Service charge dispute (OM Property Management)

rodd-y-ler

Hi again!

Believe it or not, this is STILL going on.

So a recap.

May 2010: Completed, moved in, paid £600 for 6 months service charges.
Jan 2011: OM start to manage us, invoice for period Nov - Apr received (and begrudgingly paid)
April 2011: Another invoice for May - Oct, which we have been fighting for over 3 months now.

We've paid for 12 months service charges, they have to date supplied us with 7 months, yet want payment for another 6 months.

Trying to get my head around the Landlord and Tenant Act 1985.

Section 22 states that we are able to request a summary of how our money was spent for a period.

OM are saying that as they weren't managing us May-Oct 2010, there are no accounts to summarise and that the money would be carried over to the new financial year.

Correct me I am wrong, but shouldn't that mean I am in credit until the end of October?

May - Oct 2010:
Invoice amount: £600
Money spent: £0
Current balance: -£600

Nov 2010 - Apr 2011:
Invoice amount: £600
Money spent: £600 (which they wouldn't have as they only managed for half this period)
Current balance: -£600

I should be £600 in credit, so the most recent invoice for May 2011 should be covered without me having to pay anything.

The are still demanding payment!

glottalstop

A bit confusing to say they weren't managing you but were collecting charges !

To some extent they may be driven by the lease which says they must demand service charges every 6 months, and be bound by their duty to the freehold landlord to arrange insurance etc. However, they can't just invent figures out of thin air, so the demand for charges should have come with a budget.

Your legal right to see service charge details only kicks in once the annual report has been presented. By law this should be within 6 months of the year end.

But any reasonable property manager should be able to say what charges they have collected from you and be able to present an explanation of expenditure.

Some form of collective protest via your resident's association or web forum is called for here, your property manager needs to respond to you all properly.

FYI

a new ePetition has been launched asking the government for better protection against this kind of exploitation ...

http://epetitions.direct.gov.uk/petitions/2127

perhaps you could draw attention to it on your web forum ?

propertyman

rodd-y-ler wrote: »

Hi again!

Believe it or not, this is STILL going on.

So a recap.

May 2010: Completed, moved in, paid £600 for 6 months service charges.
Jan 2011: OM start to manage us, invoice for period Nov - Apr received (and begrudgingly paid)
April 2011: Another invoice for May - Oct, which we have been fighting for over 3 months now.

We've paid for 12 months service charges, they have to date supplied us with 7 months, yet want payment for another 6 months.

Trying to get my head around the Landlord and Tenant Act 1985.

Section 22 states that we are able to request a summary of how our money was spent for a period.

OM are saying that as they weren't managing us May-Oct 2010, there are no accounts to summarise and that the money would be carried over to the new financial year.

Correct me I am wrong, but shouldn't that mean I am in credit until the end of October?

May - Oct 2010:
Invoice amount: £600
Money spent: £0
Current balance: -£600

Nov 2010 - Apr 2011:
Invoice amount: £600
Money spent: £600 (which they wouldn't have as they only managed for half this period)
Current balance: -£600

I should be £600 in credit, so the most recent invoice for May 2011 should be covered without me having to pay anything.

The are still demanding payment!

Ok

1: Its Section 21, and still requires a written request ( the online version of the Act is misleading).

2: Service charges are charged on the estimate from the date of completion.

If the actual spend for your flat's share is less than what you have paid, what happens to the credit (surplus) should be stated in the lease.

OM cannot decide to hold it over unless the lease allows.

So its actually

May - Oct 2010: £600
Paid - £600
Nov - April 2011 £600
Paid -£600
April - Nov 2011 £600
Year end surplus -£600 £0

You have to remember that very half years charge is an estimate. The actual spend is a separate entry and can only be taken into account when they sums are done and its put on your account. That's the way leases work I am afraid,they have their own rules. They are a two track process.

rodd-y-ler

propertyman wrote: »

Ok
So its actually

May - Oct 2010: £600
Paid - £600
Nov - April 2011 £600
Paid -£600
April - Nov 2011 £600
Year end surplus -£600 £0

You have to remember that very half years charge is an estimate. The actual spend is a separate entry and can only be taken into account when they sums are done and its put on your account. That's the way leases work I am afraid,they have their own rules. They are a two track process.

But the initial estimate that we paid was never used as they spent no money during that period. If it is moved to the next financial year, then why is it not credited to our balance?

Here is the response I sent yesterday:

Hello

I have spoken with our solicitor, and they can see no reason as to why the initial payment made for the period May - Oct 2010 could not be credited to our current bill.

The funds for that period were not used, and as that period is not being audited, this money should carry over to the current financial year.

In your earlier email you state:

However OM property Management took over management in the 2010/2011 accounting year and as such we will be preparing the accounts one this year has run and upon doing so any monies paid into the service charge account that has not been used for services during this year can then be credit back to the leaseholders. We are therefore not auditing the accounts currently but these monies will be included in the service charge and will fall part of the auditing of the accounts after the end of the year of 31st October 2011

If our initial payment £566 is being included in the audit at the end of the current financial year, why is it not being credited to our current bill?

We have been invoiced 3 times: £566 on completion, £600 for Nov 2010 - Apr 2011, and another £600 for May - Oct 2011.

