Rise in Property Management Fees
Owners of new flats have seen their property management charges rise to almost £2,800 on average, new research has revealed.
The typical fee of £2,777 is for new build homes while those for older properties is £1,863, according to the findings by Direct Line for Business.
The research found that 33 per cent of management companies have increased their fees in the past two years.
Property management fees are a standard part of owning a flat. They usually cover repairs to communal areas of a development such as windows, drainage and the roof.
They can also be used to establish a sinking fund for major renovations – and in some cases they are also used to pay for shared services such as gardeners, landscapers, concierge services or cleaners.
Fees can be particularly costly for blocks of flats with extra amenities, such as grounds, communal areas or gyms.
Those considering buying a flat should consider this cost when calculating the affordability of the purchase. Similarly, anyone renting should check whether they or their landlord are responsible for covering the cost.
Charlotte Moss lives in a property managed by FirstPort.
Service charges differ between developments due to the various calculations used.
In some cases it is a flat rate for all properties, while for others it is determined by the number of bedrooms or the square footage of a property.
Nick Breton, head of Direct Line for Business, said: ‘Service charges are often a hidden cost, which should be factored in when considering the affordability of a property.’
He added: ‘In some cases service charges are uncapped and can escalate rapidly.’
As a rough guide, service charges in London tend to vary from between £1.55 per sq ft to £7 per sq ft, he said.
However those who are not happy with the service they receive from their management company have some recourse, according to a barrister.
John de Waal QC of Hardwicke chambers explained there are procedures in place that support leaseholders going to tribunal without having to pay for a solicitor.
‘It can result in your monthly property management charges being significantly reduced and you can even end up with money being paid back,’ he said.
Mr Breton went on to blame the increased costs of service charges on a trend among new builds to include luxury amenities such as libraries, 24 hour concierges, gyms and cinema rooms.
He urged those buying a flat to factor management charges into their running costs budget, which also needs to include ground rent – which is £371 a year on average for a new build and £327 for an older property, according to the research.
It found that the typical annual service charge of £1,863 on older properties is the equivalent of twice the average monthly rent of £906, the research added.