Latest news with #servicecharges
The Sun
6 days ago
- Business
- The Sun
The sneaky service charges adding thousands to YOUR bill and how to fight back
MILLIONS of people living in leasehold properties are being hit with spiralling service charge fees - but there is a way to fight back. Almost five million homeowners pay service fees, which have risen 11% in the last year to an average of £2,300 per month, according to Hamptons. 3 Some leaseholders have seen charges sky rocket, making it unaffordable and tricky to sell their home. While others have been hit by unfair charges. The government has planned to reform the system - but there are delays. This week JAMES FLANDERS explains how to challenge unfair charges. SOARING FEES Service charges are a fee paid by a leaseholder or resident set by a landlord. The amount varies each year depending on costs to the landlord. They can include charges for maintenance, repairs and insurance. The details are usually set out in your lease. The fee is usually set on what the landlord thinks they will spend. At the end of year the landlord should provide a statement. Detail of world's tallest apartment block revealed - including price of penthouses Some leases allow landlords to ask for contributions towards a "sinking fund" to build up reserves for future larger scale works. David Fell, lead analyst at Hamptons, said: "Both buyers and mortgage lenders have become increasingly cautious about committing to high service charge costs, particularly where they perceive charges to be disproportionate to the amenities they get in return. "As a result, would-be sellers paying high charges have often seen the value of their homes rise more slowly or even fall. "In some cases, sellers are offering potential buyers a cash contribution towards future service charge payments." 3 UNFAIR CHARGES Some leaseholders have found that they are being charged unfair fees. Tribunal judges have made some landlords pay back up to £100,000. In one example, they ruled that a £135 fee to change two light bulbs was excessive. In February 2023, it was revealed that landlords and insurance brokers were secretly taking up to 60% of the £1.6billion leaseholders paid for building insurance as hidden commissions. New rules now stop insurance companies from choosing policies just to earn the highest commission, helping leaseholders get better value. But brokers and managing agents are still allowed to take commissions. The government has promised to ban excessive building insurance commissions through the Leasehold and Freehold Reform Act 2024. Instead, landlords will only be able to charge a straightforward and fair "permitted insurance fee" for the work they actually do, making costs clearer and protecting leaseholders from hidden charges. However, these proposed laws still need further legislation to come into effect, and the government hasn't yet provided a timetable for this. New rules planned by the government also plan to introduce commonhold agreements to replace leasehold ones. Commonhold allows flat owners to jointly own and manage their buildings, cutting out landlords and property management companies. But the proposed rules only apply to new homes. A spokesperson for the Ministry of Housing said they know "far too many leaseholders" are being hit with "unreasonable and extortionate charges". A draft of the bill is expected later this year but leaseholders may have to wait months before it becomes law. 3 HOW TO CHALLENGE FEES Leaseholders have a legal right within six months of receiving a summary of costs to request extra information from their landlord. You can challenge a cost if you think it's unreasonable, the standard of work is poor or you don't think you should be paying it. For example, you might question a fee for lift maintenance if you live in a ground-floor flat and it's not included in your lease. Or you could challenge charges for communal services, like a gym that's always closed or a concierge service that doesn't have staff. You will need to apply to a tribunal which has the power to rule on whether the service charge is reasonable or payable. In England this is the first-tier tribunal (property chamber). In Wales it's the leasehold valuation tribunal. Applying to the tribunal usually costs a fixed fee of £110, though this may be waived if you're on certain benefits. If your case is transferred from court to the tribunal, you'll only pay the difference between the court fees and the tribunal fee - or nothing if you've already paid more than £110 in court fees. If a hearing is scheduled, you'll need to pay an additional £220 hearing fee. Speak to the Leasehold Advisory Service online at or call them on 020 7832 2500 to find out more and get free advice on service charge issues. You could also apply to the Housing Ombudsman if you have a complaint about how your service charge fees have been managed. It says cases have jumped by 25 per cent in the last four years. If you're finding it hard to pay your service charges, there's support available. If you're on Universal Credit and have