An examination of 140 court tribunals relating to Assethold, the freehold owning company of around 4,000 properties in England and Wales, has revealed service overcharging on a huge scale. Homeowners of the properties examined had been overcharged almost £1.2 million for key cutting, cleaning doormats and the cleaning of council wheelie bins.
One such victim was Sue Robertson, whose service charges rose from £750 a year in 2019 to £3,198 in 2023 – a 320% increase in just four years for a small one bedroom flat in Worthing. The flat is one of just two in a converted Victorian building with little shared space to maintain. The rises began when the freehold to her property was sold at auction to London firm Assethold, and its sister company, Eagerstates, took over management of the building.
More than 30 MPs have signed a letter to another property management firm to demand answers to poor or non-existent service. FirstPoint has been accused of failing to perform basic maintenance and administrative tasks, such as the upkeep of communal areas, and charged for ‘terrorism insurance’ and ‘contribution to reserves’, while tripling the cost of service charges over the last five years.
One of the leaseholders of the Bristol flats managed by the company said that he had no option but to sell his two bedroom flat because the charges had become unaffordable. Liam McKinnon said that there was “no accountability” and that the company could “just keep putting up the charges” while failing to provide a service. Mr McKinnon accepted an offer on his property but the buyer pulled out when FirstPoint failed to provide a valid fire risk assessment, leading to the sale falling through several months into the process. The risk assessment was eventually provided, but too late.
Freeholders on some new build estates also find themselves tied into private maintenance contracts for the upkeep of communal areas, often because the local council refuses or otherwise fails to adopt the new area, leaving the builder or management company liable.
Richard and Katherine Phillips own a freehold house in Wells but said they felt “trapped”, even though they owned their property and the land it sits on, because of the hundreds of pounds charged annually for “next to no service”. They had also found out from Land Registry that the title deeds to their property did not show their names because FirstPort had failed to provide the correct details.
FirstPort Group’s customers say they are getting next to no service and when they have phoned for details they have not received an answer. In response, the company said it had created a new online customer portal to view bills and submit repair requests “to enhance cost transparency”.
In the letter, MPs invited FirstPort to come to parliament to explain its conduct and confirm how it planned to address constituents’ “consistent complaints”. The company said in a statement: “As the largest property management company in the UK, we take our responsibilities very seriously and we work hard to meet the needs and expectations of residents. If we do fall short of these expectations, we will address concerns and rectify any mistakes as soon as possible”.
The government plans to force building owners to make bills more transparent, but leaseholders have little choice but to pay service charges even if the service is non-existent, unless they risk forfeiture of their property. When Sue Robinson threatened to withhold payment in full, Eagerstates threatened her with a possession order to claim the entire value of her home. Fortunately, Sue and her neighbour have now successfully purchased the freehold on their building, having found that Assethold had failed to register the property with Land Registry and was not therefore the legal owner of the freehold.
The Property Institute, the professional body for managing agents, has called for building managers to be regulated – but this has not been included in the government’s proposed new laws. This is surprising, given that almost one fifth of properties (4.7 million homes) in England are leasehold.
What does the service charge pay for?
According to the Property Institute, service charges have increased substantially on average over the last five years.
| Service Charge | Increase 2019-24 |
|---|---|
| Reserve Funds | 34% |
| Maintenance Costs | 36% |
| Health & Safety | 36% |
| Staff Costs | 37% |
| Expenses | 39% |
| Professional Fees | 69% |
| Utilities costs | 73% |
| Building Insurance | 92% |