A flat owner has spoken of her pain at the prospect of losing her flat due to an unpaid service charge of £5,499.80.
Nicola Hawkins bought her flat in Romford in 2022 for £215,000. It is in a block that was converted in 2018.
Last year, he paid the service charge in full, but then disputed the charge with his managing agent in what is known as First Level Court.
Miss Hawkins and her neighbors won £9,783.18 in court but says she has not yet received any of the money from the managing agent.
Nicola Hawkins bought her Romford flat in 2022 for £215,000 and is now at risk of losing it amid an unpaid service charge of £5,499.80.
So this year he decided not to pay the service charge in full because he believed the managing agent still owed him money and was spending too much on the works being carried out on the block.
Speaking to MailOnline Property and This is Money, Miss Hawkins said: “I told them they still have £1,273.19 of my money, which was my share of the profit, and then I paid another £1,000 towards my last bill of charges service”.
‘This was more than they were worth, but I wanted to appear reasonable when we returned to the First Level Court.
“They are intimidating me and I maintain that they cannot take the flat from me for not paying for my services when I have already won a case against them in the Court of First Instance.”
At the time of the exchange, Miss Hawkins discovered that the service charge was much higher than initially expected.
She went on to explain the impact it was having on her health: “I have been in therapy for the last year and this situation is ruining my life and taking up a lot of my time.”
‘We are desperate to move but we can’t. Nobody is going to buy a flat above a shop with a service charge of £5,500.’
She bought the flat for £215,000 and her current mortgage payments are £685 a month, having taken out the home loan before mortgage rates rose.
She said: ‘At first the estate agent told me the service charge was £600 a year and then during the purchase my mortgage broker said the figure was £1,200 a year. It was a shock, but manageable for £100 a month.
‘At the time of the change, I discovered that the service charge was £1,900 a year. The lawyer said that he had forgotten to send me the management package. That law firm has since closed.
This year Miss Hawkins has decided not to pay the service charge in full and has paid £1,000.
At this point, Miss Hawkins says she felt pressured to complete the sale because she feared losing her deposit.
“I was sending £35,000 to the solicitor as a deposit when I first saw that £1,900 figure. I was going to lose my deposit so I continued until I completed it and moved out.
‘I spoke to the other owners of the flat and discovered that there were major problems with the roof which were not disclosed to me during the sale as my seller had already paid £1,400 in addition to the service charge for roof repairs.
‘And then I get a service charge later in the year and the charges for the roof repairs are included in it.
“So the £5,500 is last year’s overspend, plus the estimate for 2024, including repairs to an electrical cabinet and drainage that we didn’t even know had happened.”
It comes like the Tenancy and Freehold Reform Bill It is currently pending in Parliament.
The bill aims to make it cheaper and easier for more tenants to extend their lease, buy their freehold and take over the management of their building, as well as ban the sale of new leasehold homes.
Service charges in a leased apartment are independent of the ground rents.
Ground rent is a regular payment made to the owner of a leased property as a condition of the lease. Ground rent applies exclusively to leased properties.
It is the charge that is applied for the lease of the land on which the leased property sits. It does not cover the costs of any additional services the owner may provide; These are covered by the service charges.
Increases in service charges have become a growing problem in recent years. As the Government begins to clamp down on other sources of income for owners and developers, such as ground rentals, service charges are a proven way for investors to make money.
If a flat owner refuses to pay the service charge, they may risk losing their home through a process known as forfeiture.
Forfeiture occurs when the landlord exercises his right to recover peaceful possession against the tenant’s wishes.
This usually occurs when the tenant has breached a condition of the lease or breached a covenant.
Have you had a surprising increase in your service charge recently? Get in touch: email@example.com