been receiving it for at least nine months, you could get help with your service charges if you own a leasehold property. People over the state pension age can also get support through pension credit. £5.3k charge but I waited months for vital repairs LAWYER Liam Spender, 41, thought he'd bought his dream home when he purchased his £591,000 two-bed flat six years ago. But within months it had turned into a nightmare. "I regret buying it to this day," said Liam, who lives in the Isle of Dogs, east London. Initially he paid a £4,200 a year service charge but it has rocketed to £5,300 in just four years - a 26% increase. A huge chunk of his bill - over £1,200 a year - was for buildings insurance, according to Liam. Yet, despite paying so much, Liam had to wait months for repairs after part of his flat's floor collapsed. To make matters worse, he discovered £300 of the insurance fee was being taken as commission by his landlord and their broker. In 2021, Liam teamed up with 103 homeowners in his building block and applied to the property tribunal. A few days before the case their landlord conceded and awarded the homeowners £100,000 in backdated commission payments. It meant that Liam got £300 back, while his neighbours in larger properties received significantly more. "There are millions of people like me in the same boat and they are owed money they don't even know about", said Liam, who has since founded Leaseholder Action to help other people being hit with secret commission fees. RIGHT TO MANAGE If you don't get anywhere by approaching your management company, you could take over managing the charges yourself via Right to Manage. It is a legal process where leasehold residents in flats can take over managing the maintenance and services. To do this, enough long-leaseholders (those with leases originally over 21 years) need to get together and form an RTM company. It costs £50 to set up a company and takes 24 hours to register. You then need to serve notice to the freeholder of the development - the person who owns the land - letting them know you are taking over the right to manage. They then have one month to dispute this. The government is also planning to remove the requirement for leaseholders to cover the landlords expenses during the process, which will save homeowners around £3,000. It's also not allowed if there are four or fewer flats and a landlord lives in the building. It could help you cut out management fee costs and charges for unnecessary work - but you will be responsible for the company and annual reporting. Unless one of you is trained in these areas you may need to take on an accountant or managing agent. Applications to set up RTM companies rose by 20% last year, according to Direct Line.
Yahoo
18-05-2025
- Business
- Yahoo
‘No one will buy my mum's retirement flat despite a £100k price cut'
For three years, Jeff Clarke has paid £900 a month in service charges for a retirement flat he does not occupy. The property belonged to his 95-year-old mother, Dora, who left it vacant when she moved into a care home. Finding a buyer is proving difficult, but keeping on top of the service charges is nigh-on impossible. Now, he is being forced to sell his own home to keep up with the charges and his mother's care fees. Mr Clarke, 71, from Windsor, is one of dozens of readers who have complained of sky-high fees on their retirement homes – leasehold properties designed for the over-55s. Labour is facing fresh criticism for failing to 'get a grip on this scandal' and delaying reform of the sector. The Leasehold Reform Act 2024, introduced by the Tories but pioneered by the current Government, has promised an overhaul to service charges and banned developers from selling new houses as leasehold properties. But it notably exempted retirement homes from the proposed ban – a loophole Labour has failed to close. Campaigners said it amounted to yet another betrayal of pensioners after 10 million retirees were stripped of winter fuel payments. And families like Mr Clarke's have been feeling as though they have a 'millstone around [their] neck.' Dora first moved into Lynwood retirement village in Ascot in 2017 when the service charges were just £518 a month. Five years later, her health seriously deteriorated and she was forced into a care home. In that time, her service charges also rocketed by 73pc. It means her son is paying for both her service charge and an extra £1,000 towards the care fees. The Lynwood flat was put on the market for £350,000, the price it was originally bought for, but the price has since been cut to £250,000. Even so, it has had just seven viewings in three years. Mr Clarke cannot turn the electricity off at the property in case it is needed for a viewing. As a result, he claimed he has to pay an extra £20 a month for the standing charge. To make matters worse, last week, he was invoiced £96 for a new energy performance certificate, which he said 'rubs salt in the wound'. He now plans to downsize from his current home. The decision was in part due to the service charges, but also a