£11k Service charges on leasehold flat.

chilihead

Hi

I have lived at the same address since 1996. My flat is 1 of 24 flats spread over 3 floors. I have kept all documentation the property management company have sent me over the years and since 1996 it was known that the flat roof would need replacing, and documentation I have states a reserve fund for the re-roofing was steadily increasing.

In 2002, the property management company called on a RICS registered Chartered Building Surveyor to prepare detailed plans and specs for the resurfacing of the roof. Pilot estimates were in the region of £50,000. Surveyors fees were in excess of £2,000 and were charged to the maintenance account. No work was undertaken, and no explanation was given to the owners.

Owners received a summary of the building work quotes 2 weeks ago. The cheapest quote was £231,636.75 exc VAT. Plus 8% of the total contract plus VAT for surveyors fees, plus 1.5% of the contract for the property management fees. Whilst the property management company wrote to us advising that the quotes were available for inspection, no-one has been able to view them. We were verbally told they were confidential and contained sensitive information (!!)

Each of the 24 flat owners have now been sent two bills for £3,125, on top of our two usual bi-annual service charge bills (about £400 twice a year - usual value). A meeting with several owners and the property management company last night revealed that the company had grossly underestimated the costs and are expecting £11,000 from each owner, and expect this payment before work begins - preferably at the end of September. We are yet to receive any formal notification of this increase. It was left last night that the property management would look into delaying the start of the works until next spring, with the possibility of bridging loans until December 2012 for those that cannot afford the up-front payment.

Since 1996, I believed I was contributing to a roofing fund which currently stands at £30,000, (incidentally, this figure was approx £35k in 2005) and I also believed that estimates for roof renewal would be in the region of £50k. The roofing fund has decreased since 2005, and since 1996, 24 flat owners have paid service charges of approximately £288k.

I have submitted a request to The Leasehold Advisory Service, but am still waiting on a response.

I'm not disputing the fact the roof needs replacing - we've known about that for years - but we were lead to believe a reserve for the replacement would be sufficient to ensure no large major-work fees. Certainly was not expecting to be asked for £11k at such short notice.

Is there anywhere else I can get advice from? It has reached a point where I just don't know where to turn. It seems we have no choice but to pay up or sell up, yet their property and account management skills are quite blatantly abysmal.

Thanks in advance

womble12345

Blimey, that isnt good. Do you have share of freehold?

Cyril

I had a similar issue on one of my flats tbh.

I'm sure I got advice from http://www.lease-advice.org/

chilihead

Hi womble. Nope. It is all leasehold. My understanding is that the property management company have to "maintain" the property under the terms of the lease. What they seem to have been doing is repairing and patching up i.e. when the roof leaks, patch it up locally.

chilihead

Thanks Cyril - yes. I've gone to Lease-advice.org and have submitted a request to them - still waiting on a response. What was the outcome for your flat?

womble12345

In that case I would read up your paperwork and see if you can dispute quotes from the leasehold company, it could be in your lease that they have to get 3 quotes. The quote you have seems high so surely they must justify it somehow, I suspect they are skimming off the top somehow. I wonder if it may be cheaper to buy the freehold and get the roof fixed by a cheaper place and still spend less than 11k.

devotee

Has the management agency not set up a sinking fund for repairs? That's appalling!

We had our roof changed and new windows done, but all they did was increase the service charge over a period of time until enough money was accumulated so they could do the works. It's unreasonable to expect to cough up that much money at such a short notice. It's management's fault they didn't estimate the works accordingly. Wait for lease.org to give you some advice.

ILW

Can you not get together with the other 23 tenants and take over the management?

chilihead

Thanks Womble. That quote of £231k was the cheapest of four quotes - the highest was £335k.

We have a right to view and inspect all the quotes. It actually states on the lease "copies of the estimates must be available for inspection, free of charge" and "the landlord shall provide to any leaseholder, on request and free of charge, a copy of the estimates".

All the owners present in last nights meeting wanted to see a breakdown of all the quotes eg. scaffolding costs, drainage, insulation, roof coverings, brickwork etc.

So far they have refused to give us visibility of any of the quotes.

chilihead

Thanks Devotee. Well - the prop/man/co did set up a reserve fund for roofing repairs in 1997. The fund currently stands at £30k -and has actually decreased from £35k. They couldn't explain the reason for this decrease last night - or the reason for the huge under-estimation of the fees.

ILW - it might be possible - lease-advice.org may get back to me with advice. We found out last night that the freeholder owns 4 flats within the block and rents them out. Several other flats are rented out privately, too, and we do not personally know the owners - and none of them showed up at the meeting last night.

DannyboyMidlands

I don't think that comparing the 2002 quote with the current one is quite so straightforward as you think. If the roof needed work 10 years ago it is lkely to have deteriorated significantly by now. What did the 2002 quote allow for? Patching up or a complete re-roofing? Who knows, maybe some patching up would have done the trick in 2002 but now the entire roof covering and some water damaged structure under needs replacing.

Having said that, property management companies know all the tricks in the book and are probably skimming money left right and centre.