Service Charges are often a bone of contention.  Over the years, there have been some bad apples in the block management industry who have taken advantage of there customers.  In this regard, block management is no different to most other professions.  The rational response to this should be to clean up the industry, not to close it down.  After all, there has been plenty of bad apples in the House of Commons - frauds, rapists, criminals of all persuasions - and yet nobody suggests Parliament should be bulldozed.

Over the last few years, the system has taken some steps forward, with the Right to Manage (RTM) act giving the chance for a majority of leaseholders in a building to take over the management of their block.  However, this is not an option to be undertaken lightly.  To be successful, there needs to be a cadre of leaseholders who are competent, time-rich and motivated.  Even if the day-to-day activities are contracted out to an agent, somebody needs to know how to manage that process.  Not every block of flats has someone with the skills and time to undertake that role.  

A benefit of having a separate freeholder is that the dwellings will always have a property professional interested in the future success of the building.  This can be very useful if one or more residents stop paying their service charges.  It is much easier for an off-site manager to push for payment.  Not many residents in a block would relish taking one of their neighbours to court for backdated service charges.

In the situation where service charges are in arrears with one or more residents, a RTM company could go bust.  By contrast, a Freeholder will always ensure that a building is insured, even if they have to lend money to the service charge kitty to pay for it.  Without a freeholder standing behind them, a commonhold management company could have no way to pay that insurance premium.

Sometimes, the detail of service charge spending has not been explained to leaseholders.  This is indefensible.

There is also a practice in the industry of insurance brokers giving "inducements" (kickbacks) to service management companies.  Although approved by the High Court, we believe this is bad-practice and should be outlawed.  The service management companies are allowed to charge a reasonable fee.  This should be their only reward, without inducements from insurance brokers or tradesmen.