Service charges on flats

[Wainy316]

Me and the wife own a flat so we have to pay a building management company amounting to about a grand a year.  All they seem to do is occasionally vacuum the corridors and tell us we can't have Sky Q.  Now they've decided to send everyone a bill saying they've spent over budget and the insurance cost more than anticipated, demanding £150.

Can they do that?  Just make up any charge they want?  

[Stevo985]

15 minutes ago, Wainy316 said:

Me and the wife own a flat so we have to pay a building management company amounting to about a grand a year.  All they seem to do is occasionally vacuum the corridors and tell us we can't have Sky Q.  Now they've decided to send everyone a bill saying they've spent over budget and the insurance cost more than anticipated, demanding £150.

Can they do that?  Just make up any charge they want?  

Doesn't sound very fair, but I'd check the contract/agreement you signed when you moved in. There will surely be something on that about the management fee.

If it doesn't say something like they reserve the right to change the fee, or charge additional fees, then I would at least try to refuse. Cite the contract stated you were to pay £x in management fees and you've done so. You're not prepared to pay anything you weren't made aware of when you signed the contract.

If it's in the small print, you might be screwed. 

I'm no expert though, so someone else may give better advice.

 

I know when I moved into my current flat one of my first questions was about that kind of thing. I explicitly asked if there were any additional management fees etc that I might be expected to pay and double checked that the contract reflected that too.

[sharkyvilla]

24 minutes ago, Wainy316 said:

Me and the wife own a flat so we have to pay a building management company amounting to about a grand a year.  All they seem to do is occasionally vacuum the corridors and tell us we can't have Sky Q.  Now they've decided to send everyone a bill saying they've spent over budget and the insurance cost more than anticipated, demanding £150.

Can they do that?  Just make up any charge they want?  

I'm looking to finally get on the property ladder and some of the fees like that are pretty eye-watering.  Fair enough if there are some nice gardens and lots of security I wouldn't mind paying but some of the blocks of flats have no grounds or anything else.  It seems a bit like those fees that estate agents make up when you're renting and charge a fortune for a tiny bit of paperwork, like you I wonder if you refused to pay them what they could really do.

[bickster]

26 minutes ago, Wainy316 said:

Me and the wife own a flat so we have to pay a building management company amounting to about a grand a year.  All they seem to do is occasionally vacuum the corridors and tell us we can't have Sky Q.  Now they've decided to send everyone a bill saying they've spent over budget and the insurance cost more than anticipated, demanding £150.

Can they do that?  Just make up any charge they want?  

Short answer, Yes.

It's one of the reasons I sold my fathers flat in Birmingham when he passed away. I rented it out for a while but the whole building management company thing is a sham. legally they can't be the same company that built the development but you'll find that they have a pretty similar shareholder list, They'll also change management companies every few years to a different one, they still have the same shareholders. One huge scam.

Legally if you get a certain percentage of the owners to vote, you can get rid of the management company completely and do it yourselves, the problem here is that many of the residents in these blocks aren't owners, so you have to get in touch with all the landlords. It can be done but its a lot of hard work. Once you've freed yourself from the management company, you then have to set your own up but at least the owners are in control and the costs should dramatically reduce. You then have to get the owners to all pay regularly, which again is a whole new problem. Like I said, it's lots of work, most people who think about doing it just give up because they want an easy life. The developers and management companies know all this and just sit there laughing at the residents and taking their money.

One huge scam!

[bickster]

4 minutes ago, sharkyvilla said:

I'm looking to finally get on the property ladder and some of the fees like that are pretty eye-watering.  Fair enough if there are some nice gardens and lots of security I wouldn't mind paying but some of the blocks of flats have no grounds or anything else.  It seems a bit like those fees that estate agents make up when you're renting and charge a fortune for a tiny bit of paperwork, like you I wonder if you refused to pay them what they could really do.

take you to court for the debt eventually and they'll pretty much win, they have you over a barrel 

[snowychap]

1 hour ago, Wainy316 said:

Me and the wife own a flat so we have to pay a building management company amounting to about a grand a year.  All they seem to do is occasionally vacuum the corridors and tell us we can't have Sky Q.  Now they've decided to send everyone a bill saying they've spent over budget and the insurance cost more than anticipated, demanding £150.

Can they do that?  Just make up any charge they want?  

Like Bicks said, yes they can charge you for anything. It shouldn't be made up, though. As per the stuff below, the charges should be reasonable. I guess you fall in to the category that the service charges are collected on an estimate and any shortfall is asked for at the end of the year?

What you need to do is have a look at your lease to see what that says and then there are various rights that you, the leaseholders, have. As a starting point, this has some more info - Leasehold rights and responsibilities:

Quote

You have the right to:

• get information about service charges or insurance
• know the landlord’s (freeholder’s) name and address
• be consulted about certain maintenance and running costs
• challenge certain charges under some circumstances

And some more info here:

Quote

What are your responsibilities?

Principally, these will be the requirements to keep the inside of the flat in good order, to pay (on time) a share of the costs of maintaining and running the building, to behave in a neighbourly manner and not to do certain things without the landlord’s consent, for example, make alterations or sublet. The landlord has an obligation to ensure that the leaseholder complies with such responsibilities for the good of all the other leaseholders. These rights and responsibilities will be set out in the lease.

What is ground rent?

