Leasehold residents have to pay for house manager's flats. that is well understood. They pay for the house manager's flat in three ways.
Firstly, when they purchase their own flat. That one flat in the development(the house manager's flat) cannot be sold is taken account of in the purchase price of the remaining flats.
For example in a development with 50 identical flats a purchaser will pay 1/50th of the total development purchase price.
In a development with a house manager's flat the purchaser will pay 1/49th of the total development purchase price.
So those that voted to end the role of a residential house manager and allow Firstport to sell the leasehold have dramatically undermined the value of their property.
The next way residents pay for a house manager's flat is by contributing to maintaining it through their service charge.
Whilst this is reasonable, it should be noted as part of the sales patter empolyed by Firstport to persuade residents to give up the role of residential house manager, residents will be told that the "house manager's flat requires major decorations which will be very expensive. However, were residents to agree to dispensing with the residential house manager these costs would be avoided."
Residents also pay a "fair market rental" for the house managers flats.
This has been a great source of income for Firstport.
To avoid a challenge at the FTT over the "rental" cost of the house manager's flat, if questioned Firstport have in every case reduced the fees charged to residents.
It can be up to double the true costs that residents are unfairly charged?
How does the scam work?
So suppose development residents are charged £500 per week in their service charge to cover the market rental of the house manager's flat.
To justify that charge Firstport would have to demonstrate that a broadly equivalant flat was available for rent at £500 per weeek and that had they been able to rent out the house manager's flat they would have achieved a rental income of £500 per week.
If evidence was produced that a broadly equivalant flat was available for £375 per week, then on the face of it that would be a £125 per week overcharge.
"On the face of it" because another factor has to be taken into account ?
And that is that there is a legal restriction on the flat in that only a residential house manager can live there.
So a full market rental cannot be achieved.
That initial £500 can easily fall to under £200 under challenge?
With the sale and leaseback of house manager's flats a very interesting situation has now arisen, which should be exploited to the benefit of residents.
Clearly Firstport has negotiated a good deal on the rental they have to pay for the house manager's flats as part of the sale that raised £31m.
Residents should now demand to know the exact price Firstport are paying in rent for the house manager's flats? And that amount is all they shoukld have to pay via their service charge.
it makes any case at a tribunal so much easier to prove?
Valuations can be subjective. But, a document showing that Firstport are paying £245 per week for a flat and charging residents £425 is damming evidence!
