Charged £720 to have a key cut - soaring bills drive leaseholders to breaking point

In the spring I received an email from Sue Robertson, following an investigation I carried out into the overcharging of leaseholders. The email was among about 200 I was sent by homeowners who told me they were having issues with their service charges.

Sue described how soaring charges and legal threats were affecting her finances and health. I replied and a few days later heard from her neighbour, who told me Sue was in hospital having tried to take her own life. After she had recovered, I went to meet her.

At Sue's one-bedroom ground-floor flat in Worthing, West Sussex, she explained to me that it had once been her "sanctuary" but was now causing her severe anxiety.

In 2019, she was paying about £750 a year in service charges. Sue thought the fee was about right for her flat, which is one of two in a small converted house and has little shared space to maintain.

But that year, the freehold to her property was sold at auction to a north London firm called Assethold. She says its sister company, Eagerstates, took over the management, after which her service charge more than doubled. By 2023, her bill was £3,198 - an increase of 320% in four years.

"I dread the post," she told me.

“Every time we get a new bill, it's got something different on it. I think they're just charging us money for nothing."

There are nearly five million leasehold properties in England - homes where residents pay ground rent on top of their mortgage.

New laws are going through Parliament to force building owners to make the bills they charge more transparent, although campaigners who say the system is being abused don't believe the legislation goes far enough.

Sue’s neighbour, James, 31, who lives in the flat upstairs, is also struggling to pay the service charge. When he saw an increased bill, he says he flew into "absolute panic - my heart was racing and I just didn't know what to do. I thought: 'We can't live here any more.'”

Assethold said: "We are deeply concerned to hear that residents have reported emotional and financial stress due to these matters."

Sue and James argue their bills are "massively" inflated and contain oddities such as a charge of £719 to get a key cut, as well as an annual fee of £500 to clean a 140x125cm (55x49in) doormat area and £300 to clean council wheelie bins - both of which Sue and James say have never been done.

James says the situation has become “unbearably stressful” for him and his partner. He says he’s working extra hours and has had to borrow £30,000 to pay the increased charges and to hire solicitors.

Assethold said: "The increase in service charges over the past three years reflects essential infrastructure upgrades and inflationary pressures in the property sector."

One of the only ways leaseholders can challenge service charges is by going to a first-tier tribunal, a type of civil court.

It is a tribunal’s purpose to determine whether service charges are “reasonable and payable”, and not to rule on whether there was any wrongdoing. But by examining hundreds of pages of evidence, we have found several judges' comments that indicate a pattern of bad practice relating to Assethold.

At the lower end of the scale, one judge agreed that “£135 to change two light bulbs was excessive". At the other end, we have found that tribunals have awarded sums of up to £100,000 back to leaseholders for "unreasonable" service charges.

One tribunal heard how homeowners had been unable to sell their flats and had been “significantly affected (financially and psychologically)”. In this case, about £38,000 of the combined service charge was deemed to be unreasonable.

Assethold was described in court as a “multimillion-pound freehold company” that had “simply refused to co-operate” with the process, behaviour that was referenced in many of the documents we examined from about 140 court tribunals.

While a tribunal does not have powers make judgments on potential criminality or other possible wrongdoing, one judge said they were “not satisfied” that an invoice provided by SFM, for £1,750, was “bona fide”.

Assethold said: "That is simply not the case and defamatory by the judge; there was clear transparency and the invoice is bona fide. How a judge can say that with no evidence is absurd and we are considering making a complaint about the judge and these comments as there must be evidence to say this."

That invoice was one of several questioned by Raymond Shaw.

He is a leaseholder at a block owned by Assethold in Stratford, east London. He has 20 years' experience working as a criminal lawyer, specialising in fraud. Raymond says the way the company operates makes him “raise an eyebrow".

In 2018, the service charge was a little over £900 a year. The latest annual bill was for more than £6,000 - a 560% rise.

Assethold disputes the sums provided by Raymond, however he says he and his wife spent “weeks and months” poring over their bills and looking into the companies Eagerstates works with. They say several are new and others close after a short period.

They believe there are links between some of them, including family connections to the cleaning firm used at his flat block.

Assethold said: "This is simply not so; all contractors are bona fide and independent."

Raymond says the block of 11 flats was charged £10,000 for cleaning last year but the service is “atrocious” and, despite the high cost, the building is filthy and bins aren’t collected, causing a problem with rats and a terrible smell.

Assethold said: "Rubbish piles up due to various short lets and abuse by the residents which means waste is constantly dumped in the property."

At a tribunal last year, Raymond and some of his neighbours were awarded back almost £60,000 because of overcharging that took place over a three-year period.

Assethold said "This included mostly estimated charges, and we have refunded any monies to the leaseholders."

The advice given to leaseholders who dispute their service charge is to pay up and take the matter up later, or they could face losing their property in a process known as forfeiture - a measure described as “draconian” by Sebastian O’Keefe from the Leasehold Knowledge Partnership.

Sue withheld some of her payment in protest over her charges and was threatened with a possession order by Eagerstates, meaning that if she didn’t pay in full, it would start forfeiture proceedings to claim the entire value of her property.

Sue says: “I couldn't believe that. This is my flat, this is my home. How can they take that away from me? I've bought it, it’s mine.

“I still can't cope with it. I get really upset about it."

Ji Hoon Yoon, an Assethold leaseholder who won his legal dispute with the firm, is one of many people who have told me of issues with the tribunal system. "There's nothing within the judicial system to link up all of these cases, even if they've done this time and time again," he says.

He has set up a company to help leaseholders trying to challenge charges.

The professional body for managing agents, the Property Institute, is calling for building managers to be regulated - something that hasn't been included in new laws the government is bringing in that are aimed at strengthening leaseholders' powers.

Jane is taking legal action in a bid to win the right to manage her building because, as it stands, she says her flat is unsellable.

"There's a whole mixture of emotions, really, from anger to disappointment to just unfairness, that the laws aren't there to help," she says.

Sue and James have successfully applied to buy the freehold on their building, a Victorian conversion consisting of two flats. I was in Worthing County Court last month when they discovered that Assethold hadn't registered the property to the Land Registry and so was not the legal owner of the freehold.

Granting the pair permission to buy the freehold, the judge said the case was "extraordinary", adding that Assethold "haven't even bothered to turn up" to give its version of events.

Sue, who describes Assethold as "a big black cloud over my head", is looking forward to having control of her home, and finances, once again.

For other leaseholders, the battle goes on.

Additional reporting by Victoria Archer