70% increase in Managing Agents' Fee!

paint

Hi folks,

I have recently received a bit of a nasty shock in the post!

I am an owner/occupier in a small 1 bedroom flat in a block of 48, 3 years old. The service charge I pay (for buildings insurance/water/cleaning/general maintenance and upkeep of the property and grounds), and have paid for 3 years is around £50 per month.

I recently received a letter notifying me that the charge would increase by 36% for 2006/07; the justification being two-fold:-

a. there hasn't been a rise since 2003/4
b. we need to build up a sinking fund

However, when I look at the breakdown of these costs from 2003/4 through to 2006/7, the sinking fund remains at £11,500. I also note that the Managing agent's fee has increased a whopping 70% to around £10,000 from 2005 to 2006/7!

I have penned a rather irate(!) letter requesting clarification since it makes little sense to me. I've also requested minutes of the meeting in which it was decided that this action could be taken.

Does anyone have any experience of this and know what my rights are in this situation? I can absolutely appreciate that an increase in line with inflation is called for, but a 36% rise is outrageous I feel.

Any help much appreciated.

david29dpo

personally i hate these arrangements, ripe for rip-off. sometime all the tenants can get together and change agents if you are not happy, some you cant. however there fees have to be justified.

realwildone

Anybody that cannot manage their own property should not have one in my opinion. Unless you live abroad their is no excuse in using these companies.

I make a point of not renting from landlords who use management companies. They are by far the worst for keeping your deposit.

Why not before your tenany agreement runs out next time advertise in the local paper for a house. I have done so for the last three houses I have rented and have had all repairs done on time and no quarrals when it comes to deposit returns.

An advert in your local paper may cost only £100 for 4 or six weeks, far less than the management companies want just for signing the contract.

All three houses have been from people who have tried to sell their houses but not had any success so have rented it for a while but have only decided on doing so after seeing my advert. Each house I have rented BMV. At the moment I live in a £375,000 detached house for £800.00 a month. I couldnt buy the garage on an IO mortgage for that.

They get the benefit of not using a management company and getting an immediate tenant for a set period of time.

paint

Thanks for your comments realwildone (I agree with many of your comments), I think my original post is probably not clear though (I'll go and re-read/amend it) as it's nothing to do with renting/tenancies.

I actually own the property and live in it. The Managing Agents to which all of the residents pay a fee is to cover buildings insurance, water consumption, general maintenance and cleaning.

I'm still fuming at the rise - can anything be done to challenge this? Has anyone done it before with any success (and if so, how)? Help!

:-)

Doozergirl

If your flat is leasehold you can collectively take up your 'right to manage'. It's not exactly a walk in the park, especially because of the number of flats involved, and will involve a fair amount of organisation and administration. The potential benefits are great for you though.

There's an absolute raft of information here; https://www.lease-advice.org/rtmframe.htm

It includes details of some firms that specialise in RTM, so you can seek advice from them too.

paint

Doozergirl wrote:

If your flat is leasehold you can collectively take up your 'right to manage'. It's not exactly a walk in the park, especially because of the number of flats involved, and will involve a fair amount of organisation and administration. The potential benefits are great for you though.

There's an absolute raft of information here; https://www.lease-advice.org/rtmframe.htm

Wow! There certainly is a lot of useful looking information on that site! Thanks Doozergirl for posting that link. I'll spend a good couple of hours going through it this afternoon.

I'd also be interested to hear of anybody's personal experiences with this type of situation as I don't know whether or not I'm simply over reacting (and as seems to be typical these days, hardly ever see, never mind speak to, any of my neighbours so have no clue if they feel the same way!).

hazeyj

Why not find out who employs your managaging agent....prob the freeholder and approach them to see if they have any aversion to changing management agents. You can call potential new managing agents to find out what charges they generally charge. They qoute on how many flats in building, if there is any ongoing problems, if its a listed building, new build etc. They give a price per apartment. Leaseholders have just sacked our old management agent and got in a much better one..it was easier me for me tho as I have a share in the management company, and I am also a director along with two other leaseholders so we get to control pretty much what the managing agent does and what they spend money on etc.

