There is little clarity on what level of service charge will be made to residents on new estates in the UK, the deed of transfer is often lacking in detail regarding the specific services which will be provided. The variance in estate size and design means there do not appear to be any adequate benchmarks in existence or being developed or any suitable parameters for measurement of appropriate sinking funds. There needs to be much more clarity written on deeds and benchmarks developed for specific circumstances so new purchasers can judge value for money.
The legal position around how service charges from free holders can be collected needs to be further explored, there has been statutory change implemented for leaseholders in the area of service charges but as yet freeholders appear unprotected from unscrupulous property management companies, there appeared to be little desire by freeholders to withhold the payment of the charges, but there needs to be some evidence of what happens when your neighbours do not pay?
Although disputes had not as yet arisen, residents could see the potential for disputes and there needs to be some clarity regarding the position for dispute resolution in this complex area. There needs to be a clearer process of transfer between the developers managing the Property Managing Agent by appointing themselves directors of the RMC and the new residents appointing voluntary and appropriate directors. These voluntary directors need clear guidance around expectations from them regarding property management including health and safety, insurance, maintenance regimes and responsibilities. Whilst every company acting as a Property Management Agent was a member of ARMA, they advertise that they provide high standards of leasehold management and admit in their literature that freehold owners are relatively unprotected. With the growth in new housing across the UK it is time for Chartered professionals such as Surveyors to take an interest in this niche but growing area.
Research is ongoing with a very large group (approx. 1,200) of new homeowners experiencing issues relating to freehold service charges providing case studies to be analysed. The impact will come from a good practice guide designed to clarify and improve the management of the issues identified.