Management company ripped us off!

WLMJ

Hi ya all,

We bought a 2-bed flat in April 08. We are among the first tenants moved in the development which have about 370 flats in total. The flats are selling very slowly and till now, I reckon only 30% of the flats are sold.

We paid service charge for £800 last April to cover period till this March. After 6 month chasing, finally got the service charge account audit which shows the actual cost for last year is only a fraction of what the management company budged and charged us for. Considering there are 370 flats, the proportionate amount we should have paid is only £150 (contribution to sinking fund incl) instead if £800!:mad: And base on the balance sheet, they only collected service charge from 30 flats! We recently find out people who buy later than us do not pay service charge as part of the incentive of buying whilst we are hit by another £800 for service charge starting this April.

According to our lease, we are entiled to a refund for the surplus from last year, which I have requested management company to action yet receive no reply. I also want to challenge them of rolling over the same unrealistic budget to this year whilst they clearly only spent 20% of the budget last year. Do you think I have an argument to get a reduction of this year's fee?

I am really fed up with management company now. I am willing to pay my fair portion of the service charge but not happy with being ripped off. Really appreciate your advice.

tks

tbs624

Get yourself over to http://www.lease-advice.org/ Much useful advice there

pie81

Sounds like you have a good basis to argue both for a refund and a reduction in next year's estimated service charge (unless they can show there are some works coming up next year which need paying for). All depends on the terms of your lease however and how much it says they can charge.

furndire

There was something about management fees, on working lunch bbc on Wed or Thurs this week. Maybe worth a look on i player

WLMJ

thanks guys. I will check lease advice org website. I think I have a case for the refund if only the management company ever reply!lol

The property management sector seems to be a grey and ill-regulated area. Does any one know which is the governing body?

WLMJ

Just had a look on BBC working lunch, interesting program. tks

DVardysShadow

WLMJ wrote: »

...
We paid service charge for £800 last April to cover period till this March. After 6 month chasing, finally got the service charge account audit which shows the actual cost for last year is only a fraction of what the management company budged and charged us for. Considering there are 370 flats, the proportionate amount we should have paid is only £150 (contribution to sinking fund incl) instead if £800!:mad: And base on the balance sheet, they only collected service charge from 30 flats! We recently find out people who buy later than us do not pay service charge as part of the incentive of buying whilst we are hit by another £800 for service charge starting this April.

I know nothing about leasehold, but it looks to me like you should have no gripe about the management company letting the newcomers have the incentive - PROVIDED this is not being done at your expense.

So I think you should always be paying 1/370th of the costs and the unoccupied flats and the incentivised occupied flats should be chargeable
to the developer.

olly300

DVardysShadow wrote: »

I know nothing about leasehold, but it looks to me like you should have no gripe about the management company letting the newcomers have the incentive - PROVIDED this is not being done at your expense.

So I think you should always be paying 1/370th of the costs and the unoccupied flats and the incentivised occupied flats should be chargeable
to the developer.

The OP won't be paying 1/370th, as the charges should be worked out on the size of the flats so someone in a studio flat will pay less than someone in a 3 bed flat.

DVardysShadow

olly300 wrote: »

The OP won't be paying 1/370th, as the charges should be worked out on the size of the flats so someone in a studio flat will pay less than someone in a 3 bed flat.

Fair point - but the principle should remain, OP should not be bankrolling incentives to new buyers.

blckbrd

olly300 wrote: »

The OP won't be paying 1/370th, as the charges should be worked out on the size of the flats so someone in a studio flat will pay less than someone in a 3 bed flat.

That's right. A 1/370 share is too simplistic unless all of the properties are identical. OP ask for details of the apportionment of costs by bedroom-size across the block then recalculate your share.

Actual annual service charge costs for any given year (1 Apr 2008/31 Mar 2009) are required by law to be provided within 6 months of the year end (30 Sept 2009). If the management company did this they are within the law.

Estimated annual costs may have been (reasonably) based on full occupation of the property. Such may again be the basis for the current year's costs. It is common to base estimates on the actual figures from 2 years prior (which do not exist in your case) as this would be the most complete set of figures available at the time of estimating the budget. So for 2010/11 estimated annual lcharges should be based on the actual figures for 2008/2009 but as (if) more properties are sold I'd expect there to be an element of projection above inflation.

You are entitled to a refund for any overpaid annual charges. Send them a letter before action if they are ignoring your general written requests. Then take them to small claims if they persist.

Sinking fund payments may not be refundable as they are meant to create a pool of money to spend on large scale repairs which would cost a lessee over £250 and on which you would have to be consulted. Such money does not have to be spent within the financial year it's collected.

I'd be interested to see the heads of charge and costings for the annual bill if you care to share it here.

Fire_Fox

WLMJ wrote: »

We paid service charge for £800 last April to cover period till this March. After 6 month chasing, finally got the service charge account audit which shows the actual cost for last year is only a fraction of what the management company budged and charged us for.

Considering there are 370 flats, the proportionate amount we should have paid is only £150 (contribution to sinking fund incl) instead if £800!:mad: And base on the balance sheet, they only collected service charge from 30 flats! We recently find out people who buy later than us do not pay service charge as part of the incentive of buying whilst we are hit by another £800 for service charge starting this April.

According to our lease, we are entiled to a refund for the surplus from last year, which I have requested management company to action yet receive no reply. I also want to challenge them of rolling over the same unrealistic budget to this year whilst they clearly only spent 20% of the budget last year. Do you think I have an argument to get a reduction of this year's fee?

I am really fed up with management company now. I am willing to pay my fair portion of the service charge but not happy with being ripped off. Really appreciate your advice.

thanks guys. I will check lease advice org website. I think I have a case for the refund if only the management company ever reply!lol

The property management sector seems to be a grey and ill-regulated area. Does any one know which is the governing body?

If you had read the LEASE website (it is huge and a brilliant resource) you wouldn't need to ask about governing bodies. TBH you seem to be assuming you are being ripped off without any real understanding of how service charges work. Your money hasn't vanished into the ether; rather than asking for a refund I'd be insisting the budgeted work is carried out to spec. Do you know why so little of the budget has been spent?

You pay two years service charges to the new owners one year as you have lived there and benefited from the communal areas for longer! As others have said, the developer/ freeholder should be contributing on behalf of the remaining flats.

When you say you are chasing the management company for the service charge audit and for a refund are you doing so in writing by recorded delivery? Once you have read the LEASE website you will have an understanding of your rights to further information as laid out in the Landlord-Tenant Act 1985 - quote this at your managing agents if they are breaching the legislation. Also quote the clause in your long lease when formally requesting the refund.