North West Leaseholders Losing 174 Million Per Year Through Managing Agent Scams

By Steve Wylie

Leasehold property owners in the North West could be throwing away a staggering £172 million a year in service charges due to excessive fees and hidden costs from managing agents, according to Urban Owners.

The costs associated with running a leasehold block of flats, or a development incorporating leasehold properties, could be reduced by an average of 30%, equating to an average saving of £400 per household per year (see Table A.).

Leaseholders often pay thousands of pounds each year in service charges for maintenance and repairs to their block, yet do not necessarily see value for that money. Slow responses from managing agents, shoddy or expensive repairs and a lack of transparency and accountability are frequent complaints.

Government statistics show that 21.7%, or over a fifth, of households in the North West are under leasehold ownership, compared to only 7.9% in the South East and 4.3% in the Midlands.¹ There are approximately 429,000 leasehold properties in the North West, meaning that leasehold property owners in the region could be paying out an unnecessary £172 million a year.

Under the Commonhold and Leasehold Reform Act (2002), leaseholders of flats have the right to acquire the ´Right to Manage´ from the freeholder. This is a process that involves taking over the responsibility of the management of the block and is an opportunity leaseholders of flats in the North West are increasingly taking up.

Urban Owners has opened a new regional office in response to this demand, which will join its head office in London to offer its Block Administration Services, a unique system of managing leasehold properties, both flats and houses, that is aimed at returning control to leaseholders.

Under this system the leaseholder, rather than a managing agent, directs how money is spent and how services are delivered on their behalf. Hence, leaseholders can avoid expensive management fees and ensure transparency over the use of their funds, rather than falling victim to unscrupulous practices that are commonplace in the managing agent industry. Not only does this save money, time and stress, but it can also make the property more saleable.

Table A: Average savings per leasehold property per annum

COST AVERAGE ANNUAL SAVING (%) AVERAGE ANNUAL SAVING (£)
Insurance 32% £85
Management Fee 32% £80
Repairs & Maintenance 26% £60
Cleaning 24% £45
Grounds Maintenance 38% £90
Miscellaneous* 27% £40

TOTAL £400

*Legal services, bank & accountancy charges, utilities, security and lifts

1 SOURCE: Communities and Local Government (www.communities.gov.uk/housing)

Article Source: http://interpret.zar.vg

About The Author
Website: www.urbanowners.co.uk

Steve Wylie is a Director and co-founder of block management expert Urban Owners. As a leaseholder himself, Steve created the initial idea for the company and its services after leading the enfranchisement of his own block of flats and re-engineering the way services were delivered to the block. He has been involved in property construction for many years and has been involved in leaseholder led blocks since 1995. Prior to Urban Owners he had a 16 year career in management consultancy.