Service Charges: Potentially Reclaim Overpayments. One MoneySaver got £400 back!

edited 21 July 2009 at 9:33PM in House Buying, Renting & Selling
98 replies 29.1K views
Former_MSE_GuyFormer_MSE_Guy Former MSE
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I've been Money Tipped! Newshound! Chutzpah Haggler
edited 21 July 2009 at 9:33PM in House Buying, Renting & Selling
[title=http://images2.moneysavingexpert.com/images/dp/wtd_underline.gif]wtd_icon.gif What's this about?[/title]
A London-based homeowner contacted us to say the managing agent of her property kept over £400 from her for three years' overpaid service charges, as her estimated bills were too high. She's now reclaimed the cash.

If this proves to be widespread we're considering a reclaim campaign, so we want to see if this is a one-off or a bigger issue, so please check to see if you're also owed money and share your stories.

[title=http://images2.moneysavingexpert.com/images/dp/wtd_underline.gif]wtd_icon.gif What is a service charge?
[/title]
Leaseholders and some freeholders pay a fee to a managing agent appointed by the landlord (which could be you if you own the freehold/land) for looking after communal areas of the property and paying important bills such as buildings insurance and heating.

Leaseholders and some freeholders also tend to fund a separate account for major works such as roof repairs or external painting.

The landlord is the person/organisation that owns the land, which could be a council, a person or a private-sector firm.

[title=http://images2.moneysavingexpert.com/images/dp/wtd_underline.gif]wtd_icon.gif How are bills usually worked out?
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You usually get an estimated bill at the start of the year, that can be paid monthly or annually, because it is impossible to tell how much will be spent over the course of 12 months.

At the end of the year you should get a bill detailing what your balance is once all the work has been carried out and your estimated bill payments have been received.


Councils and private sector managing agents say that depending on your contract, one of three things usually happens if you're in credit:
  • You're given the money back
  • The credit is used to reduce next year's bill
  • It goes towards your major works account
[title=http://images2.moneysavingexpert.com/images/dp/wtd_underline.gif]wtd_icon.gif How to find out if you're owed cash
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The simple way is to check your bills. Go through previous years' payment demands and check whether you are in credit for any year because your estimated service charge bill was too high.


If you're in credit:
  • check whether you got the money back
  • whether that credit reduced your following years' liability
  • whether it went towards any other bills
If you did not get a refund or it was not used to reduce any of your other bills then it's likely you are owed that money back.

[title=http://images2.moneysavingexpert.com/images/dp/wtd_underline.gif]wtd_icon.gif The Reclaim in detail[/title]
Our case study got the money refunded after contacting her managing agent (appointed by the landowner, Islington council).

She is adamant that, after checking her bills, the overpayments she made were left dormant until she called and not used to reduce any subsequent bills. She says the money eventually refunded was the correct amount to cover the overpaid service charges.

On the other hand the agent says the refund was due to a separate accounting error on its part. It adds that it never withholds overpaid service charge fees.

So we want to find out whether her story is replicated elsewhere to find out whether managing agents are telling the truth or whether this is a bigger problem they are trying to hide.

[title=http://images2.moneysavingexpert.com/images/dp/wtd_underline.gif]wtd_icon.gif How to get in touch
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If you're owed money from a managing agent because you've paid too much in service charges, please post your story in the forum below, just click reply (we may then PM you for more info).

If you want to keep it in confidence for the moment then email [EMAIL="casestudy@moneysavingexpert.com"][email protected][/EMAIL] with a brief outline of your story, and please include a daytime phone number.
«13456710

Replies

  • dmg24dmg24
    33.9K Posts
    ✭✭✭✭✭
    This is a subject that I am quite passionate about (largely for the wrong reasons!). My managing agent is Peverel OM.

    The service charges for my property are split between myself and my neighbour, and apportioned according to the size of the property. Mine is the larger of the two properties. However, I discovered that they had incorrectly apportioned the amounts, and I was paying more than I should have been (I cannot recall the amount involved, close to £100 per year).

    A further issue that I had was that the management company were charging approx £80 a year as their management fee for the property (which for my property consists of arranging buildings insurance!), but also another £80 for each property for the estate management fee! I complained about this, and got an £80 reimbursement as 'goodwill', and an agreement that the estate management fee be reduced to £40 per year for all properties.

    Our bills are estimated each year, with any overpayment carried forward to the next year. Alternatively, you can request that the amount be returned if over £25.

    I am now in dispute with my management company as they have bought my lease without it having been offered to me first. I bet they love me!

    I think that the subject of management companies and service charges is something that needs to be investigated further, but not just for the reason noted in the OP.
    Gone ... or have I?
  • AkomAkom Forumite
    159 Posts
    Sevice charges are a very sensitive subject around our area at the moment and i'm sure for many more people elsewhere.

    Our service charges are increasing year on year way above inflation rate and with little to see where this money is going. Some people in our area are refusing to pay it and are going to court to fight it.

    We are also currently having major works being carried out under the goverments better homes 2010 scheme. There are huge amounts of confusion from everyone due to lack of communiction around the billing. I for one am being billed between £22-27,000. We have no idea when this bill is coming or whether it's a fair price for the works involved. We are scared as due to the current climate of falling house prices and it being ever harder to get credit where are we supposed to get this money from.

