An apartment owner has told of her pain at the prospect of losing her apartment due to unpaid service charges of £5,499.80.
Nicola Hawkins bought her Romford apartment in 2022 for £215,000. It is located in a block that was renovated in 2018.
Last year she paid her service charges in full, but then disputed the charge with her manager at a so-called First Tier Tribunal.
Mrs Hawkins and her neighbors won £9,783.18 at the tribunal but says she has yet to receive any of the money from the manager.
Nicola Hawkins bought her Romford apartment for £215,000 in 2022 and is now at risk of losing it amid unpaid service charges of £5,499.80
That’s why she decided not to pay the service charges in full this year because she thought the manager still owed her money and was spending too much money on the work being carried out in the block.
Speaking to MailOnline Property and This is Money, Ms Hawkins said: ‘I told them you still have £1,273.19 of my money – which was my share of the profits – and then I paid another £1,000 towards my last service charge bill .
“These were more than they were worth, but I wanted to look reasonable when we go back to the First Tier Tribunal.
‘I’m being bullied and claiming they can’t take my flat because they haven’t paid for my services, even though I’ve already won a case against them at the First Tier Tribunal.’
At the time of the exchange, Miss Hawkins discovered that the service charge was much higher than originally anticipated
She went on to explain its impact on her health, saying, “I’ve been in therapy for the past year and this situation is ruining my life and taking up so much of my time.”
‘We would like to move, but we can’t. Nobody is going to buy an apartment above a shop with €5,500 in service charges.’
She bought the flat for £215,000 and her current mortgage payments are £685 a month, having secured the mortgage before mortgage rates rose.
She said: ‘I was initially told by the agent that the service charge was £600 per year, and later during the purchase my mortgage broker said the amount was £1,200 per year. It was a shock, but manageable for £100 a month.
‘At the time of trade-in I found out that the service charge was £1,900 per year. The lawyer said he forgot to send me the management package. That law firm is now bankrupt.’
This year Mrs Hawkins decided not to pay the full service charge and paid £1,000
At this point, Ms. Hawkins says she felt pressured to complete the sale because she feared she would lose her deposit.
‘I sent £35,000 to the lawyer as a deposit when I first saw that £1,900 figure. I was in danger of losing my deposit so I went ahead with completion and moved in.
‘I got into discussions with the other flat owners and discovered that there were major problems with the roof that had not been disclosed to me at the time of the sale, as my seller has already paid £1,400 apart from the service charge for the roof repairs.
‘And then I get service costs later in the year, which includes the costs for the roof repair.
‘So the £5,500 is the excess spent from last year, plus the 2024 estimate, including repairs to an electrical box and drain that we didn’t even know had taken place.’
It comes as the Leasehold and Ownership Reform Act is currently passing through Parliament.
The bill aims to make it cheaper and easier for more leaseholders to extend their lease, buy their property and take over the management of their building, and ban the sale of new leasehold properties.
The service costs of a leasehold home are separate from the canon.
A ground rent is a periodic payment to a leaseholder of a leasehold property as a condition for the lease agreement. The ground rent only applies to leasehold properties.
It is the fee charged for renting out the land on which the leasehold property is located. It does not cover the costs of any additional services that the owner might provide; these are included in the service costs.
The increase in service costs has become an increasing problem in recent years. As the government begins to restrict other income streams for freehold land and developers, such as ground rents, service charges are a proven way for investors to make money.
If an apartment owner refuses to pay the service charge, he risks losing his home through a process known as forfeiture.
Forfeiture occurs when the landlord exercises his right to regain peaceful possession against the will of the tenant.
This is usually the case when the tenant has breached a term of the lease or breached a covenant.
Have you recently experienced a sudden increase in your service costs? Contact: editor@thisismoney.co.uk