Frequently asked questions
Why do I have to pay service charges on my flat or maisonette?
If you buy a house, you will purchase the freehold and will own
the property outright. You become responsible for all the costs
relating to its upkeep.
But if you buy a flat or maisonette, Trafford Housing Trust owns
the block freehold. The Trust is responsible for the upkeep of the
building as a whole and for any communal areas and
facilities.
Because of this, leaseholders have to pay service charges. These
can be quite high, perhaps several hundred pounds each year, or
even more if the block needs major repairs or maintenance, such as
a new roof or new windows and other improvements.
How much am I likely to have to pay?
Service charges are a proportionate payment by the leaseholder for
all the services the landlord provides to the block in which a
particular flat is situated.
Details of what can, and cannot, be charged by the landlord - and
the proportion of the charge to be paid by the leaseholder - will
be set out in the lease.
Usually, the total expenditure spent on the block is divided by the
number of dwellings in that unit to determine the proportion due
from each leaseholder.
Each September you will receive a certificate which provides a
detailed breakdown of your service charge and what services you
have been charged for.
Why do service charges vary?
Service charges can vary from year to year, they can go up or down
without any limit, other than that they are reasonable.
In some instances, your service charge invoice may differ from that
of your neighbour. There may be a number of reasons for
this:
- Their flat may have been purchased, or further assigned, part-way through the relevant accounting period.
- The leaseholder may have certain costs restricted during the first five-years following the purchase of the flat.
- Specific works may be individual to one (or more) flat.
Landlords can only recover costs that are reasonable. Leaseholders have rights to challenge any service charges they feel are unreasonable at the Leasehold Valuation Tribunal (LVT).
Are there extra service charges after major improvements
to my block?
The Trust will need to carry out major improvements to blocks to
make sure that they are well maintained and provide a high quality
environment for our tenants and leaseholders. This may include work
such as roof renewal, lift replacement, building improvements and
environmental and security improvements.
When these major works are undertaken the Trust will charge each
Leaseholder a proportion of the total cost. If the work undertaken
is expensive the charge to the leaseholder will also be high. The
Trust recognises that some leaseholders may struggle to pay these
amounts or may be concerned about these payments. The Trust
therefore wants to provide support to leaseholders.
At present the Trust can;
- Agree with you to repay the service charge over a set period of time and not to charge interest on the service charge amount during this time.
The Trust will agree to the
following payback periods:
Level of service
charge
Length of repayment period
<
£1,000
12 months
£1,001
- £2000
24 months
£2,001 -
£5,000
36 months
£5,001 -
£10,000
48 months
>
£10,000
60 months
- Can discuss with you whether you want to sell the property back
to the Trust, at the original right to buy price.
The Trust is currently working with another Registered Social
Landlord to offer more options than this. Future options may
include:
- Shared equity - this is where rather than paying the Trust the service charge the Trust would own a proportion of your property and this would be repaid when you move.
- A variety of loans managed through an agreed agency.
The Trust will involve leaseholders in developing these options
and will write to all leaseholders later this year to explain these
options in more detail.
What happens if a leaseholder doesn't
pay?
It is the leaseholder's obligation to pay service charges,
insurance and ground rent demands promptly under the terms of the
lease. If you are having problems paying service charges please do
not ignore the problem but contact the Leasehold Service.
Appropriate arrangements can be made to resolve outstanding
invoices.
If they are not paid and the landlord is able to show that the
charges are reasonable, he can contact your mortgage lender
directly or he can begin legal action to repossess the flat. This
will incur additional administration costs to the leaseholder.
Starting legal proceedings of this nature would be a last resort
after all other options have failed.
Other points on service charges
- If you decide you want to buy under the Right to Buy (preserved) or the Right to Acquire, we will tell you how much the property will cost and give you an estimate of any service charge you will have to pay.
- If the lease says you must pay some of the costs of improvement, the estimate must cover these too. Once you have received this estimate, we cannot charge you more than that figure during the first five years of your lease, except to take account of inflation.
- There is no limit on charges for repairs or improvements done after the first five years.
- Some freeholders may also have to pay service charges for repairing and maintaining shared communal areas on an estate, such as pathways, play areas and gardens.
- The estimate of service charges, provided before you buy, will also cover charges for building services such as caretaking or lighting. But these charges can change, even during the first five years of a lease. We will also tell you about any known structural defects affecting the building. If we want you to pay for work to put them right in the first five years, the estimate of service charges for repairs must cover this. But you may also have to pay for some of the costs of work done after the first five years.
- The law protects you from unreasonable service charges. Your
rights are described in Housing Booklet 27, Long Leaseholders that
you can get free from the Office of the Deputy Prime
Minister.