Freeholder pulling a fast one

barfer

the freeholder appointed a new management company and out of the blue we get a letter for £700 in service charges. There's nothing to repair as the place is in good nick. I reckon the new management company are pulling a fast one and I'll tell them to get lost.

the_blue_angel

hmm thats a tricky one

EdInvestor

You mean there has been nothing spent on maintenance of the building for 8 years?

silvercar

I would check that building insurance is, and has been, in place.

BNU_2

Hi

I work for a property management company, and it is quite usual for Freeholders to appoint an agent to carry out this function for them. You should ideally have received a Budget with your demand so that you have some idea of what your payment covers and what major works the Freeholder intends to have carried out with that money, but works like redecoration, maintenance of roof, guttering and aerials, any communal gardening, maintenance of pathways, garage area, cleaning of communal areas, maintenance of fire equipment/alarms/security measures etc will most probably be paid for from that fund.

It is usual for the money to be raised to create as Service Charge Fund before it is spent, to allow problems to be dealt with quickly, and allow for the chasing of inevitable non-payers. It's not fair to keep a contractor waiting for payment for a job he has competantly completed simply because one or two of the leaseholders have not paid for whatever reason, but that said, if you have any doubts about the legality of the instruction of managing agents in your case you are best to contact the solicitor that dealt with the conveyancy when your bought your flat, or ask a local RICS Chartered Surveyor to review your lease and advise you.

Many of the blocks that we look after also have a Residents Association which works closely with us as managing agents, having a say in the running of the block, and proposing works and preferred contractors, and approving the annual budgets before bills are released. This is a very good way to keep involved and retain a say in how your building is managed.

You have the right to see annual accounts showing where monies have been spent, and the invoices should be made available to you for inspection should you ever wish to see them.

Finally, although having a managing agent does inevitably add to your running costs, it can be a mercy at times, they can intervene in cases of dispute, such as noise disturbance or other breaches of lease, but particularly when legal proceedings have to be instructed for cases of non-payment by your fellow leaseholder neighbours (which is an extremely common occurance believe me!).

I hope this helps you. Please ask if you need anything other information that I haven't covered here.

NAR

Barfur, I live in a block of apartments and our management fee is approx £650 p.a. Our fee covers buildings insurance, communal grass cutting, ground rent, management company fee and a couple of other things I can't recall.
We have also built up a reserve fund, which as BNU has said, is used for emergency works on maintenance that crop up from time to time that are not covered by insurance.
I would ask the management company for a breakdown of how the £700 is made up.

mystic_trev

barfer wrote:

I just read our lease. There's NOTHING in there to say we have to pay a service charge. It just says that WE have to do the repairs and if we don't then the freeholder can do them and charge us. There's nothing to repair as the place is in good nick.

So I reckon the new management company are pulling a fast one and I'll tell them to get lost.

If a majority of the leaseholders have appointed the new Managemet company you are legally bound to pay the service charge. If you don't (and in exceptional circumstances) you could be seen to be in default and lose your Lease!

All IMVHO

RiskAdverse100

Barfer, can you clarify how many flats your building is divided up into?

It is quite common where houses are divided into only two flats for the responsibility for maintaining and repairing the building to fall on the two flatowners with the landlord only collecting ground rent and taking out buildings insurance.

For two flat houses the lease of the upper flat will say that the flatowner is responsible for the top half of the building and the lease of the lower flat will say that the flatowner is responsible for the bottom half of the building.

Sometimes the leases will say that 'common' costs are shared (with the responsibility for actually doing the work remaining separate), but not always.

There is, however, a large difference between what leases say in these circumstances and what actually happens in practice.

This position can apply to houses divided into three flats but is much less common.

You do need to check exactly what the lease says as it is certainly possible that the management company are trying to pull a fast one!

RiskAdverse100

BNU_2

barfer wrote:

It's a block of 4 purpose-built maisonettes, 2 upstairs and 2 downstairs. The lease says that the leaseholders have to maintain the outside structures like the pipes, fences etc. and paint the outside every few years.

I'm glad to read that you have been issued with a budget, so know where the money will be spent. Are the other residents paying up, or are you all up in arms?

Non-payment may result in a County Court Judgement, forfeiture of your lease (repossession) or a 'charge' on your mortgage if you find that they can legally charge service charge. I would raise it with your Freeholder if I were you, and also ask a local professional, but unless you have reasonable grounds to think that the money is going to be misappropriated, what have you got to lose by paying it? You risk unpopularity with your fellow leaseholders if they all pay but still can't have works done because you haven't stumped up your share!

Me_Myself_2

BNU. I don't mean to be rude, but you seem to be addressing this from the 'Management Co' side of the arguement.

IMO this appears to be a change to the terms of the lease and is a totally different issue.

He need to speak directly to the freeholder about it.

BNU_2

Me_Myself wrote:

BNU. I don't mean to be rude, but you seem to be addressing this from the 'Management Co' side of the arguement.

IMO this appears to be a change to the terms of the lease and is a totally different issue.

He need to speak directly to the freeholder about it.

That is hardly a surprise to you is it? My opening sentence declared my occupation!! This does not mean that the advice is not valid, I do have 13 years direct experience in the field, and it was the benefit of this I was trying to pass on.

Leasehold law is full of inequities, and is changing all the time just lately. I just didn't wan't Barfer to find himself falling foul and in breach for what he 'perceives' it's meaning to be, and did advise him to contact his freeholder as well as an unbiased local professional for interpretation.

Just because his situation has changed, it does not mean that the Freeholder is not still acting in his best interests. A flat in a well managed, well maintained building is bound to fetch more at resale than one that has been neglected.