    I should mention that our landlord is Newham council and trying to get honest answers from them is near on impossible.

    I know me and many more people (i'm sure from other places as well) would love to have this investigated. I know i'm very scared as finding a loan worth around 18% of my property is very daunting.

    I know this is a slight digress but i'm sure there are many people in the same boat especially if their landlord is the council.
  • If you are the Leaseholder who bought it from Newham Council then perhaps you can console yourself with the massive discount from the full market value you received that is unavailable to those who have not benefited from living in cheaper council owned accommodation.

    If not, then what on earth are you doing buying ex-council stock without knowing these things in advance. Speak to your solicitors!
  • plm106plm106 Forumite
    8 Posts
    We found our management agent conducted all the work on the property through a 'friend', who charged twice the standard market rate!
    Beware! :eek:
  • edited 27 July 2009 at 3:50PM
    FarbrFarbr Forumite
    2 Posts
    edited 27 July 2009 at 3:50PM
    Our block of 14 leasehold apartments used to have managing agents and we suffered from their lack of information; over-priced fees (18% of total service charges) and complete inability to understand the concept of cashflow. They were not on-site and just paid bills when they were presented by contractors. In theory (according to the books - now in our possession) our windows were cleaned 22 times in one year. In practice, they were cleaned SIX. But the window cleaner obviously knew he could get away with it and overcharged us 14 x £100

    2 years back, when they shocked us with a debt of £14k and uncollected service charges of £8k, we decided to ditch them and looked around for another 'professional' managing agent to take on the work. Several couldn't (overloaded already); some wanted even more money from us. We were concerned about jumping out of the frying pan into the fire. Would the new ones be any better?

    In the meantime we began managing things ourselves. In the end we've found it not that difficult and much more beneficial to everyone. So we carried on without a 3rd party. We've reduced our services charges by 20% despite inflation AND we're getting things done! We know where our money is going. We have a say in what it is spent on.

    There are drawbacks especially dealing with unreasonable demands by fellow leaseholders who think they can ring up @ 10 at night. But everyone agrees that we've done the right thing

    Try it if you can
  • bpebpe Forumite
    6 Posts
    Farbr - could you tell me how you managed to get to manage yourselves - there is a huge lack of info on the net and me and our group of residents are sick of our management company!

    The budget was wrong on sale of the house to us, its now doubled in the space of 2 years?

    The management company blame the developer etc, too many things to list in this post, its just become a joke - how do we sack our management company? We have a separate company set up which each resident has a share in.

    We own a freehold house, but its on an estate with some leasehold apartments.
  • dljdlj Forumite
    1 Post
    Our service charge is split between three flats (converted victorian building) I never have an estimated bill at the start of the year, only an invoice at the end of the financial year. This increases slightly every year, no work has been carried out on the property's by the look of the external paint drains etc. We currently pay £316.00 a year each?? and £75 ground rent. The management company is an estate agent elsewhere in the country and very hard to contact and quite rude when you do! I think they management the lease for an individual.

    Can anyone give me advice on this, i think external paint work is needed and general tlc on the building, i didnt realise this could be requested as a leasee?

    My bill only details the building insurance for the whole building which is then split between the three flats ie the £316, should they be shopping round for a cheaper deal or is this up to them?

    Any advice would be great-first property and been her two years.

    Thanks
  • I pay £67 per month for service charge and I have only seen the windows cleaned once in two years. The cleaner spends ten minutes in the block and then leaves not doing the job properly. Rubbish is cleaned at the front but never from the back of the property. The property has never been decorated in the communal areas. When I have contacted the management company they are very thin on information and I can't work out what they are doing with the money. Any ideas as to what I can do?
  • Hi there,
    I live in a leasehold property (15 flats in the block), our management company has to be the worse - RMG (other trading names have been Erinaceous, Haywards and many more). Out problems started when Erinaceous were put into administration (directors charged with fraud) and our mgmt co transferred somehow to another one of their subsidary companies. Even though we were all paid up on service charge (6 months in advance) we found out through our cleaner she had not been paid for over 3 months. Letters, emails and phone calls were then ignored when we complained. Obviously we were worried about where our money was going to we refused to pay the next service charge until they could give us proof that contractors were being paid - when we saw the invoices months later they claimed they'd been paying the cleaner £60 per hour (seriously come on....), obviously we decided we had to start the process of the right to manage. We're now days away from taking over the management but I still feel sick to my bones on what a mess it is - RMG are withholding money we've since paid for services that were not carried out and they still ignore us even though they should be working alongside us in times like this. There's alot more issues that I can't really go into in a public chat room but there are so many grey areas it's quite scary. We are about to contact the old cleaner to find out if she actually was billing £60 per hour (I really can't believe she did), but how on earth do we even start that kind of business!!! For those of you that are dealing with companies like these you really must run the management of the property yourselves. I found lots of information on the Lease Advisory website which gave us links to all the legal documents to use.
  • We got a lot of help from the Leasehold Advisory Service. The government runs it and it's a completely free service. These guys really seem to know their stuff. We found out that we have a right to take over the management ourselves or to choose our own agents. Worth a phone call or a look at their web site.
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