Excessive Service Charge

jankers30

Bought a new build 1 bed flat in September 2005 and my service charge bill for 2006 was £746.75. This figure included £45 which was documented as being for the Management Company's Reserve Fund.

Yesterday I received the Service Charge demand for 2007, which was for £801.08 plus a demand of £353.87 for the reserve fund ( total 54% increase)

Whilst I understand the need to build up a reserve fund am I right in thinking that this is some what excessive and also, is a £100 increase on the general service charge also excessive.

Can anyone advise what course of action i can take to complain/get it reduced?

All the flat owners are actually members of our management Company, but the Developer (Bovis Homes) are still the Directors and are dictating these costs with our Managing Agents.

A Management Company AGM has yet to held since I moved in (should this be called by the Directors) and are they legally bound to hold one every year.The company is a Limited Comapny.

Any advice, greatly appreciated.

Thanks

dmg24

First step: have you asked for a justification of the costs?

djm1972

It is not uncommon for the service charge to increase in the second year of a new built flat lease; as in the first year the maintenance costs have to be estimated but after 12 months the costs are more accruately known for the second (and subsequent) years.

The amounts you are quoting sound ball-park for a modern new build flat; it could be anything between £800 to £1500 per annum depending on whether there are things like lifts, gardens etc.

All management companies establish a reserve fund; and this usually allows the fund to absorb the cost of things like external decoration every 5 years so that the tennants in that year aren't left with an unusually high service charge.

karenrussell

Hi, I have been looking on the site the last week or so (there is a lot of information;))for a suitable answer but found nothing that specifically matches my case therefore I would really appreciate it if anyone could offer some advice.

Last year I bought a new flat from Berkley Homes Basingstoke and I was one of the first people to move into the complex in Nov 2008. However I was surprised that I was charged 100% of the service fee as soon I moved in considering the facts that the building was miles from complete, many of the service areas were unavailable, most of the site was/is still under construction, the garden was a construction site, Alarms and doors did not function, car park was only partially complete, the neighbouring 20 storey building was completely scaffolded, no over ground parking, cranes everywhere, rubbish floating down from the construction site onto the balcony, etc I was also overcharged for services in my first bill.

The management agent changed divisions half way through the year but I called and wrote to both of them numerous times asking how they determined my overcharge and requesting a written summary of costs. I also asked them to provide me with reasonable facilities to inspect the accounts, receipts and other documents supporting the summary and for taking copies or extracts from them and information about how the service charges were determined.

I considered that the estimated breakdown of the service charges were unreasonable as they were charging for services that didn’t exist such as window cleaning (Glazed Atrium in entrance lobby) & complete maintenance for 5 lifts when we had only 2 lifts functional for most of 2009 never mind 2008 plus they have charged a massive sinking fund estimated over 1/3 of the service charge even although the site is far from completed… And they overcharged for the first billing period.

I agreed that tenants should pay a reasonable service charge and I only stopped paying after numerous failed attempts to contact the management agents for an explanation of the estimation process and why I was overcharged.

I am also really confused as the Management Agent is creating a sinking fund for future anticipated works but according to the management agents own estimate the sinking fund will set aside over £150M over the terms of the lease not including inflation. Is this sinking fund reasonable and fair?

The Management Agent is also seeking contributions for a number of items as below which I can’t seem to understand as the property will be 60% more populated in year II which surely means that the charges should go up not down?

Year I Year II
Electricity (inc Bulb replacement) £50K £24K
Building Insurance Premium £20K £11.7
Cleaning Costs £40K £13.5

The annual certificate and budget provided by the Management Agent does not provide enough detail about the expenditure to enable me to check whether I am liable for the expense under the terms of the lease.

Any help defending this overinflated charge would be much appreciated.

Thanks