Late, unexpected and excessive service charges

Hi Mark,

Someone more qualified than me will no doubt offer advice about what you can and can't do if you consider your service charges to be excessive and / or you believe you are getting a poor service.

I offer no opinion on your situation, but merely make the observation that most leaseholders either believe their service charges are outrageous, or believe they get a poor service or both.

I'm a letting agent (managing individual properties). I've been approached a number of times and asked whether I'd be interested in taking on management of a building. I've turned them down every time. Its a thankless job.

Reply to the comment left by "Steve From Leicester" at "20/04/2015 - 16:16":

Hi Steve,

I understand your point. There are always 2 sides to every story. But putting the quality of works performed to one side for the moment, my biggest issue are..

Absolutely no prior notice of a increase of service charge for 2014 (during 2014 or at even at the end of 2014) .

Then nearly 5 months into 2015, a claim for this money dating back nearly 17 months!

Then the amount...nearly double! £916 is not an insignificant amount of money for anyone to then be told they owe.

Cheers,

Mark.

Brilliant isn't it, they can make up a figure and it is immediately enforceable, if you do not pay they go the s42 route with unrestricted legal fees.

So you have to pay and then fight.

That said you have a cat in hells chance of winning, you may get a few hundred back, but it will cost you that in fees and time.

What you should do is ask for the summary od accounts, you should then get a list of what was spent and the bank accounts. They have to give you these, it is a criminal offence if they don't, shame there is no enforcement,

Then try to get control, if the flats make up 75% you can exercise right to manage (if you succeed, appoint a manager yourself).

Most likely you will not have the floor space so you will have to try to get the FTT to appoint a manger, this is tricky too, you have to prove the MA is really bad and find someone good to replace them.

Reputable agents will often say they cannot make enough money from a small place so finding a replacement can be hard.

And to put the agent out of a job the FTT will want overwhelming evidence.

You will have guessed they can only go back 18 months?

What portion of the service charge is a "reserve", hard to see how standard running is 1900, but with reserve and some actual work, it is not that bad.

Do you a swap!

Thanks Chris, I will ask for all the info you mentioned, of course now I need to put my time into this.

I cant think of any other situation in day to day life where people can spend someone else's money with no regard.

Its like a plumber coming round, giving you an estimate for some works, you pay the guy a grand and he comes back a year later asking for an additional £900. Know-one would except that.

Wouldn't be so bad, if the place looks tidy but its complete mess. I have complained about the main door not shutting properly on about 5 occasions. It then occurred to me that it was costing me a fortune because a company would come out, do a bodge fix, charge it to the service account. It would not shut again and they come out again, bodge fix, charge it the account again.

The management company have no incentive to ensure the money is being spent correctly, in fact it works out the complete opposite because to do that requires there time to check.

I'm sure I have been told that they have to give you notice of major works in advance before commencing? Surely a doubling of fees is a indication of this?

Cheers,

Mark.

Mark,

A Section 20 notice has to be issued if any works will cost any one leaseholder more than £250 in total. If a leaseholder owns more than 1 flat this amount does not get multiplied by the number of flats that they own but remains at £250. I believe emergency works are allowed to be carried out without the need for a S.20 notice though. Hope this makes sense and helps, service charges are a nightmare!

Mark,

It sounds as if there have been a number of smaller expenditure costs which have occurred within one accounting year. Unfortunately they would have been incurred without the need for notification under the normal rules. The service charge is more likely to be volatile as your flat is within a small block and therefore you bear the brunt of any unexpected expenditure during the year. You have not indicated whether there is a sinking or reserve fund provision within your service charge as this will help to smooth out any unexpected expenditure during the year. You are entitled as a leaseholder to view the invoices held by the managing agent but the previous suggestion of getting a summary would be better as you can see what makes up the charges. You can then see if there is a reoccurance of a similar call out by a contractor and then drill down into the invoices if you wish. The managing agents have a obligation to provide you with this information but they can make an admin charge and this should be covered in their terms of business with you as to what they are. If you should wish to take on the unthankful task of managing your own block you could look into this also but be aware that it is likely to consume quite a lot of your time.

Hi Sue,

The non detailed breakdown they have sent is as follows:

£6,517.00 on management.
£933.50 on electricity.
£5,065.00 on soft services (Cleaning - making up about 75%)
£9,284.84 on hard surfaces
£894 on insurances.

Ironically hardly any cleaning took place during 2014, every time I complained I was told they couldn't find anyone in the area reliable enough to do it.

I continually complained about the light sensors not working and so the lighting has been on 24x7..hence big communal electricity bill.

I know that its a lot of work for anyone to take on the management of a block, but then this multinational based 150 miles away also shouldn't take it on if they cant manage it properly too.

My main contact was off for months with sickness due to stress.

But regardless of all those issues above....it does not matter...I have to pay for a management company that actually provides an awful service and spends my money recklessly.

Cheers

Mark.

Hi Mark,

What did they project for the budget during that year for those items? Do you pay a set managment fee or a percentage? If a percentage there is no incentive to make sure that the service charge is kept within reasonable levels. Its difficult to assess the costs you have given without the information regarding the age, size complexity of the block or blocks your flats occupy. Some info would help.

Hi Sue,

I understand, and I do need to go back through my files as I'm pretty sure they sent a budget for the year 2014.

Basically there are 12 flats each with a parking space, there are also 3 business units but this latest invoice is just for the residential units. The building is less than 10 years old. TBH I cant recall any major work being done outside other than the occasional tidy up,

Interestingly I have just found a letter from them dated 4th of Dec 2014 with the budget for 2015 and it says that there will be no increase in the 2015 budget compared to 2014 and sets it at a figure that I paid during 2014 (£1,024.02). But as I have mentioned this 2014 figure has now (in a letter dated this month) jumped up to £1,950.40.

They are totally cluless...quite frightening tbh.

Kind Regards,

Mark.

Wow,their management fee works out at over 40%, we're in the wrong business. Have they budgeted a high management fee for 2015?