serious accident which reduced his mobility. The situation is even more catastrophic for Dora, whose investment in the flat has evaporated. He said: 'My mother now has nothing. She doesn't have a penny to her name.' Lynwood Village is run by automotive charity, Ben. Small print in the contract means that once Mr Clarke does manage to sell the property, he will have to pay the provider 1pc of the sale price for every year the flat was owned. Rachel Clift, chief executive of Ben, said property prices at Lynwood Village are 'stable and sales are steady', but acknowledged it can take a while for properties to sell in this 'niche sector and difficult market'. She added: 'We are sorry to hear about the challenges that this individual has experienced. We are fully committed to providing a supportive community, and we would be happy to speak with this individual directly to explore what else we can do to help.' Retirement homes are leasehold properties, usually with leases of between 125 and 999 years, and are specifically designed for over-55s. They boomed in popularity during the 1980s and remained attractive well into the early 2000s. As of 2019, there were 730,000 retirement housing units in the UK, according to the Elderly Accommodation Counsel. However, in recent years, their appeal has dramatically waned as complaints mounted among those early buyers. This is due to their hefty service charges, which are payable whether or not the property is lived in. Owners must also pay ground rent, generally between £400 and £500 per year. Ground rent has since been banned on the sale of new retirement homes but this does not apply to re-sales. The issue has been compounded by the double council tax raid on second home owners which has swept up the families inheriting these properties. The Leasehold Reform Act 2024 was brought in by the previous Conservative government to strengthen leaseholder rights. It aimed to improve the 'transparency of service charges and give leaseholders a new right to request information about service charges and the management of their building'. But it contained loopholes which allowed developers to sell new houses as leasehold properties, for instance if they are part of a retirement village. Helen Whately, shadow pensions secretary, said: 'This is yet another example of Labour not keeping their word. It's just like when they said they wouldn't remove the winter fuel payment, only to then betray 10 million pensioners the first chance they got. 'With each day it becomes clearer their pre-election promises aren't worth the paper they were written on.' Dennis Reed, of charity Silver Voices, said: 'In some cases, the service charges amount to daylight robbery of vulnerable older people. It is essential that legislation provides a fair framework for such charges. 'Older people are already struggling to cope with rising energy and food prices, cuts to winter fuel payments, poor social care support and large council tax bills, so we need extortionate service charges in retirement flats like a hole in the head. In April 2024, Labour U-turned on its own promise to scrap leaseholds in its first 100 days of power. Instead, it pledged to 'bring the feudal leasehold system to an end' without committing to a timeframe. In March, the Government published the Commonhold White Paper, which will be followed by a draft Leasehold and Commonhold Reform Bill in the second half of this year. Again, retirement homes will not benefit from exemptions and were excluded from the recommendation to ban exit fees. It means owners like Ann Townson will have no protection from soaring costs. The 78-year-old moved into a retirement village in Harrogate. At the time, it seemed like the 'ideal solution' as she struggled with health and mobility issues. However, now she cannot keep up with the service charges and ground rent which cost her £1,047 a month, which has rocketed from £731 when she first moved in four years ago. She said: 'It will use up all my savings as the cost per month takes up more than half of my pension. You have absolutely no control over the costs. 'I would never have moved here if I had known what I know now.' Paula Higgins, of the Homeowners Alliance, said: 'Retirement homes should not be exempt from plans to ban leasehold houses. 'Buyers of these properties often face huge hidden costs. In many cases, it's the children who are left to shoulder these financial burdens after their parents pass away.' A spokesman for the Ministry for Housing, Communities and Local Government said: 'Far too many leaseholders across the country are being asked to pay unreasonable and extortionate charges, including people living in retirement homes. 'We are determined to fix this, which is why we will consult this year on detailed plans to drive up transparency of service charges and hold landlords to account for the money they spend.' Broaden your horizons with award-winning British journalism. Try The Telegraph free for 1 month with unlimited access to our award-winning website, exclusive app, money-saving offers and more.
