Exposing Block Management’s Hidden Fees and Absent Transparency

If you own a flat in the UK, you’ve likely come across the complex world of block management. At its best, it keeps buildings well maintained, communal areas safe, and your investment secure. But at its worst? It becomes an unregulated labyrinth of block management hidden fees and transparency issues—leaving leaseholders to pick up the tab. Over the last decade, residents across the UK have started to uncover an uncomfortable truth: some block management companies don’t just underperform—they actively exploit the system. Opaque service charges and secret insurance commissions mean the money you pay to maintain your building often ends up enriching the very people meant to manage it.

Take the case of Stephen Squires, a homeowner who discovered a £5,351 commission embedded within an £80,937 annual insurance premium.

When the Numbers Don’t Add Up

That’s more than 6.6% of the total cost – and there was no mention of it in his service charge breakdown. He only found out after pushing for disclosure, and he’s far from alone. This is not just a case of an overzealous line item. Across the UK, leaseholders are increasingly reporting unexplained surges in their service charges, often with no justification or consultation. In one London block, fees skyrocketed by 600% overnight following the appointment of a new managing agent. No Section 20 consultation. No discussion. Just a demand for dramatically more money. When residents pressed for clarity, they were met with silence.

In a new-build development in Leicestershire, homeowners received bills of nearly £9,000 annually – not for major works, but for estate upkeep, a terrorism insurance policy valued at £14, and, unbelievably, grass cutting. The bulk of these fees? Management costs. Residents soon realised they were trapped in a structure sometimes called “fleecehold,” where private developers retain ownership of communal areas and contract out the management. There’s no lease, no freeholder to challenge, and no regulation to stop companies from charging what they like.

It gets worse. A class-action lawsuit led by Velitor Law alleges that thousands of UK leaseholders have been charged secret commissions on their building insurance – with no knowledge or consent. These hidden cuts, often paid to freeholders or managing agents by insurance brokers, can inflate premiums by 30% to 60%. Over a period of six years, this could add up to thousands of pounds per household. The practice is legal, but leaseholders are often left in the dark. It’s a prime example of block management hidden fees and transparency. With no clear accounts or open-book policy, many never realise how much of their money is being siphoned away.

In one particularly shocking case, a leaseholder paid six months’ worth of service charges upfront to their block manager. Then the company vanished. No contact details, no refund, no support. A new managing agent was appointed and promptly demanded payment again, threatening legal action and a County Court Judgment if it wasn’t received. The original funds? Lost. The resident had to choose between paying twice or facing court action.

In another case, a resident in arrears of just £570 saw that amount balloon to £1,050 thanks to a chain of so-called admin and instruction fees. These fees, stacked by the management firm and their chosen debt collector, created an effective APR of nearly 1,000%. The managing agent profited. So did the collector. The leaseholder paid, again.

Perhaps the most insidious issue in block management today is structural: some managing agents sit as directors of the very Resident Management Companies meant to oversee them. Others refuse to release financial records, appoint in-house contractors at inflated prices, or ignore statutory obligations like holding AGMs or providing receipts. At the heart of it is a widespread pattern of block management hidden fees and transparency, leaving leaseholders powerless and overcharged. Leasehold expert reports submitted to Parliament reveal case after case of residents being stonewalled, overcharged, and undermined by those who are meant to serve them.

While these stories vary in detail, they share common red flags:

• Sudden and unexplained fee hikes
• Insurance premiums with no breakdowns
• Managing agents who ignore complaints or disappear
• Lack of transparency in accounting
• Threats of legal action for payments already made

If you see one, investigate. If you see two or more, it’s time to act.

1. Ask for the paperwork. You are legally entitled to see a breakdown of your service charges, invoices for major works, and details of insurance commissions. If it’s not forthcoming, you can escalate.
2. Know your lease. Many leases require consultation for major works (under Section 20) and cap what management fees can be charged. If your agent isn’t following the lease, you may have grounds to challenge.
3. Consider Right to Manage. Leaseholders can form an RTM company and take back control from the freeholder – no permission required. This allows you to choose your own managing agent or self-manage with professional support.
4. Join or start a Resident Management Company (RMC). If your block already has one, get involved. If not, you may be able to set one up to give residents a voice and a vote.
5. Escalate complaints. You can take your concerns to the First-tier Tribunal, a property ombudsman, or legal services like those handling class-action cases.

At Brompton Block Management, we believe that leaseholders deserve clarity, fairness and service that reflects the fees they pay. That’s why we provide open-book accounting, regular reporting, and zero hidden commissions – ever.

We’re here to manage your building, not profit from your trust.

If you’re concerned about hidden fees, sudden charges, or opaque practices in your block, talk to us. We’ll help you understand your options – and take back control.