If the £566 is being factored into the current financial year (for which the total amount invoiced is £1,200), then we have already paid £1,166 for the year Nov 2010 - Oct 2011, meaning our current invoice should only be £34, not the £600 that it currently is.

I can't see any other logical way for this to be corrected;

Either the accounts for year 2009/2010 are audited and the initial payment refunded, or the initial payment is carried over to the 2010/2011 year, crediting the balance for this period.

Our solicitor has stated that if the payment for 2009/2010 was not used as OM were not managing us for that period, there is no reason why it could not be carried over to the 2010/2011 year as a credit. Money was paid for a period of time and not used within that period, therefore the amount should either be refunded or used to credit the account for future invoices.

With regards to the ground rent, it has been paid in full separately.

Could you please advise on how to speak with someone directly about this matter, I have been advised that this has been escalated and promised a phone call before, but never received on.

Sincerely

££sc££

Whilst you may not have been receiving certain services, there must have been some costs incurred even if they are paying for it after,
e.g.
*communal electric for lighting, door entry system, lift or whatever's applicable
*buildings insurance
*payment into provision fund.
I'd probably ask for a revised bill for the period where most services weren't delivered.

propertyman

rodd-y-ler wrote: »

But

Sorry but you need to re read my post.

This is a common problem where you try to ram your situation into common sense when common sense has nothing to do with it- honest.

After paying in advance, any difference will not show up on your account until the expenses for the prior year are added up and applied ( just hang on a mo) to your account. The current year estimate your current £600 bill is an entirely separate financial year and as long as it is a reasonable estimate for this , not last years, costs, it is due.

OMPeverals involvement is irrelevant and here is why.
They are not a contractor who takes on the contract, bills you and spends the money with subcontractors, they actually manage funds for the landlord.

The "landlord" whoever that is under your lease provides services and you pay half yearly in advance on that estimate.

The money that they manage is from completion to the financial year in the lease. They may have had control over it for a short period so for teh £1200 due under teh lease as estimate,
a; any expenses under OM management will be deducted,
b any landlords expenses prior to their appointment will be deducted

The balance is then calculated.

Whether that is carried forward sent to you or credited to your account is set out in your lease not what OM would like to do.

You need as said to read your lease. your letter vents your anger and sounds logical but is I am afraid wrong.

And that is how leases work not how you think they work or how you think they ought to work.

SO HERE IS WHAT YOU WRITE.

In the last financial year I know that less was actually spent than was estimated.

Please confirm when the accounts for the end of the year will be made available.

For the avoidance of doubt this is a formal request for the the income and expenses to be certified under section 21 of the landlrod and tenant act 1985. These should be prepared within 6 months of the year end or one month of my request.

If as we both agree that there was a profit or surplus please explain where under the lease for my property that allows that surplus to be retained and what is done with it.

In the meantime I do not agree or admit that the current charges are due, fair or reasonable, bearing in mind that services are not being provided ( summarise no gardening etc).

As members of ARMA you are required to reply within 10 working days otherwise I will take this up as a formal complaint.

propertyman

££sc££ wrote: »

Whilst you may not have been receiving certain services, there must have been some costs incurred even if they are paying for it after,
e.g.
*communal electric for lighting, door entry system, lift or whatever's applicable
*buildings insurance
*payment into provision fund.
I'd probably ask for a revised bill for the period where most services weren't delivered.

Sorry but that is not how leases work

rodd-y-ler

propertyman wrote: »

SO HERE IS WHAT YOU WRITE.

In the last financial year I know that less was actually spent than was estimated.

Please confirm when the accounts for the end of the year will be made available.

Thanks for the detailed explanation, but they have categorically stated that as they weren't managing us during the previous financial year (theirs runs from Nov 1st - Oct 31st), they won't be doing an audit for that period, and that my payment for that period is being added to this financial year's pot.

That money is not going to be used to cover any expenses for the previous financial year as there aren't any. It was the first block of the development, things are still being built on site a year and a half later, and all the costs that OM would have dealt with if they had started to manage us in that period have been absorbed by the developer, they foot the bill for changing one of the communal doors, redoing some of the grass areas, and they few other things that needed to be done. They will not be charging us or OM for those services.

mimimt

Hi Sorry to dig this post up but I have a Peverel related question and thought this might be the best post to ask that question.

I'm considering buying a leasehold flat managed by Peveral and getting some work done to the flat, which includes removing some internal non load-bearing walls which will need Peverel's consent. Does anyone by any chance know how much Peverel would charge and how long it would take?

Thanks a lot

propman1

Take care with this, i suddenly got a bill from OM for the period in which the builders were on site a couple of years later! Also had problems where the accounts were audited months late and received an extra rechrage of around £700 per appartment due to serious overspending using high cost contractors shipped in from miles away. There is virtually no control of costs and sub contractors seem to be able to charge high costs without constraint whilst the site also was in quite a state even with the extra spending!

funds were not available for basic services due to the overspending. Simple repairs cost a fortune and we were hit with an enormous water bill as it hadn’t been dealt with for years.
The Good news is that i organised for OM to be removed as the management company- they are now gone- the service charge has been reduced and the place is already looking much better. I am now organising to have management companies removed from a couple of other sites i own property at where similar issues are occurring- happy to share my experience of how we got rid of them with anyone else in similar circumstances if you send me a private message through this site