believed the managing agent still owed her money and was overspending on works being carried out in the block.
Speaking to MailOnline Property and This is Money, Miss Hawkins said: ‘I told them that you still have £1,273.19 of my money – which was my share of the win – and then I paid another £1,000 towards my latest service charge bill.
‘This was more than they were worth, but I wanted to look reasonable when we go back to the First Tier Tribunal.
‘I am being bullied and argue that they can’t take my flat for not paying my service when I already have won a case against them at the First Tier Tribunal.’
At the point of exchange, Miss Hawkins found out the service charge was much higher than initially expected
She went on to explain that the impact it was having on her health, saying: ‘I have been in therapy for the past year and this situation is ruining life and consuming so much of my time.’
‘We are desperate to move but we can’t. No-one is going to buy a flat above a shop with a £5,500 service charge on it.’
She bought the flat for £215,000 and her current mortgage payments are £685 a month, having secured the home loan before mortgage rates increased.
She said: ‘I was initially told by the estate agent that the service charge was £600 a year and then later during the purchase, my mortgage broker said the figure was £1,200 a year. It was a shock but manageable at £100 a month.
‘At the point of exchange, I found out the service charge was £1,900 a year. The solicitor said he had forgotten to send me the management pack. That firm of solicitors has since folded.’
This year, Miss Hawkins has decided not to pay the service charge in full and has paid £1,000
At this point, Miss Hawkins says she felt under pressure to complete the sale as she feared she may lose her deposit.
‘I was sending £35,000 to the solicitor as my deposit, when I first saw that £1,900 figure. I was going to lose my deposit and so I continued to completion and moved in.
‘I got talking to the other flat owners and find out there has been major problems with the roof that were not disclosed to me during the sale as my vendor has already paid £1,400 separately from the service charge for the roof repairs.
‘And then I get a service charge later in the year and the charges for the roof repairs are on it.
‘So the £5,500 is the overspend from last year, plus the estimate for 2024, including repairs for an electricity cupboard and drainage that we didn’t even know had happened.’
It comes as the Leasehold and Freehold Reform Bill is currently going through Parliament.
The Bill aims to make it cheaper and easier for more leaseholders to extend their lease, buy their freehold and take over management of their building as well as ban the sale of new leasehold houses.
Service charges on a leasehold flat are separate to ground rents.
A ground rent is a regular payment made to a freeholder of a leasehold property as a condition of the lease. Ground rent exclusively applies to leasehold properties.
It is the charge applied for renting out the land on which the leasehold property sits. It does not cover the costs of any additional services that the freeholder might provide – these are covered under service charges.
Increases in service charges have become more of an issue in recent years. As the Government begins to clamp down on other freehold and developer revenue streams such as ground rents, service charges are a proven way for investors to make money.
If a flat owner refuses to pay their service charge, they can risk losing their home through a process known as forfeiture.
Forfeiture occurs when the landlord exercises their right to regain peaceable possession against the wishes of the tenant.
This is usually where the tenant has breached a condition of the lease or has breached a covenant.
Have you had a shock rise in your service charge in recent times? Get in touch: email@example.com