I’m paying £8k in service charges for my flat – leasehold reforms aren’t enough

Tenants living in long-term leasehold agreements have expressed concern that reforms being introduced this week do not go far enough to protect them.

Today, long-awaited legislation that would ban the creation of new leasehold houses in England and Wales will be introduced to Parliament.

The Leasehold and Freehold Reform Bill will mark its first step on the path to become legislation, hailed by Housing Secretary Michael Gove as a “landmark moment for millions”.

In the UK, homes are purchased on either freehold or leasehold basis. When you buy a property freehold, you own the building and the land it’s on until you decide to sell it.

But if you buy a property leasehold, you own only the right to live in it for a set number of years. The landowner remains as the freeholder, meaning they can impose restrictions and charges, and that the property will revert back to the landowner at the end of the term.

During his speech at the State Opening of Parliament on Tuesday, King Charles reasserted the Government’s commitment to make it cheaper and easier for homeowners to buy the leasehold of a property and to end “punitive” service charges.

However, some leaseholders have argued that the reforms will not go far enough and are “but a drop in the ocean”.

Chris Hogben, 39, bought a four-bedroom flat, in London’s Forest Hill with his wife in April 2022.

Mr Hogben told i: “I worked so hard until I was almost 40 to be able to afford my own property and now we’re tied into so many punitive charges.

Chris Hogben is fearful he and his wife will not be able to sell their home (Photo: supplied)

“A lot of people get sucked into really trying to nail freeholders on the details, but they have abused the laws perfectly legally and as soon as I realised this, it became the single issue that has politicised me.”

Mr Hogben said that his initial added annual fees of £150 in “daft” ground rent and £1,450 service charges were “annoying”. However, it was the endless service charges that have emotionally and financially “crippled” him and his wife – this year they have paid over £8,000.

“The leasehold system encourages abuse,” Mr Hogben added. “It is such a crooked, exploitative scheme compared to actually owning your own place.”

He added that he feels uncomfortable with the fact that 20 per cent of the Conservative Party’s funds come from property donors.

Ground rents were banned under The Leasehold Reform (Ground Rent) Act on new leases for homes purchased after 30 June 2022, but they can still be charged on leases before this date.

Leaseholders also have to pay service charges to contribute towards the maintenance of the block or development they live in.

Mr Hogben described the inundation of letters he receives on a monthly basis asking for more money for various maintenance projects. He said that this was the fee that “had people living in total fear of what’s to come”, adding that freeholders will charge a premium on services to get anything done.

Regarding the reform bill coming into play this week, Mr Hogben said he is unclear on what change, if any, the bill would enact.

Matt Lismore and his partner have been inundated by service charges since moving into their leasehold property (Photo: Supplied)

But he was sure that the initial promises of the bill had been “severely watered down” since it was first read in 2022. He added that it was “but a drop in the ocean for flat leaseholders”.

Matt Lismore, 29, moved into his flat in Barking and Dagenham, east London, in 2019. He thinks this bill will have little effect and called for the total abolition of the leasehold system.

He said: “In my honest view it is a pathetic piece of legislation that is designed to appear to be reform when in reality it allows the abuse of people in leasehold flats to continue.”

Mr Lismore said that his service charges have rocketed to £3,500 per year compared to £1,700 when he first moved in. He added: “One mother in my residents’ association told me she had to choose between paying her service charges and feeding her kids.”

“The other cost I think is egregious is that tenants were charged a total of £5,000 across 17 flats just to check that emergency lights were working – to me that’s just abuse,” he added.

“I feel trapped, I am personally trying to sell my home and move on from this. We are so scared – we are not the exception we are the rule the cat is out of the bag that leasholding is a rip-off.

Another leasehold owner who has been living in her flat for more than 20 years claims she is trapped in a “constant battle” as she is unable to sell her property despite it being totally unsuitable for her health needs.

The 72-year-old woman, who has asked to remain anonymous, currently lives in a two-storey apartment in Potters Bar, Hertfordshire.

But a diagnosis of arthritis means the home has now become “too large” for her – and she is instead looking to sell the property to find somewhere more suitable.

Harry Scoffin and his mother Anna are not sure if the reforms go far enough (Photo: supplied)

“The issue is I need to look at renewing the lease because I only have 66 years left on it and that’s not attractive to potential buyers,” she said.

“If the new Government bill goes ahead, the extension term would jump from 90 years to 990 and that’s great. But will it actually come into law?

“All of my advisers say it’s worth the wait. But time isn’t on my side because of my age and health. The flat has two steep flights of stairs and a huge garden. It’s just not suitable for me.

“A change of Government next year might see the bill fall through and then I’m no better off. It’s a constant battle and I feel left in limbo because no one really knows what might happen.”

Harry Scoffin, 28, set up the campaign group Commonhold Now after seeing his mother Anna pay an eye-watering £33,000 a year for service charges in her three-bedroom apartment in east London.

Mr Scoffin has welcomed Government action, but warned the reforms don’t go far enough and questioned whether the bill would actually come into law.

“The leasehold system is the biggest organised scam in the country,” he said. “It’s great to see the Government bringing in reforms and it will help a lot of people – including those with short leases.

“But it doesn’t go far enough in giving people control over service charges. The freeholder currently has free reign over how much people will pay. And service charges have doubled in the last five years.”