Help with service charge and ground rent

Katrina65

Hi there I find myself in the horrible position of no longer being able to pay my mortgage out of my benefits. The last rate rise was the 13th I’ve had to endure in past 18 months. I will therefore be moving into a leasehold flat which I can afford to buy but the thought of paying these extortionate extras is scaring the life out of me. Some are as much as a mortgage over the period of a year. Can anyone tell me will I qualify for any help towards this? I cannot work and have legacy ESA and PiP. Many thanks. 

Katrina65

The extras I mean ground rent and annual service charge 

poppy123456

I know you can claim for some service charges (depends what it includes) i'm not sure about ground rent. To claim for help with these you will need to claim Universal Credit. A claim for UC will end any Income Related ESA you're claiming 2 weeks later.

If your ESA includes any contributions based this will continue but be deducted in full from any UC entitlement.

Edit to add, i found this link which says you won't be able to claim for help with ground rent. https://england.shelter.org.uk/professional_resources/legal/benefits/universal_credit/universal_credit_housing_costs_element_payment_condition

I will tag a member of the scope team who will hopefully be able to advise you further. @Adrian_Scope can you please help here?

Katrina65

Many thanks for your help, today I spoke to DWP and because I’m on income based they said I would get help with any additional costs in its entirety. I am very sceptical about this. In all honesty I don’t believe this is the case. If anyone is in a leasehold property I would really appreciate any thoughts. 

poppy123456

I would never advise anyone to ring any DWP department for any benefits advice. When ringing them you're speaking to someone from a call centre, who very often have very little benefits knowledge.

To claim for help with service charges you will need to claim Universal Credit because it's no longer possible to claim housing benefit in your case.

You can also get some expert advice from an agency near you. Start here. https://advicelocal.uk/welfare-benefits

Katrina65

Yes I do believe you are absolutely right. I am now looking at the option of the SMI Mortgage support but cannot even work out how that works?? It currently says that they pay 2.65% how is that even worked out? Does anyone know please? 😞 drowning in making the right decision 

honeybee700

Please be aware that once you go on Universal Credit, you cannot go back to any legacy benefits.  Some people have lost out when they switch.  Please see this article by Martin Lewis-although its dated May 2022 its still got relevant information.

https://www.moneysavingexpert.com/news/2022/05/900-000-benefits-claimants-to-be-left-worse-off-in-move-to-unive/

honeybee700

This is another link explaining about SMI-hope it helps.

https://www.moneysavingexpert.com/news/2022/11/more-homeowners-to-benefit-from-governments--support-for-mortgag/

Katrina65

Thankyou both for your valid input. 

MW123

Katrina65 

I am unable to provide any assistance or advice regarding benefits or mortgages.   However, as a fully qualified conveyancer specialising in lease law, I am hopeful that the information below will be beneficial to you. 

 I understand the concerns you have regarding service charges and ground rent. Currently, there has been an average annual increase of 10% in service charges. These charges encompass various expenses, such as building insurance, communal electricity (which has experienced significant hikes in the past year), water and sewerage charges, gardening, window cleaning, and the cleaning of common areas. To gain a comprehensive understanding of the financial aspects, it would be advisable to review the company accounts for the past three years, along with the annual budget which will list exactly what the service charge demand covers. 

You must also bear in mind that on top of service charges the landlord can raise a levy for repairs.   I have recently seen a block of 20 flats told on top of their current service charges of £3,500  per annum  they are going to have to find an extra £15000.00 per flat over the next three years for balcony repairs to the property.   

The collection of service charges is regulated by the provisions outlined in your lease agreement. Depending on the specific terms stated in your lease, the frequency of payment may vary. Service charges are collected on a quarterly basis, while others may be required to make payments half yearly  or annually in advance. 

In the majority of cases involving blocks of flats, service charges are divided equally among the leaseholders. However, there are instances where certain flats contribute a percentage towards the overall charges, which is determined by the specific terms outlined in their lease agreements. 

Ground rent is not always payable in leasehold flats, but in some properties it is payable to the landlord or superior lessor.  It is essential to review the lease agreement when considering a purchase to determine if ground rent applies. 

It is difficult to give specific information without more detail.   It is imperative that your conveyancer is well-versed in lease law and conducts a thorough examination of all possible pitfalls.

 

 

 

 

 

Katrina65

Wow that’s an eye opener if ever I need one. Trying to find something where I currently live that hasn’t got these ridiculous charges. Back to square one then 🤦‍♀️

L_Volunteer

That sounds really difficult @Katrina65. Would anything help at the moment?

Katrina65

I think my only option is the SMI loan which gets added onto my existing mortgage and has to be paid back with interest. This is not ideal at all. I no longer can get another mortgage because of my disability. Anyway everyone is suffering something so I shall just try and keep positive as I can and pray these rates come down. 

Hannah_Alumni

@Katrina65 Just wondering, do you have to pay the ground and service charges up front? Can you pay monthly and hope that is a little more manageable than all up front?

honeybee700

Have you tried Shelter?  I've found them really helpful

https://england.shelter.org.uk/

Katrina65

I would get help with the service charges but they’re so expensive it’s now not an option. Also yes I have found a lot of information from shelter very helpful.