Because leasehold is a tenancy, it is subject to the payment of a rent (which may be nominal) to the landlord. Ground rent is a specific requirement of the lease and must be paid on the due date, subject to the issue of a formal and specific demand by the landlord.

You may sometimes here the term “peppercorn rent”, this is an historic term which today means no ground rent is payable.

What are service charges?

Service charges are payments by the leaseholder to the landlord for all the services the landlord provides. These will include maintenance and repairs, insurance of the building and, in some cases, provision of central heating, lifts, porterage, estate staff, lighting and cleaning of common areas etc. Usually the charges will also include the costs of management, either by the landlord or by a professional managing agent.

Service charges will vary from year to year; they can go up or down without any limit other than that they are reasonable.

Details of what can (and cannot) be charged by the landlord and the proportion of the charge to be paid by the individual leaseholder will all be set out in the lease. The landlord arranges provision of the services. The leaseholder pays for them.

All costs must be met by the leaseholders; the landlord will generally make no financial contribution. Most modern leases allow for the landlord to collect estimated service charges in advance, repaying any surplus or collecting any shortfall at the end of the year.

The landlord can only recover the costs of services which are reasonable. Leaseholders have the right to challenge service charges they feel are unreasonable at the First-tier Tribunal (Property Chamber).

When considering the purchase of a leasehold flat, it is important to find out, for personal budgetary purposes, what the current and future service charges are likely to be. Also check if there is a reserve fund, and what plans there are for major works that could affect the service charge in the next few years after your purchase.

And some more stuff from Shelter:

Quote

What is leasehold?

With leasehold the freeholder owns the land your home is built on. When you buy your home, you lease it from a freeholder.

Leasehold is the way most flats are owned.

...

The freeholder owns the land your home is built on. The freeholder can be an individual, a private company, a council or a housing association.

Many leaseholders have no direct contact with the freeholder and deal with a managing agent instead.

You may be able to become the freeholder by buying the freehold.

...

How to find the freeholder

Leaseholders have the right to know the freeholder's name and an address in England or Wales where they can be contacted. Your freeholder or managing agent can be fined if they do not give you this information after you write to ask for it.

All your service charge and ground rent bills must include the name and address of the freeholder, even if a managing agent sends the bills.

You don't have to pay until you have these details. When you have the details you must pay the full amount that is due.

If the managing agent won't give you the details you can ask the Land Registry for the title register of your property. You can do this online or by filling out a form. You have to pay a small fee.

...

Leasehold charges

Leaseholders usually have to pay charges to the freeholder or their managing agent.

Your lease says what charges you have to pay. This usually includes:

• ground rent
• service charges for general maintenance and repairs
• a share of the buildings insurance
• a contribution to a sinking fund to cover the cost of future repair works

...more on link

 

Edited August 14, 2018 by snowychap

[snowychap]

1 hour ago, sharkyvilla said:

I'm looking to finally get on the property ladder and some of the fees like that are pretty eye-watering.  Fair enough if there are some nice gardens and lots of security I wouldn't mind paying but some of the blocks of flats have no grounds or anything else.  It seems a bit like those fees that estate agents make up when you're renting and charge a fortune for a tiny bit of paperwork, like you I wonder if you refused to pay them what they could really do.

Again, like Bicks says, plenty.

If you're looking to buy leasehold (whether that be a flat or a new build - see all the hoo-ha about leaseholds on new estates that has been in the news), then make sure you understand all of the implications. Too many people walk in to it without knowing much about it.

[choffer]

6 hours ago, Wainy316 said:

Me and the wife own a flat so we have to pay a building management company amounting to about a grand a year.  All they seem to do is occasionally vacuum the corridors and tell us we can't have Sky Q.  Now they've decided to send everyone a bill saying they've spent over budget and the insurance cost more than anticipated, demanding £150.

Can they do that?  Just make up any charge they want?  

Bicks and Snowy have pretty much covered this but I just wanted to add - get in the face of the management company. Not in an aggressive way - always remain polite. My place has a similar deal and for the first four yearsI was there, the costs got bigger and bigger each year. There's only 20 properties in my block and most of them are rentals so the agent knows there's no way we'd ever get a quorum to oust them so they kept rinsing everyone with more and more outlandish claims every year.

After a while, prompted by some of my neighbours, I took them to task personally. I reminded them of my rights to review the accounts and invoices relating to our property and spent a fun afternoon at their HQ, making them fetch me different invoices and the like. I pointed out several anomalies in their budgeting and that year, we all got a (small) rebate. I spent most of the time spouting legislation at them which I barely understood but clearly they understood less and made thinly veiled threats of reporting their "mistakes". All this was done under the guise of being helpful to them rather than being confrontational so they couldn't dig their heels in and argue the toss. Since then, I've had a personal invitation to review their accounts every year before they submit invoices and every year, the numbers add up. Most importantly though, they've actually started doing the things they've been charging us for. The garden has never looked so tidy and the shared entrance has finally had that lick of paint that we've been charged for previously.

I literally had no idea what I was doing when I was looking through their accounts but I've clearly got our property marked as one to do properly as they've been very compliant in the last few years. 

 

I'd ask them why they spent over budget and why they didn't have a sinking fund to cover it. Also ask how many insurance quotes they got and ask for their rationale for choosing the one they did. They have an obligation to act in your best interests and they probably haven't.