Telegraph
18-05-2025
- Business
- Telegraph
Britain's retirement home ‘scandal' is another Labour betrayal of pensioners
For three years, Jeff Clarke has paid £900 a month in service charges for a retirement flat he does not occupy. The property belonged to his 95-year-old mother, Dora, who left it vacant when she moved into a care home. Finding a buyer is proving difficult, but keeping on top of the service charges is nigh-on impossible. Now, he is being forced to sell his own home to keep up with the charges and his mother's care fees. Mr Clarke, 71, from Windsor, is one of dozens of readers who have complained of sky-high fees on their retirement homes – leasehold properties designed for the over-55s. Labour is facing fresh criticism for failing to 'get a grip on this scandal' and delaying reform of the sector. The Leasehold Reform Act 2024, introduced by the Tories but pioneered by the current Government, has promised an overhaul to service charges and banned developers from selling new houses as leasehold properties. But it notably exempted retirement homes from the proposed ban – a loophole Labour has failed to close. Campaigners said it amounted to yet another betrayal of pensioners after 10 million retirees were stripped of winter fuel payments. And families like Mr Clarke's have been feeling as though they have a 'millstone around [their] neck.' Dora first moved into Lynwood retirement village in Ascot in 2017 when the service charges were just £518 a month. Five years later, her health seriously deteriorated and she was forced into a care home. In that time, her service charges also rocketed by 73pc. It means her son is paying for both her service charge and an extra £1,000 towards the care fees. The Lynwood flat was put on the market for £350,000, the price it was originally bought for, but the price has since been cut to £250,000. Even so, it has had just seven viewings in three years. Mr Clarke cannot turn the electricity off at the property in case it is needed for a viewing. As a result, he claimed he has to pay an extra £20 a month for the standing charge. To make matters worse, last week, he was invoiced £96 for a new energy performance certificate, which he said 'rubs salt in the wound'. He now plans to downsize from his current home. The decision was in part due to the service charges, but also a serious accident which reduced his mobility. The situation is even more catastrophic for Dora, whose investment in the flat has evaporated. He said: 'My mother now has nothing. She doesn't have a penny to her name.' Lynwood Village is run by automotive charity, Ben. Small print in the contract means that once Mr Clarke does manage to sell the property, he will have to pay the provider 1pc of the sale price for every year the flat was owned. Rachel Clift, chief executive of Ben, said property prices at Lynwood Village are 'stable and sales are steady', but acknowledged it can take a while for properties to sell in this 'niche sector and difficult market'. She added: 'We are sorry to hear about the challenges that this individual has experienced. We are fully committed to providing a supportive community, and we would be happy to speak with this individual directly to explore what else we can do to help.' Retirement homes are leasehold properties, usually with leases of between 125 and 999 years, and are specifically designed for over-55s. They boomed in popularity during the 1980s and remained attractive well into the early 2000s. As of 2019, there were 730,000 retirement housing units in the UK, according to the Elderly Accommodation Counsel. However, in recent years, their appeal has dramatically waned as complaints mounted among those early buyers. This is due to their hefty service charges, which are payable whether or not the property is lived in. Owners must also pay ground rent, generally between £400 and £500 per year. Ground rent has since been banned on the sale of new retirement homes but this does not apply to re-sales. The issue has been compounded by the double council tax raid on second home owners which has swept up the families inheriting these properties. The Leasehold Reform Act 2024 was brought in by the previous Conservative government to strengthen leaseholder rights. It aimed to improve the 'transparency of service charges and give leaseholders a new right to request information about service charges and the management of their building'. But it contained loopholes which allowed developers to sell new houses as leasehold properties, for instance if they are part of a retirement village. Helen Whately, shadow pensions secretary, said: 'This is yet another example of Labour not keeping their word. It's just like when they said they wouldn't remove the winter fuel payment, only to then betray 10 million pensioners the first chance they got. 'With each day it becomes clearer their pre-election promises aren't worth the paper they were written on.' Dennis Reed, of charity Silver Voices, said: 'In some cases, the service charges amount to daylight robbery of vulnerable older people. It is essential that legislation provides a fair framework for such charges. 'Older people are already struggling to cope with rising energy and food prices, cuts to winter fuel payments, poor social care support and large council tax bills, so we need extortionate service charges in retirement flats like a hole in the head. 'The Government must get a grip on this scandal' In April 2024, Labour U-turned on its own promise to scrap leaseholds in its first 100 days of power. Instead, it pledged to 'bring the feudal leasehold system to an end' without committing to a timeframe. In March, the Government published the Commonhold White Paper, which will be followed by a draft Leasehold and Commonhold Reform Bill in the second half of this year. Again, retirement homes will not benefit from exemptions and were excluded from the recommendation to ban exit fees. It means owners like Ann Townson will have no protection from soaring costs. The 78-year-old moved into a retirement village in Harrogate. At the time, it seemed like the 'ideal solution' as she struggled with health and mobility issues. However, now she cannot keep up with the service charges and ground rent which cost her £1,047 a month, which has rocketed from £731 when she first moved in four years ago. She said: 'It will use up all my savings as the cost per month takes up more than half of my pension. You have absolutely no control over the costs. 'I would never have moved here if I had known what I know now.' Paula Higgins, of the Homeowners Alliance, said: 'Retirement homes should not be exempt from plans to ban leasehold houses. 'Buyers of these properties often face huge hidden costs. In many cases, it's the children who are left to shoulder these financial burdens after their parents pass away.' A spokesman for the Ministry for Housing, Communities and Local Government said: 'Far too many leaseholders across the country are being asked to pay unreasonable and extortionate charges, including people living in retirement homes. 'We are determined to fix this, which is why we will consult this year on detailed plans to drive up transparency of service charges and hold landlords to account for the money they spend.'
