Herne Bay
The Burrs is a lovely old building but it does require an above average level of expenditure to keep it looking attractive, safe, comfortable and in good substantial order.
Fortunately since claiming the right to manage on 5 Nov 2014 (under provisions of the Commonhold & Leasehold Reform Act 2002), we as leaseholders have complete control over maintenance and do not have to rely on it being organised by the freeholder or as, in the recent past, their managing agent. The rights and responsibilities of our RTM company are listed HERE ......
Meeting the Cost
Lessees are required under the terms of their leases to meet the cost of keeping the building in good substantial order.
Lessees cannot refuse to pay for maintenance and repairs if they are carried out as an emergency, or have been agreed by a majority within the RTM.
As with all apartment buildings there are 3 aspects to maintenance costs:
1. Routine day-to-day Maintenance - cleaning common areas, fire alarm servicing, health and safety reporting, cleaning gutters, small repairs etc.
2. Cyclical Maintenance - Painting the exterior at least every 7 years (perhaps more frequently), refurbishing the common areas every 10 years (redecorating, recarpeting etc).
3. Planned Major Works - To improve the water tightness of the building and refurbish the exterior brickwork.
Prior to the formation of the RTM, there was no organised fund to call on for routine, cyclical and major works. The drawback to meeting the costs of maintenance this way was that large sums of money were required at relatively short notice which invariably the leaseholders at that time were reluctant to provide, or needed time to find. This delayed the work and made the management of the building extremely difficult.
The solution is to spread the cost. All lessees now contribute on a monthly basis to a fund, known as the Reserve Fund, to cover all maintenance. The fund has been running since September 2018.
Contributions are held in trust by the RTM company, and when contributed are attributable to the flat rather than the present leaseholder of the flat. Therefore contributions are given on the understanding that they are not refundable on the sale of a flat or for any other reason.
Reserve Fund
To arrive at a suitable figure for contributions we had to rely on our own estimates and the prevailing norms in the leasehold sector. Estate Agents are of little help because they rarily publish details of service charges in their sales blurbs. This is mainly due to the fact that leases often don’t put an actual figure to the charges, you find this out once you are the new proud owner of a flat and a large bill drops through your letterbox. We have only found one reference to service charges and that was on Rightmove advertising a flat in Bay View along by the Clocktower with a monthly service charge of £114 per month per lessee. Yet this is a relatively new building with nowhere near the repairing costs of The Burrs.
In the wider market, The Competition and Markets Authority (CMA) has undertaken research into Service Charges in England and Wales and published a report in December 2014 entitled: Market study of the residential property service. Their research found that leaseholders can expect to be asked to pay as a Service Charge somewhere between £1,000 and £2,000 a year (£80 to £160 per month) depending on the type and condition of the property. The CMA estimates that the average amount of an annual Service Charges bill is at least £1,123 (£94 per month).
As one expert said, if I show you a building without a reserve fund, I will be showing you a building that is shabby, run-down, where nobody cares and anarchy rules (and the roof will be badly leaking). The advice is - always be very wary when buying an apartment in a building that doesn’t have a reserve fund.
At The Burrs it was decided at the AGM in July 2018 to introduce a monthly contribution scheme, gearing contributions to the market value of each flat rather than the equal 20% contribution specified in the leasehold terms. This seems a fairer way of financing maintenance costs. This provided for a range of contributions from £75 to £99 per month, excluding buildings insurance.
The Burrs 44 Central Parade, Herne Bay, Kent CT6 5HZ
maintenance Matters
