The thrill of buying your first flat and moving into your own home can be dampened by paying hefty service charges for maintenance of communal areas. Rows between leaseholders and management companies have been well documented. If things go wrong - gardens go untended, communal hallways are not cleaned and broken windows stay broken - yet demands for service charges still arrive regularly in the post, what action can leaseholders take? As a leasehold flat owner, you usually own and are responsible for the maintenance of everything within its four walls, including floor boards and plasterwork, but not usually the external or structural walls. The landlord, who can be a person, a company, a local authority or a housing association, owns the structure and common parts of the building and the land it stands on and is responsible for its maintenance. According to independent advice agency the Leasehold Advisory Service (Lease), it's now becoming quite common for the leaseholders to own the freehold of the building through a residents' management company, effectively becoming their own landlord. A lease is a contract between the leaseholder and the landlord, giving conditional ownership for a fixed period of time. It is the key to all the responsibilities and obligations of both the leaseholder and the landlord and should spell out what you can expect from the landlord in terms of services. No two leases are the same, so it is essential you read yours carefully to find out exactly what your rights and responsibilities are. Get advice if unsure about any legal language. Your contractual rights laid out in the lease normally entitle you to expect the landlord to maintain and repair the building and manage the common parts such as grounds, staircases and hallways. At the same time, you will be required to keep the inside of the flat in good order, to behave in a neighbourly manner, to pay a share of the costs of maintaining and running the building and not to do certain things, such as sub-let, without the landlord's consent. Because leasehold is a tenancy, it is subject to the payment of a rent - which may be nominal. Ground rent is a specific requirement of the lease and must be paid on the due date. Service charges are payable by the leaseholder to the landlord for all the services they provide, including maintenance and repairs, insurance of the building and, in some cases, provision of central heating, lifts, lighting and cleaning of common areas etc. Service charges usually also include the costs of management, either by the landlord or by a professional managing agent. Details of what can and cannot be charged by the landlord and the proportion of the charge to be paid by the individual leaseholder are all set out in the lease. Read it very carefully. Don't assume, for example, that you are obliged to pay for something just because a bill turns up from your landlord. All maintenance costs are met by the leaseholders, and landlords normally make no financial contribution. Service charges can vary from year to year and can go up and down with no limit other than that they are "reasonable". Most modern leases allow for the landlord to collect service charges in advance, repaying any surplus or collecting any shortfall at the end of the year. The lease normally obliges the landlord to take out insurance for the building and common parts and gives them the right to recover the cost of the premium through service charges. The policy doesn't usually cover the possessions of individual leaseholders. Many leases provide for the landlord to collect sums in advance to create a reserve fund, ensuring that enough money is available for future scheduled major works such as external decoration. The lease will set out the sums involved and when regular maintenance works are due. Leaseholders have powerful rights to challenge service charges they feel are unreasonable at Leasehold Valuation Tribunals (LVTs), which provide a relatively informal way to resolve residential leasehold disputes. Application to LVTs can be made under many different laws and on many subjects. LVTs can determine, among other things, the reasonableness of a service charge and whether it is payable and disputes relating to insurance. Some landlords carry out the management of the property themselves but many appoint a managing agent to manage and maintain the building on behalf of the landlord in accordance with the terms of the lease, current relevant legislation and codes of practice. The agent takes instruction from the landlord, not the leaseholders, but should be constantly aware of the leaseholders' wishes and requirements. The agent will receive a fee which is usually paid by leaseholders as part of the service charges. There is no statutory regulation of managing agents. Some are members of ARMA, the Association of Residential Managing Agents, and agree to abide by its own code of practice and that of the Royal Institution of Chartered Surveyors. If there is a problem with management services, the leaseholder's argument is not with the agent but with the landlord, who has ultimate responsibility for the full and proper management of the property. For disgruntled leaseholders who have suffered long-term bad management from landlords or who believe they could do a better job at a lower cost, there is another option. Since September 2003, flat owners in England and Wales have been able to exercise the Right to Manage (RTM) and take over the management of their building without having to prove any fault on the part of their landlord. Article date: July 2006

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