We see quite a few misconceptions when it comes to leasehold properties. Some of the most common are briefly described below.
As a leaseholder, you don’t own the bricks and mortar of the flat, nor do you own the land on which it is built. You have bought a lease, which entitles you to rent the property for a certain amount of time, i.e. 99 years, 125 years, or whatever. That lease is the rule book for the tenancy and dictates what you can and can’t do in the flat and at the building, what your landlord must do and not do, the services which must be provided, and the amount you must pay for those services. So, most of the time, the property manager can tell you what to do … or stop doing.
Managing the flat is actually usually the job of a letting agent not the managing agent. A property manager manages the building and its surroundings on behalf of the Freeholder / Landlord.
The service charges paid to the managing agent includes all of the expenditure at the block, not just the management fee for managing the building. The vast majority of what is paid in service charges covers the actual costs incurred in providing services at the building, such as; cleaning, maintenance, insurance, utilities, gardening, lifts, cyclical maintenance, etc.
This is a common leasehold misconception.
As mentioned above, the Landlord’s and Managing Agent’s responsibilities usually stop at the front door of the flat. They are responsible for the building and its surroundings – not the interior of the flats, nor the contents of flats. Your washing machine is your own personal property and it is, therefore, your responsibility to repair or replace it.
Service charges cover the actual costs incurred in maintaining the building and providing the service at the building. There is no profit – and equally, there should be no loss. 100% of what is expended is recovered from the leaseholders via service charges. Communal living means you’re “in the club” and being a member of that club includes a collective responsibility for the shared costs. There is no ‘pot of gold’ kept by the managing agent from which money can be taken to write off your share.
As mentioned above, you bought the lease for the flat – and thus acquired the exclusive right to live in the flat (or rent it out to a sub-tenant perhaps) and to have use of the communal areas. The structure of the building and common parts need to be maintained and the services need to be provided and the resulting expenditure is recovered via service charges. The landlord retains the obligation to maintain these areas but also has the right to recover the costs incurred via service charges. The lease for your flat will tell you precisely what is exclusively yours (where the flat stops and the rest of the building begins) and what rights and obligations you share with others at the building.
The obligation to pay towards the upkeep of facilities is usually related to the right to use those facilities. You have a right to use the lift whether you need to use it or not. It’s the same as the right to use the communal garden for leisure, whether you chose to or not.
Occasionally leases do provide for all lift costs to be met by those leaseholders living on the upper floors, but this is quite unusual and not the norm. It is much more usual for leases to provide for all leaseholders to cover a proportion of all communal costs. As I said above, you’re in the club and you benefit from and contribute to the costs incurred ‘by the club’.
When you ‘buy a flat’ you do not buy the bricks and mortar, you buy a lease, which entitles you to use the flat for a certain number of years. Therefore, if you want to alter the flat, for example, to turn the loft into a bedroom, you need to get permission from the owner of the loft (the Landlord) and the owner of the ceiling which you’re wanting to cut a big hole in (the Landlord again).
From the Landlord’s side, they need to ensure that any proposed works will not adversely affect the structural integrity of the building, nor infringe upon the rights of other leaseholders.
There are many leasehold misconceptions, but the above are the most common. Property managers come across misconceptions such as these almost every day. This is why leaseholders should always read the lease carefully or instruct someone to do so on their behalf.
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