‘What is our money being spent on?’: Leaseholders crippled by 118% increase in service charge

Leaseholders living in a “neglected” block of flats say they have been left “financially crippled” after facing a 118 per cent increase in service charge since 2016.

Matthew Gisborne, 49, is one of seven leaseholders living in Kirkdale Corner, Westwood Hill, Sydenham, a 1930s purpose-built block owned by property management company Freshwater.

Since 2016, all seven have seen their service charges increase from £1,600 to £3,500, despite the state of their properties remaining in poor condition with constant leaks, damp and broken windows. 

A spokesman from Freshwater said that service charges are “carefully reviewed” and in-line with the company’s duty to ensure they are “reasonable” and leaseholders receive value for money.

But Mr Gisborne said: “I’ve lived with stress, anxiety and fear for years. I’m on a good wage but I just cannot afford this.

“I owe money to the bank, to my mortgage and to Freshwater.”

Leasehold property owners pay a service charge to their building’s freeholder or landlord, to maintain communal services such as cleaning, repairs and insurance. 

While shared ownership properties are supposed to be an affordable way to get onto the housing ladder, there is no limit on how much can be billed as service charges. Nor is there transparency in how costs are calculated.

Mr Gisborne said: “We’re being charged for garden maintenance when we don’t have a garden and we pay £400 a year for CCTV – one camera is from the 1980s and the other one faces a blank wall.”

On top of the service charge, leaseholders each face a £4,000 reserve fund charge each year from major works which Freshwater carried out on the building in 2020.

The leaseholders took freshwater to a tribunal over its decision to begin internal major works on the building before addressing the external sources of water ingress. They lost the tribunal, which found that the landlord was not aware of the external issues.

But, Mr Gisborne said he never would have brought the leasehold to his flat in 2016, if he was aware that major works would take place.

He said: “Freshwater assured me no major works were planned. Within a year they said £200,000 worth of major works were going ahead.”

Now, leaseholders will be billed for a whole new set of major works to repair the outside of the building. Freshwater has said these will not begin until the arrears have been cleared from the indoor works, and they cannot estimate the costs that leaseholders will be billed.

Danila Bodei has been a leaseholder at Kirkdale Corner for 14 years. When she first brought the property she said it felt like an “achievement”.

The 53 -year-old who works in a coffee shop said: “I was so proud to buy my own place. Now it’s a worry with indefinite reserve funds and service charges.

“Most of my savings have gone. I live on my own and my family are in Italy. These savings are my life – it’s for emergencies, not this.

“I’m constantly having to call them up to report broken doors or rubbish not being collected, and they’re just dismissive. What are we paying for?”

Some of the leaseholders have tried renting out rooms in their properties but make a loss due to the service charge. Others face bankruptcy, having used up all their savings to pay off the charges.

At least four have tried to sell their properties but were told by estate agents this will be next to impossible with the annual charges.

A spokesman from Freshwater said: “The residents of Kirkdale Corner have not been repeatedly overcharged for maintenance and major works and neither has there been any mismanagement on the part of the Freshwater Group.

“Such claims, including a claim as to the reasonableness of the internal decorative works carried out in 2020, were brought by leaseholders to an independent tribunal and were rejected.  It was further determined that the cost of the 2020 work was payable in full.

“Where leaseholders have genuine difficulty in paying we have agreed payment plans to assist them.”

Pictured top: Leaseholders Danila Bodei, Beatrice Nota and Matthew Gisborne outside Kirkdale Corner (Picture: Matthew Gisborne)