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  • FIRST POST
    • HPG1
    • By HPG1 2nd Dec 17, 5:55 PM
    • 11Posts
    • 0Thanks
    HPG1
    126% Service Charge increase!!! Really?!
    • #1
    • 2nd Dec 17, 5:55 PM
    126% Service Charge increase!!! Really?! 2nd Dec 17 at 5:55 PM
    Will try to keep this as short as possible! Offer accepted on a flat (leasehold), mortgage is in place and valuation completed. I received the LPE1 form from my solicitor which details the following:

    "Is any increase in the Service Charge over 10% or £100, whichever is the greater, anticipated in the next 2 years?'

    "Within the next 2 years, are any Section 20 works proposed to the Property"

    Landlord ticked No to both questions, it is signed and dated 21st July 2017. Service Charge is confirmed as £700 per year, Ground Rent is £250 per year.

    My boyfriend owns the ground floor property (2 flats in the property) and he has just received a letter from Circle Residential Management for an interim Service Charge bill for just under £800 for the period between 25 Dec 2017 - 24 June 2018 (6 months) £1586 over a 12 month period!!!

    He is going to dispute this charge as it is heavily inflated for the property a simple 2 bed flat in Tilbury. No major works are planned or necessary and the Landlord was previously managing this himself via his company.

    Obviously, this affects me so I need to find out where I stand. This is a huge cost and from what I have found thus far, Circle Management do not have glowing reviews to say the least!!

    I realise I need to contact my solicitor but I am on edge until Monday.

    Any feedback would be greatly appreciated.

    Thx
Page 1
    • HampshireH
    • By HampshireH 2nd Dec 17, 7:17 PM
    • 272 Posts
    • 275 Thanks
    HampshireH
    • #2
    • 2nd Dec 17, 7:17 PM
    • #2
    • 2nd Dec 17, 7:17 PM
    What is the breakdown of services he has been provided with?
    • HPG1
    • By HPG1 3rd Dec 17, 8:15 AM
    • 11 Posts
    • 0 Thanks
    HPG1
    • #3
    • 3rd Dec 17, 8:15 AM
    • #3
    • 3rd Dec 17, 8:15 AM
    Thank you for your reply.

    Breakdown as follows:
    Building repairs: £360.00
    Year end accounting: £162.30
    Buildings insurance: £158.06
    Surveyors fees & expenses: £240.00
    Health & safety: £300.00
    Management fee: £363.83

    Total for tenant: £1584.19
    Total for property: £3,168.37
    • csgohan4
    • By csgohan4 3rd Dec 17, 8:29 AM
    • 4,020 Posts
    • 2,499 Thanks
    csgohan4
    • #4
    • 3rd Dec 17, 8:29 AM
    • #4
    • 3rd Dec 17, 8:29 AM
    the cons for having a flat unfortunately is service charges and leases, your at their mercy
    "It is prudent when shopping for something important, not to limit yourself to Pound land"
    • Richey_
    • By Richey_ 3rd Dec 17, 8:33 AM
    • 289 Posts
    • 326 Thanks
    Richey_
    • #5
    • 3rd Dec 17, 8:33 AM
    • #5
    • 3rd Dec 17, 8:33 AM
    Are you buying the flat above your boyfriend ?
    • HPG1
    • By HPG1 3rd Dec 17, 8:58 AM
    • 11 Posts
    • 0 Thanks
    HPG1
    • #6
    • 3rd Dec 17, 8:58 AM
    • #6
    • 3rd Dec 17, 8:58 AM
    Yes, I am buying the first floor. He already has the ground floor.
    • eddddy
    • By eddddy 3rd Dec 17, 8:58 AM
    • 5,551 Posts
    • 5,234 Thanks
    eddddy
    • #7
    • 3rd Dec 17, 8:58 AM
    • #7
    • 3rd Dec 17, 8:58 AM
    To dispute the service charge demand, he'll probably need to be very specific about why the estimates are not 'reasonable'.

    For example:

    "You are estimating that insurance will cost £158. I have 3 quotes each of around £100."

