Page last updated at 06:01 GMT, Sunday, 20 December 2009

High cost of living proves costly for flat owners

By Helen Grady
BBC Radio 5 live, Donal MacIntyre show

Reception desk
Many apartment complexes now have gyms and a concierge service

"When I first moved here, you walked in and you thought - wow!"

When Tony Fernandez bought his flat, he and his wife were looking forward to a hassle-free lifestyle in a home they could be proud of.

"It's not the most luxurious flat in the world, but it's luxurious to us.

"We have a gym and a concierge, security cameras and a management agent to look after things."

The flat is in Stratford, east London, a stone's throw from the 2012 London Olympic Village, in an area undergoing massive regeneration.

But Mr Fernandez is looking to sell up as soon as he can.

"These days you walk in and it looks like part of a sink estate. Lights don't work, there are leaks in the ceiling, doors are broken, there's rubbish in the communal areas.

"We pay a lot of money to the management agency to look after this place, but they just aren't doing their job.

"The fees they charge us keep going up and up, but we're not seeing any results for our money."

Rising maintenance fees

Mr Fernandez is one of an increasing number of flat-owners who are challenging management agencies over service charges.

Typically, many residents living in modern apartment blocks pay a fee to cover the cost of maintaining common parts of the building. The fees also cover buildings insurance and services like heating, lighting, lifts, cleaning and gardening.

A lot of people do not realise that there is no cap on how much service charges can rise by.
Tony Essien

Leasehold Advisory Service

These charges can also include a management fee to cover the work of the managing agency that looks after the building, and in some flats residents also cover the cost of a concierge or gym.

Over the past year the government-funded Leasehold Advisory Service, which offers free advice on property leasehold law, has seen a 21% rise in enquiries from flat-owners.

According to its chief executive Tony Essien, the most common issue has been service charges.

He told BBC 5 live's Donal MacIntyre programme: "A lot of people do not realise that there is no cap on how much service charges can rise by. The rule is that charges have to be reasonable.

"But flat-owners and management agencies often disagree about what is and isn't reasonable."

The Residential Property Tribunal Service which decides many rent and leasehold disputes, says it has also seen a rise in the number of complaints over the past five years, including those between flat-owners and management agencies.

Taking action

Back in Stratford, some of Mr Fernandez' neighbours are withholding their fees from their managing agent, Peverel.

Others say they are confused about how much they are paying - among them Sej Bhabra, who bought a flat in the block in 2003.

Sej Bhabra
Sej Bhabra has seen his maintenance fee rise over 65 per cent since 2003

When he moved into his flat he was paying Peverel £120 a month to cover service charges. He's now paying around £200 a month - a rise of just over 65% in six years.

Mr Bhabra says he also keeps getting additional bills.

"The way the fees are structured is baffling. Even though I'm paying by direct debit… I have absolutely no idea what for."

His neighbour, Ciara Pinder-Smith, has set up a residents' association with the aim of holding Peverel to account.

She said: "When we report have to keep chasing and chasing, email after email, call after call.

"We had a cockroach infestation. I reported it but nothing was done.

"I reported it again - nothing. In the end, I had to call the pest control company, ring round the residents and sort it out myself. I feel like I am doing their job for them."

No response

Peverel say they investigated a complaint about cockroaches but as the infestation was not the landlord's responsibility, they took action against the owner of the flat which was found to be the source.

In a statement to the Donal MacIntyre programme, the company added:

"Peverel has attempted to engage directly with residents and the newly formed residents' association on numerous occasions.

"We have listened to feedback and appointed a new property manager, who has emailed individuals who previously expressed concerns. These met with no response."

The company said fees charged to residents living in the apartment complex where Ciara, Sej and Tony live have risen by less than 1.5 per cent in the past year.

Donal MacIntyre, Radio 5 live, Sunday, 20 December at 1930 GMT
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Peverel is a member of the Association of Managing Letting Agents - a trade body with 230 members who between them manage 900,000 flats in England and Wales.

Its chief executive David Hewett believes that many disputes about fees could be avoided if solicitors provided first-time buyers with better advice.

He said: "A lot of people buy flats without understanding that they will be paying service charges. All too often the conveyancing solicitor does not explain."

Many flat-owners are also unaware they can take control of fees.

Under a process known as the Right to Manage, they have the right to get rid of their management agent.

Flat-owners can then take on the responsibility of managing their building themselves or appoint another management agency to look after the building for them.

The process usually takes around five months - which may be too long for Tony Fernandez and his wife.

He says "Once the market picks up, we want to move. We're trying to save enough to buy a house this time. We don't want to run the risk of fees which keep going up."

You can hear the full report on the Donal MacIntyre programme on BBC 5 live on Sunday, 20 December 2009 at 1930 GMT or download the free podcast.

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