Its certainly worth asking why their fees have gone up so much, but the service charge payments must be covered. Also with a sinking fund at our place, we are trying to build up to around £20K in case of any unforseen problems such as lift problems etc.

Good luck.

paint

hazeyj wrote:

Leaseholders have just sacked our old management agent and got in a much better one..it was easier me for me tho as I have a share in the management company, and I am also a director along with two other leaseholders so we get to control pretty much what the managing agent does and what they spend money on etc.

Thanks hazeyj, the bizarre thing is I think I also have a share in the management company which employs the managing agent, along with all of the other leaseholders (it was set up when the flats were converted 3 years ago). I have no idea who the directors are though... it's not something I've paid a great deal of attention to. Certainly I'll do some phoning around as you suggest to see how much it's usual to charge in this part of the country.

hazeyj wrote:

Its certainly worth asking why their fees have gone up so much, but the service charge payments must be covered. Also with a sinking fund at our place, we are trying to build up to around £20K in case of any unforseen problems such as lift problems etc. Good luck.

I appreciate these things have to be paid for and I certainly would hate to be faced with a whopping bill if the lifts decided to pack in or the roof fell in or something so I'm not too concerned about the sinking fund cash - it's more the 70% rise in fees from year 1 to year 3 I'm whinging about!

Bearing in mind your recent experience, would you be able to tell me how the directors to the management company are elected/appointed? I've never concerned myself with anything much in this regard before now (more fool me!) but am suddenly interested now to learn who they are, how they got there and what powers they have!

Thanks again.

hazeyj

Hiya, your managing agent should tell you who the directors are currently....basically you can nominate yourself to become a director...you dont have powers as such..only in fact that you control the managing agent.....your directors will sit down with the managing agent to set the budget for the current year, have general meetings with them say 4 times times a year (or however many meetings you choose) authorise large bills (over 2k), if your block is a new development it may be that teh developers are still in control of the managment company (it took ours two years to be handed over).

Basically I contact our managing agent on a daily basis (or vice verca) to see what problems/jobs they are deadling with that day...be it problem tenants, getting qoutes for work for common parts, asking them if anyone is behind in service charge payments etc...what you dont have is any rights to know who the owners of the apartments are..although, saying that I used to wite to all the owners of apartments on a weekly basis when we had our crap managing agent, asking for support etc and I got to know pretty much everyone which really really helped. You can also find out owners of apartments from teh land registry for a fee of £2.00 which is what I did when I was writing to all leaseholders re the problem managing agent as a lot of oyur owners are Irish investors.

You should remind your managing agent that the directors have the power to replace them and that the managing company does pay their wages. Something that our our old managing agent forgot...after threatening them for months I finally found a new managing agent through word of mouth and wrote to all teh other leaseholders to see if they would mind if I employed a new agent and it was with great pleasure that I sacked them, giving them one montsh notice. They were very shocked.

You should also liase with the managaging agent to see what the building accounts are up to on a monthly basis...

It is like another job so be prepared to be busy tho.

I love it me!

paint

Thanks again hazeyj, that's very helpful. On the one hand I don't want to become that involved with the day to day running of the block, but on the other hand I'm absolutely infuriated that they've tried to get one over on us in this way.

Good for you in sacking your management company. I think they must rely on the complacency of the majority of residents and think they can get away with just about anything.

Anyway, I've written to them demanding a full breakdown of costs and justification for it so will see what they come back with and go forward from there. Cheeky swines!

jennifernil

My daughter owns a flat in Glasgow. Up here they call the property managers "Factors". Last year they changed their factor, the new one is much better, and less expensive. There are 14 flats in the block and the management fee at present is £100 per flat per year. She pays £40 per month, which has been more than enough to cover stair cleaning, garden upkeep and general maintenance, so a small surplus has built up. The insurance is paid separately, but the £40 would have covered it. Your management fee sounds very high.