Extortionate leasehold fees were ‘the nail in the coffin for me’

The government has announced it is looking at giving leaseholders stronger rights and protections to challenge extortionate service charges.

What are leasehold fees?

If you own a leasehold property, like a flat or apartment, you don’t own the building itself, just the right to live there for a set number of years. The building is owned by a landlord.

Leasehold fees or service charges are payments you make to the landlord or management company to cover your share of the costs to keep the building running and in good shape.

Julia’s story

The government’s announcement will no doubt be welcomed by leaseholders up and down the country, but it comes too late for many.

Julia (48) ended up in £17,000 of debt, after leasehold fees on her flat in Worthing, West Sussex, spiralled out of control.

She claims the charges were unpredictable and unreasonable. Talking about the management company, she says:

“They were just awful, slapping fees on all the time for extra things. ‘Oh we’ve moved a feather from the front door, that’s £500 please.’”

In the end, Julia’s neighbour convinced the other residents of the building to take the landlord to court to challenge the charges.

Julia explains:

“We all backed her with that, and we lost.”

That meant Julia had to contribute to the court costs, as well as finding money for leasehold fees that had accumulated while the case was in progress.

She says:

“I think that was the nail in the coffin for me.”

After that, Julia’s debts became unmanageable, and she had to rent out her flat and move up north, where the cost of living was cheaper.

She spent the next six years scrimping and saving to get her finances back in shape, moving from substandard home to substandard home and surviving for weeks at a time on plain pasta.

She remembers:

“I just had to literally suck it up that I was absolutely poor as anything. Like too poor to buy decent food.”

What’s changing?

The government has said it intends to introduce rules that will mean leaseholders get a standardised service-charge document spelling out exactly how fees are worked out and spent.

They also plan to stop the practice of automatically forcing leaseholders to pay their landlord’s court costs even when the residents have won their case.

The reforms are due to be introduced after a consultation.