The Sun
16-05-2025
- Business
- The Sun
Restaurants and bars are ‘quietly' introducing new US-style tipping rules and YOU will have to pay extra
PUBS and restaurants are facing a perfect storm, and it could mean you'll soon be shelling out US-style tips just to keep them afloat. A double whammy of government policies, designed to help hospitality workers, are actually pushing the industry to the brink, leaving customers to pick up the tab. Service charges are increasing, even in places where tipping was rare, with some restaurants now asking for up to 20%, plus additional cover charges. The previous government's Tips Bill, aimed at making sure staff get all their tips, has had some unexpected drawbacks. Although it guarantees waiting staff keep 100% of their tips, it has removed a financial safety net for restaurants dealing with rising costs and fewer customers. Kitty Slydell-Cooper from hospitality group Countertalk said that, before the law, service charges helped support restaurants financially. Now, that safety net is gone, and many restaurants pay staff the minimum wage, using tips to top up their pay, which spreads the money more thinly. Adding to the strain, increases in the national minimum wage and the government's rise in employer national insurance contributions have further intensified the financial pressure on the hospitality sector. In April, the national living wage rose by 77p an hour to £12.21, while the rate of employer national insurance contributions increased from 13.8% to 15%. Plus, the threshold at which businesses begin paying this tax was reduced, dropping from £9,100 to £5,000 a year. As a result, businesses are quietly cutting staff, reducing employees' hours, removing perks, and even sending workers home without pay when business is slow. Ryan, who works at an upscale bar in Mayfair, told The Telegraph that his team has been cut down from 13 staff members to just four. New tipping rules mean hairdressers and waiters will get more cash as bosses are forced to pass on all tips without deductions Those who are left are working fewer hours and struggling to make ends meet. He said: "One of my bartenders got paid £1,600 in January." "I just don't know how some are surviving." To cope with rising taxes, hospitality chains are adding extra charges and increasing recommended service fees to help cover the additional costs. For instance, at the upscale London restaurant The Wolseley, there is a 15% recommended service charge, plus a £2.50 cover charge. Kitty said: "Expect to see 15% on your bill as standard, and don't be horrified when the card machine is asking you to add an additional gratuity. "It will be propping up a totally beleaguered industry, so it's best to view it as a tax loophole that allows for the restaurants you love to survive." Despite these expected increases, in most cases, diners are still not obligated to pay service charges. However, the majority still do, according to the Hospitality Professionals Association. What are the rules on tipping? Since October 1 2024, the Employment (Allocation of Tips) Act 2023 requires employers to pass on 100% of all tips, gratuities, and service charges to their staff. Businesses must have a written policy outlining how tips are shared fairly and keep detailed records of all tips received and distributed. If a service charge is discretionary, customers must be made aware that it is voluntary. Employers are still responsible for national insurance contributions on distributed service charges if they control the distribution, but a tronc system changes this. A tronc is when tips are managed separately by someone other than the employer. Employees are then responsible for declaring cash tips received directly for income tax These rules were introduced to protect hospitality staff's tips, but diners can still choose to tip if they want to. Even if your receipt includes an automatic service charge, you are not legally required to pay it. Service charges and tips - what's the difference? IT'S easy to get these two mixed up, so here's a quick breakdown: Tip: A voluntary payment made by a customer to express satisfaction with the service. The customer decides the amount (or if they want to tip at all). Service Charge: An amount added to the bill by the restaurant or business. It may be discretionary (optional) or mandatory (compulsory). The Tipping Act mandates that all tips and service charges must be distributed to staff. If a service charge is optional, customers must be clearly informed that they are not obligated to pay it. It's always a good idea to review your bill to see if a service charge has already been included before adding an additional tip.