    "The surveying that is required should only cost £100" or "No surveying is necessary"

    "You are estimating a management fee of £363. Other management companies charge £200 for managing similar properties."
    • HPG1
    • By HPG1 3rd Dec 17, 9:16 AM
    • 11 Posts
    • 0 Thanks
    HPG1
    • #8
    • 3rd Dec 17, 9:16 AM
    • #8
    • 3rd Dec 17, 9:16 AM
    Thank you all for your responses.

    Yes, we are looking into obtaining quotes for all of the 'services' listed.

    Not sure how they have reached these prices for this property! We were also looking at Right to Manage. Either way, it's a spanner in the works but we'll have to deal with it.

    I think the both of us owning both flats makes it easier in one respect as we don't have any other leaseholders to consult with.
    • getmore4less
    • By getmore4less 3rd Dec 17, 9:19 AM
    • 30,846 Posts
    • 18,450 Thanks
    getmore4less
    • #9
    • 3rd Dec 17, 9:19 AM
    • #9
    • 3rd Dec 17, 9:19 AM
    Thank you for your reply.

    Breakdown as follows:
    Building repairs: £360.00
    Year end accounting: £162.30
    Buildings insurance: £158.06
    Surveyors fees & expenses: £240.00
    Health & safety: £300.00
    Management fee: £363.83

    Total for tenant: £1584.19
    Total for property: £3,168.37
    Originally posted by HPG1
    If I read this right these are the charges for 6 months on a property that only has 2 flats.

    for a year we have the potential for
    (rounded a bit)

    say £6340 total

    £1440 Actual work
    £ 650 Insurance.

    around 33% on real costs

    £960 survey for <£1500 of work?
    £1200 H&S what's that?

    34%

    £650 accounting
    £1450 Management fees

    that's the other 33%
    • HPG1
    • By HPG1 3rd Dec 17, 9:49 AM
    • 11 Posts
    • 0 Thanks
    HPG1
    The breakdown above is for 50% share of the total charges over 12 months which is £1584.19.
    Ground floor flat £1584.19 (boyfriend)
    First floor flat £1584.18 (me)
    Total for property £3168.37
    They are asking for 6 months now and I presume the remainder will be requested at some point in May 2018.
    • getmore4less
    • By getmore4less 3rd Dec 17, 9:57 AM
    • 30,846 Posts
    • 18,450 Thanks
    getmore4less
    OK 1/2 the numbers or lets say its for 2 years.

    My point was there is a lot of money there for not a lot of real work.

    what do the accounts for the previous years look like?

    Since they know they are likely to loose this cash cow if you get the right to manage(what about buying the freehold?) is this an attempt to get one last dip into the money pot?
    • HPG1
    • By HPG1 5th Dec 17, 12:33 AM
    • 11 Posts
    • 0 Thanks
    HPG1
    The service charge for 2016-2017 and prior does not provide much in terms of a breakdown of costs.

    I think you're right, this is an attempt to get some more cash.
    • getmore4less
    • By getmore4less 5th Dec 17, 6:30 AM
    • 30,846 Posts
    • 18,450 Thanks
    getmore4less
    If the previous years have been £700 per flat there is not a lot to breakdown

    Did it change when the landlord change from doing it themselves to Circle?

    Do they(circle/landlord) know you know each other

    Sneaky timing between owners, your vendor won't care and they hope you don't notice.

    Your vendor should have had the same letter have they passed it on yet.
    • rtho782
    • By rtho782 5th Dec 17, 10:33 AM
    • 1,037 Posts
    • 748 Thanks
    rtho782
    If there are 2 flats and you and your boyfriend own the both of them between you, can you not take over management or buy the freehold?
    Deposit Saved since 01/12/15: £13,000 / £15,000 House Bought!

    Debt Cleared since 01/12/15: £6,000 / £7,500
    • HPG1
    • By HPG1 5th Dec 17, 9:34 PM
    • 11 Posts
    • 0 Thanks
    HPG1
    Yes, the breakdown was introduced when Circle Management was instructed.

    They have no idea that we know each other.

    Good point re. my vendor as he hasn't passed anything on. Issue with him is that he owes for previous years service charge and ground rent....

    I think the right to manage route is best option.

    Does anyone have much experience with the process? I have started to get comparable quotes.

