Leaseholder Service Charges

We held a meeting on leaseholder issues in April. One of the issues was leaseholder service charges. We’ve now received a response from Metropolitan

The key point about service charges that came up at the meeting was “At the time the estate was transferred from Lambeth to the Housing Associations the offer letter said the landlords intend to charge a management fee of 10%. Ben [from Metropolitan] said the management fee was subsequently reviewed and raised to a level higher than 10%. Other residents contributed to a discussion about this: essentially saying there should be a paper trail if Metropolitan were to override what was said in the offer made at the time of estate transfer. Ben said he would email Chris [Secretary’s note: that’s me] with the paper trail about reviews of service charges”

We’ve now heard back from Ben Hall from Metropolitan. Our secretary thinks it’s a waffly response that doesn’t answer the question, details are below. We emailed him on 24th July saying ‘You very kindly responded to me on 10th May with details of how service charges are calculated, but I haven’t yet received any information on why you felt you had the authority to “override what was said in the offer made at the time of estate transfer”. Can you please let me know when I will receive this information’.  The only response we got back is “The management fee is charged in accordance with the lease which states Metropolitan must charge a minimum of 10%.  Due to increases in costs and administration, Metropolitan undertook a review of the management fee in 2010”.

The TRA committee hopes to discuss how to take this further in September. If you have any thoughts please contact us

The full reply from Metropolitan is below

Management Fee
As discussed at the meeting, I confirm the management fee is charged in accordance with the lease which states Metropolitan must charge a minimum of 10%.

Due to increases in costs and administration, Metropolitan undertook a review of the management fee in 2010. This established a management fee to be charged on a fixed basis in three bands:

Band A – £64.00 p.a.
Freehold properties on estates with service charges.
Leasehold street properties with no service charges.
DIYSO/shared owners houses with no service charges.

Band B – £204.00 p.a. Where Metropolitan provide full services, including Right to Buy Leaseholders, Shared Ownership leaseholders and those formerly shared owners who have staircased to 100%.

Band C – £150.00 p.a. Third Party managed (managed partly or wholly by another landlord).

This new management fee structure was applied to St Martin’s leaseholders in the 2013/14 accounts.

Metropolitans management fee has been benchmarked against similar organisations and is currently below ‘average’. The review carried out in 2010 will need refreshing and a review of the management fee will be undertaken during 2016/17. We will be in contact with leaseholders at St Martin’s about the approach, methods and impact.

The management fee includes the following services:

  • Rent/charges/fees calculation and collection
  • Consultation, including statutory consultation
  • Ensuring appropriate buildings insurance is in place and managing the buildings insurance programme (not freeholders)
  • Dealing with correspondence & responding to leasehold/owner enquiries
  • Providing information and advice including handbooks, leaflets, website etc
  • Neighbourhood management including Anti Social Behaviour
  • Associated office costs in providing a management service.
  • Service charge calculation, invoicing and collection
  • Monitoring accounts and taking action/providing support and advice
  • Processing and paying services invoices
  • Managing common area lighting, grounds maintenance and/or other contracts
  • Managing buildings common area cleaning, lighting, heating, aerial systems repairs and maintenance
  • Arranging, inspecting and processing common area and building repairs and associated contracts

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