Hefty increase in Maintenance Charges?

What is in your Lease and was this not brought to your attention by your solicitor before you signed up?
If not, why not? Ask!

Hi Alice,

You should look at the service charge budget for the current financial year and compare it to the previous year.

Once you can see the differences you can ask the agent to explain the rationale and/or reasons behind the changes.

Unfortunately, if the management company is made up of lay directors as many RMC's are then it's very possible they facilitated a managed decline (not always knowingly) and didn't sufficiently prepare for unforeseen events such as dramatic increases in utility costs or the cost of replacing balconies, heating systems, roofs etc. Therefore, you are seeing a spike in maintenance costs. If the RMC had collected sufficiently from day one then sudden jumps in every day costs or large projects can generally be taken care of via the reserve fund or at least smoothed out over time without having to add 50% all of a sudden.

If your building has lifts, heating systems, fire alarms, cladding, vehicle gates, private roads, intercoms etc there is ongoing maintenance of these items but also a replacement cost at some point. This replacement cost is often only considered when it is too late.

The only redress you have is to apply to the FTT on grounds that the service charge is unreasonable. A solicitor could assess your claim but it's more likely that this is the new price going forward.

Reply to the comment left by Blodwyn at 08/02/2023 - 11:56
Service charges have to be reasonable and if you don't think they are you can take a case to tribunal. If you and the other leaseholders don't trust the managing agent, you could form a right to manage company and appoint a different managing agent.

I run a Right to Mange company so I have first hand knowledge of service charges. The sum levied is not determined by affordability, although this should be taken into consideration, rather the maintenance needs of the building. Building costs, both labour and materials, have rocketed over the last year so it is likely that, even without increased maintenance demands, costs will increase significantly, perhaps even double.

Is this a rental property?

What does your lease allow?

OK so includes heating and hot water. From October to April ??? Heating costs are likely to be at least £3k pa from now on.

What does their 10 year plan include? You should have been given this if you purchased recently via your conveyancer or been given as an owner.

How old is the boiler?
When was the building last externally redecorated?
Internally redecorated?
Fire Risk Assessment carried out? What were the recommendations to be carried out ?
Do all the flat front doors comply with the new Regulations? ie 3 fire hinges, self closers, fire/smoke-retardant strips or need upgrading?
Are all flats linked to the communal mains powered fire/smoke alarm system, and not just have their own?
Does emergency lighting need to installed or upgraded?
Is there a lift?
Resident caretaker?
Gardener?
Communal area cleaners?

Hate to say it but if the above all need doing/paying/maintaining then seems reasonable, and very sensible to have an adequate reserve fund for emergencies.

High service charges wont make properties unsaleable, just a little more difficult to sell also as included hot water and heating is not something the majority of people want as they cannot control it.

Service charge under long residential leases usually are required to be estimated based on previous year’s audited accounts and annual summaries of actual costs.

As you have communal heating then this will be a commercial contract and therefore not capped. This year’s service charge is for last year’s heating bills.

Going forward there has to be consultations under section 20 of 1987 Act to ensure the heating contract costs for next year are reasonable.

Contact directors of your Management co. re Section 20 consultation for next year and if they will not do it then apply to the FTT

Reply to the comment left by Judith Wordsworth at 08/02/2023 - 13:33
Thank you for your input - I will look into the lease

Further didn’t your solicitor get three years service charge accounts before you purchased?
Didn’t solicitor go through what the lease says what service charge to be spent on?
Didn’t solicitor find out what major items of expenditure coming up?
Recent Minutes of Meetings?
What costs are payable by the Freeholders and due as separate cost from leaseholders?

Reply to the comment left by Alice Bock at 08/02/2023 - 17:53
Hi Alice,

Did you get a chance to review your service charge breakdown against what it says in your lease?

If you need help with looking at this in detail, please let me know 👍🏾