Leaseholders who purchased flats from Irish developer Ballymore have finally rebelled and spoken publicly about run-away service charges – even though doing so has trashed the likelihood of anyone buying them.
It is quite an astonishing turn-about for London leaseholders, who usually like to keep quiet about the grisly truth of modern leasehold tenure and its out-of-control costs.
The Leasehold Knowledge Partnership has been contacted by all the sites mentioned, but leaseholders never wanted their woes to be made public.
The Embassy Gardens development in London’s Battersea offers buyers “a life like no other”. Its website features lithe young women relaxing at various on-site facilities, including a Jacuzzi, sauna and sky-high swimming pool. But it comes with unanticipated costs.
Today, however, all these sites are also caught up in the cladding and build safety scandal and the leaseholders have little to lose: their financial investment in these homes is facing devastation anyway.
The revelations come from a Financial Times investigation published today, and they make appalling reading for Ballymore, a company privately owned by the Irish Mulryan family.
One leaseholder, feeling like “a cash cow”, at Embassy Gardens, in Battersea, south London complains of service charges rising 58 per cent to more than £6,500 since 2015.
Another, airport worker Adrian Gill, 46, who lives at High Point Village, in west London, attributes serious illness to stress caused by the service charges.
“I moved to London for a promotion and wanted a nice new-build flat with nothing to worry about or fix — but it has been non-stop stress and you are totally disempowered,” he tells the FT. “You are not a homeowner, you are little more than an inmate.”
The FT interviewed 25 Ballymore leaseholders “across several of the company’s most prestigious London developments found a common complaint: rising service charges that residents say has left them feeling trapped in increasingly unaffordable homes”.
At New Providence Wharf, in London’s Docklands, one leaseholder’s service charges have risen 77% in four years to more than £9,000pa. A neighbour has had rises of 58% over the same period.
Ballymore, which houses more than 20,000 in sites across the UK and Ireland, said it did not profit from service charges and that increases were largely due to inflation in services such as insurance and utilities. It added that service charge budgets across its developments had increased by just over 5 per cent annually over the past five years.
One leaseholder in Ballymore’s 21 Wapping Lane, east London, said the service charge was “like a second mortgage”, having risen from almost £8,000 in 2013 to £12,500 in 2020. “We feel like we are being held captive by
Ballymore,” he told the FT.
A High Point Village leaseholder, whose service charge has surged 67 per cent to about £5,000 since 2012, “We are trapped. Other people have tried to sell but [buyers] see the service charge and laugh and walk away.”
The FT references a Mayfair-based estate agent saying that service charges should rise by only 2 to 3 per cent annually and that some of the Ballymore increases were “bonkers”.
ARMA is cited stating that London service charges average £2,000pa.
The article also demonstrates the largely futile efforts of leaseholders to control service charge costs without removing management from the freeholder.
Ballymore – like other Irish developers in London – keep the freehold and management of their sites as long-term investment assets.
At Royal Wharf, the residents’ association successfully pressed Ballymore to remove a £140,000 cost for the rent of its concierge space. Then it was confronted with a new cost: £187,000 to be paid by leaseholders towards running a community centre.
A Ballymore resident said this highlighted the problem of attempting to fight the developer on specific charges. “It’s a bit of a game they play,” she said. “They may give you money back with one hand but take it back somewhere
Many Ballymore residents believe a simple fix would be to ban companies from holding multiple roles as builder, manager and freeholder of residential development
Ballymore is quoted: “We sincerely regret any impact these historic issues may have had on residents, but we are now in a period of change, one in which we are investing significant resources in better communications and engagement with residents and our resident associations.”
Meanwhile, Ballymore, founded by Sean Mulryan, 66, and run by his son John, 38, made £80m profits from its UK operation.
The future might not be so bright for anyone, however. Overshadowing UK modern flats – especially the fancy ones in London sold to international investors – is the near total destruction of the market in the aftermath of Grenfell.
No only are blocks covered in combustible cladding, one appalling defect after another is being revealed in the EWS1 process.
The message going around the world is that not only are flats built with rip-off leasehold tenure, they are built spectacularly badly as well.