Service Charges vs Estate Charges: What to be aware of when purchasing a freehold home on a private estate

This article intends to give a quick summary on the current legal position of estate charges and how they provide the freehold owner with lesser rights in contrast to that of service charges, which are payable by a long leaseholder.

When it comes to long leaseholders in a block of flats, the payment of service charges to cover the cost of maintenance of the building and communal areas can be challenged. This is due to the statutory rights granted to the leaseholder, providing them with the right to information about the service charges, the chance to challenge their reasonableness and the right to question whether or not the services promised were provided to a sufficient standard. The bodies which deal with such challenges are the First-Tier Tribunal (Property Chamber) or the Leasehold Valuation Tribunal if the property is in Wales.

In contrast, freehold house owners are not provided with the same privileges when it comes to estate charges and their contribution of the maintenance of communal areas. The latter practice has been coined the term ‘fleecehold’.

With the above in mind, the Government has said that it intends to regulate managing agents to enable leaseholders and freeholders to be protected alike. A 2017-19 Bill proposed the provision of self-management of communal facilities by freeholders as well as requiring management companies to ensure that the shared facilities are of an adequate standard.

It appears that it is time for the law to be balanced in such a way that leaseholder and freeholder rights are equal. At present, it is important to have awareness of the above if you plan on becoming a freehold house owner on a private estate.

If you have any queries or would require our assistance with an alternative matter, please do not hesitate to get in touch with our expert team of solicitors at Lawdit today.

Tel: 023 8023 5979


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