Soaring service charges for leasehold flat owners are thought to be behind a 20% rise in applications to set up Right To Manage (RTM) and flat management companies during the past year, research from Direct Line reveals.

Service charges in leasehold flats like those pictured cover various expenses related to maintenance, repair and management of the building and communal areas.

PRICES RISING

But with prices rising throughout the economy many flat owners including landlords have seen charges rise by 10% per year – with one in 14 (7%) seeing increases of 21% or more.

That increase means service charge bills now average £1,580 per year with one in five (20%) owners paying over £2,000 a year.

On average, landlords in Greater London pay the highest service charge at £1,994, more than the median monthly London rent, experiencing an 11% increase in the charges they pay in the past two years.

RTM and flat management companies allow leaseholders to take over the management of their building from their freeholder, as part of a group of other leaseholders of neighbouring properties.

LEASEHOLD LANDLORDS

Research from Direct Line business insurance reveals that nearly two thirds (60%) of leasehold landlords in England and Wales would consider setting up an RTM or flat management company, to take over the management of the building in which a property they own is located. And nearly one in five (17%) said they would consider joining one if someone else in their building established it.

Sarah Casey, Landlord Product Manager at Direct Line business insurance, says: “Rising mortgage rates and steep increases in service charges have put landlords under real pressure of recent months.

“As a result, it is not surprising to see an increase in the number of flat owners teaming up with other leaseholders in their blocks to form Right to Manage companies.

“By taking control of the management of their block in this way, landlords can have more say in what work gets done, when it is done, and at what cost.”