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RE: The Service Charge Trap...

in LeoFinance8 months ago

There's another similar one to watch out for; service charges on retirement flats.

Selling a retirement flat can be a slow process because they come with so many strings attached - usually that they can only be sold to single people over a certain age (usually 55+), can't be sub-let, and the owner of the block gets a % of sale price.

But the real issue is the service charges. Because they provide wardens, lifts, emergency alerts, social facilities etc, the service charges are relatively steep.

If a relative living in one dies, the company owning the block will usually expect the service fee to continue to be paid. It is often due even while probate is still going through, which can take anything up to 12 months during which time the flat can't even be put on the market. Deferring the charge (even with interest) is not usually allowed.

This becomes the responsibility of whoever is the executor of the will, often a relative. So it lumbers the relative with an additional monthly expense of £200-£400 depending on the charge. While this can be reclaimed eventually from the value of the estate, if the executor can't pay, it will adversely affect their credit rating.

Personally I think it's morally wrong that someone can get their credit rating wrecked due to a contract they didn't take out any may not benefit from.

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100% agree - it's aweful but doesn't surprise me at all.