    Thanks!
    • AlexMac
    • By AlexMac 5th Dec 17, 9:52 PM
    • 1,966 Posts
    • 1,727 Thanks
    AlexMac
    This is the reason I only ever buy "Shared Freehold " flats; to avoid the situation where an absent (non-resident) freeholder owns the freehold for the sole purpose of making money.

    But it might be more naive than that; you seem to be describing a building where there are only two flats? In presumably a converted house? But while you finger "Circle" as the exploitative managing agent, and correctly say you will have the automatic Right to Manage once you both own the whole block (...?) you do not say who the existing freeholder is?

    Maybe they are just daft... or maybe the problem is

    Because they will have appointed the Managing Agent who is inventing huge service charges; unless Circle are both the Freeholder and the Manging Agent?

    Either way- if you make life difficult for the Agent by constantly challenging their bills until you take over RTM they may back off, and if you also keep giving the freeholder aggro, they may well sell it to you? But remember, these people are only in it for profit, so don't play soft .
    And take legal advice from your current conveyancing solicitor, or, if they are !!!!!!s, a more agressive solicitor.

    Along the way, pull them up on everything they fall down on; e.g have they done the asbestos surveys on any communal areas?

    And then, when you own the freehold, cost uo wheter it's worth converting back into ahouse; sometimes two flats are worth less than a classic 3-bed house! Sometimes not.

    You'll sort it out- you obviously have the "right stuff"
    • HPG1
    • By HPG1 5th Dec 17, 10:35 PM
    • 11 Posts
    • 0 Thanks
    HPG1
    Thank you Alex Mac!
    Very much appreciate your response.

    You've hit the nail on the head; two flats in a converted house. The freeholder is not Circle but they have been instructed to manage the services. He owns the freehold and manages the services for a number of properties so I suspect he now wants an easier life (?!) My boyfriend has probably been a pain but he questions everything!! Rightly so.

    I feel comfortable going ahead with the right to manage and perhaps the freehold (further down the line!)

    Solicitor is on the case and I am gathering evidence relating to the inflated service charges.
    • HampshireH
    • By HampshireH 5th Dec 17, 10:44 PM
    • 272 Posts
    • 275 Thanks
    HampshireH
    Does his service charge apply to an estate rather than the block. I cannot see where they could charge for health & safety or maintenance if there are no communal gardens/areas and no work has been done. Unless the area being catered for is wider than just the 2 flats.

    Presumably the leaseholder would be responsible for any H&S issues which arose within the respective flats.

    Also be interesting to know what they were surveying for.

    Probably doesn't help you for that I apologise. Just seems excessive
    • getmore4less
    • By getmore4less 6th Dec 17, 6:12 AM
    • 30,846 Posts
    • 18,450 Thanks
    getmore4less
    Yes, the breakdown was introduced when Circle Management was instructed.

    They have no idea that we know each other.

    Good point re. my vendor as he hasn't passed anything on. Issue with him is that he owes for previous years service charge and ground rent....

    I think the right to manage route is best option.

    Does anyone have much experience with the process? I have started to get comparable quotes.

    Thanks!
    Originally posted by HPG1
    Looks like the vendor may be no use, unless keen to sell and not introduce delays.

    Not sure if it best to stay anon for now, as once they catch on they will treat any information from either of you as they were dealing with a single entity and will know for sure they are going to lose the contract.

    Remember for now you don't know from an official source(your vendor) about the charges.



    not sure how this works legally but if they have said

    "Is any increase in the Service Charge over 10% or £100, whichever is the greater, anticipated in the next 2 years?'

    "Within the next 2 years, are any Section 20 works proposed to the Property"

    Landlord ticked No to both questions, it is signed and dated 21st July 2017. Service Charge is confirmed as £700 per year, Ground Rent is £250 per year.
    when can they up the charges?
    how long would that info be valid?

    Maybe your solicitor should be asking for an update as it is nearly 6 months old.

    if the landlord still says the same as they don't know what circle are doing what happens then.
    • AlexMac
    • By AlexMac 11th Dec 17, 8:50 PM
    • 1,966 Posts
    • 1,727 Thanks
    AlexMac
    De Nada HPG1; but having re-read my post, I an amused to see that my flippant use of the word for baby cats when describing a timid solicitor, in #16. above, has offended the MSE profanity checker? Hush my mouth!
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