Property Guardianship - Unexpected Charges

Badger_Lady

Hia,

It's dubious how well this situation fits on the 'House Buying, Renting & Selling' board but I'm struggling to find anywhere better.

I live in a property guardianship with 80-100 other people, occupying a very large building since Spring. We hope that this contract will continue for some time (the planning restrictions in this area are tight so it may take a while to sell or develop), but of course our licencing agreements do allow us to be evicted with only 2 weeks' notice and in theory this could happen any time.

Anyway - we all like living in our property. We have a strong community there, a 'make do and mend' attitude (for the most part) and of course the biggest benefit to us all is that our licence fee there is cheaper than any rent in the area.

HOWEVER

We have today been informed by our management company (via email) that they intend to apply a "Winter Surcharge":

Due to escalating utility costs, we need to introduce a winter surcharge to cover the addition electricity you will need to use to heat your respective rooms. Without this surcharge the property becomes non viable for us to manage.

The surcharge is £200.00 per Guardian and it covers the period from October 2011 to February 2012 (5 months). We believe this to be a fair amount to be paid and we will cover the excess.

Now, our licence explicitly states that all bills are included in our licence fee. The only exception to this is:

If the electricity supplied to the Living Space costs more than £250 per month, the Guardian will pay a fair proportion of the excess over that amount.

Now, naturally a building that contains around 100 people is likely to have an overall electricity bill of over £250 a month. In fact it makes a bit of a mockery of the above clause, which is identical for guardians sharing a two-bedroom flat. However, do we really expect it to exceed £4,000?

Bear in mind that the property has a very restricted electric system - only a few lights are linked to it, there are no cookers, no heating (there is constant hot water though) and we are all under strict guidance to switch off everything we're not currently using. We're not allowed to keep heating appliances (e.g. microwaves) in our rooms, so we generally share kitchens between 10-15 of us. We also have very few washing machines between us and make heavy use of the local laundrette. Most of us don't even have TV's or full internet access. We are allowed to supply our own oil-filled electric heaters - personally I haven't bothered.

So, my issue with this email is threefold:

1. Our bills are supposed to be included. Can they just change their mind?

2. If the 'excess usage' clause does apply, how can it be applied in advance of usage and to the level of £20,000 for a winter?

3. Since they are able to evict us with 2 weeks' notice, what risks do we expose ourselves to in paying 5 months of electricity up front?

And my main question is:

- What can we do about it? Is the only option to refuse by leaving the building, can we fight it whilst remaining, or can we make a stand until the management company takes action against us?

N79

Badger_Lady wrote: »

1. Our bills are supposed to be included. Can they just change their mind?

2. If the 'excess usage' clause does apply, how can it be applied in advance of usage and to the level of £20,000 for a winter?

For electricity clearly they can, based on the clause you quote. However, one would normally expect the charge to be retrospective and based on usage. I don't see a justification for an advance payment.

Badger_Lady wrote: »

3. Since they are able to evict us with 2 weeks' notice, what risks do we expose ourselves to in paying 5 months of electricity up front?

That you wont see the money back. Another reason why a retrospective charge may well be justifiable (based on the clause and assuming the numbers are correct) but not an advance charge.

Badger_Lady wrote: »

And my main question is:

- What can we do about it? Is the only option to refuse by leaving the building, can we fight it whilst remaining, or can we make a stand until the management company takes action against us?

You can try any of the above, but it may well result in the licence being terminated. Obviously your licence does not give you much security of tenure. If you plan to challange your status as licencees then that will not be cheap and you will need a good LL&T lawyer to see if you have a case. Since you are all in full time employment you almost certainly won't get legal aid (based on their selection criteria).

Any company that claims that their contracts are "water tight" on their website is clearly blustering but I can also see that they may well be correct that you have a valid licence either under a service occupation or using other provisions such as temporary accommodation and not a tenancy.

Badger_Lady

Thanks - yes it's very clear that this isn't a tenancy and I would never try to claim under tenancy rules... that's why I wasn't sure about posting here. But I agree with your conclusion entirely - based purely on contract (disregarding type), the charges can only be applied retrospectively and with justification.

BigAunty

I reckon you probably need specialist, rather than generalist advice, and need to run your contract past a legal bod.

And there's no harm in politely negotiating the request with the property company, asking for evidence of utility costs and for them to define the process of refunds if notice is served before 5 future months of occupation.

I reckon that any action to quit the building in protest could be counterproductive. Firstly, there will be some of the original occupants that think an extra tenner a week for electricity on top of cheap rent is a steal compared to local market rents, plus the original contract did advise of potential extra costs. Secondly, I wonder whether the property company would find it very easy to find replacement guardians from their presumably long waiting list of applicants.