In short, costs!
Tenants have to pay an annual ground rent , service charge and extra costs for "one offs".
According to a survey of leaseholders the issue is not insignificant either.
It found that more than two-thirds of leaseholders have little or no confidence in the ability of their managing agent to deal with a problem.
Four in ten leaseholders who responded to the survey ‘strongly disagreed’ with the statement that service charges represent value for money.
The point is however that tenants are not without remedy, not by any stretch.
Tenants can take over the management of the property from the landlord under the Commonhold and Leasehold Reform Act 2002 as long as at least 50% of the tenants agree to join the right to manage company.
Alternatively, the flat owners can agree to buy out the freehold through a process called "collective enfranchisement". A premium will need to be paid to the freeholder and the valuation for this will be determined by a surveyor based on a number of factors: value of the property, length of the lease and ground rent.
The point is either option gives tenants control over costs. Very often there is a perception that landlords do not try hard enough to keep costs under control.
When it comes to large flatted developments there is one other consideration which can work in the tenants' favour. I recently wrote about this in connection with service charges here.
House builders of large flatted schemes are only too aware that bad PR surrounding one of their developments can all too often affect present and future building projects. As such, the more progressive house builders are realising that in the long run it pays dividends to ensure the development is run efficiently.
Let's hope this trend continues but meanwhile if you are a tenant and you are not happy with your present set-up please feel free to drop me a line to discuss your options.
Extra costs are leaseholders’ biggest bugbear. Flat owners pay an annual ground rent to the freeholder; monthly or annual service charges for the upkeep of the building; and additional bills for ‘major works’. With freeholders having little interest in keeping costs down, bills can be both high and unexpected. Four in ten leaseholders who responded to the survey ‘strongly disagreed’ with the statement that service charges represent value for money.