Leasehold management company issues

dan74_2

Not sure if this is really relevant to this site, but someone may be able to help so here goes.
I own a Leasehold flat in a block of 4. The Freeholder has appointed a Management company who have now been active for 3 years. When they took over from the last company our reserve fund account was considerably in credit, about £3000.
I understand that this account is reserved for major works and to be honest that is not my issue as i'm quite happy to have this money in the account as a backup shoud anything go wrong.
What i am worrid about though is the ongoing charges this Management Company are claiming they are within their rights to charge us. For instance, this year they have hit us with a bill that is 50% more than the previous year. The breakdown includes: Insurance premium(£1387), general repairs (£450), reserve fund (£200), management fees (£1387), audit fees (£250), risk assessment (£300).

Althought the reserve fund is in credit, they are still asking for us to contribute towards it, is this a legal requirement?

They are also claiming that the £450 fee for general repairs is not relating to any specific work carried out, but is an estimated cost for future repairs this year, even though they cant tell me what they are proposing. The fee last year for this was £200 and they didn't do anything then either.

The insurance premium has also risen nearly 50% form last years figure.

I've asked them to detail the individual costs but every time i question something they reply with legal jargon.

Is there anyting i can do if i am not happy with their actions or are we lumbered with it?
Can i complain direct to the freeholder for instance?

tim123456789

1) all the items that they charge for, excepting their management fees, should be on an "as incurred" basis". If they haven't actually spent the money then they can't claim it. You can challenge this, ultimately at an LVT, where they will have to provide proof that the money was actually spent (on behalf of the tenants). But beware that this could cost you more than the amount you are arguing about

2) Whether you are obliged to fund a sinking fund or just pay for expenses on an arising basis will be detailed in your lease. If the lease allows it they can collect in advance, but the money should then be kept in an account belonging to the block, not just held in the agents general pot.

If you are unhappy with the way that they are managing the block and can gain a majority vote you can change to an RTM and appoint a management co of your own choice. (unless you are in block that doesn't qualify for this).

If you can't gain a majority and they really are making a mess of things, an individual can apply to an LVT to force a change of management to one nominated by the court. But on the basis of the info provided you aren't anywhere near the thresh-hold for this.

dan74_2

tim123456789 wrote: »

1) all the items that they charge for, excepting their management fees, should be on an "as incurred" basis". If they haven't actually spent the money then they can't claim it. You can challenge this, ultimately at an LVT, where they will have to provide proof that the money was actually spent (on behalf of the tenants). But beware that this could cost you more than the amount you are arguing about

2) Whether you are obliged to fund a sinking fund or just pay for expenses on an arising basis will be detailed in your lease. If the lease allows it they can collect in advance, but the money should then be kept in an account belonging to the block, not just held in the agents general pot.

If you are unhappy with the way that they are managing the block and can gain a majority vote you can change to an RTM and appoint a management co of your own choice. (unless you are in block that doesn't qualify for this).

If you can't gain a majority and they really are making a mess of things, an individual can apply to an LVT to force a change of management to one nominated by the court. But on the basis of the info provided you aren't anywhere near the thresh-hold for this.

Thanks for the reply Tim,
I always assumed the RTM scheme required the leaseholders to set up their own management company, i didn't realise we could appoint our own external one.
Does anyone have any good/bad experiences with this, perhaps a trustworthy RTM company they can refer?
Thank you

tim123456789

Well you do have to go through the effort of forming a company.

But having done so, you sub-contract the day-to-day running of the block to professional management, if that is what you want.

The block that I am about to buy into are managed by (but not as an RTM):

http://www.hmlandertons.com/property-management.html

and everything that I can find out about them says "responsibly run company", but I've not moved in yet so can't give you actual first hand info.

and FWIW, I walked away from 2 potential purchases because everything that I could find out about the management of the block [1] said the opposite.

[1] Yes, those in the know, can insert the names of the "usual" suspects here

dan74_2

Our current management company are Hillcrestestates.co.uk

I can't find any horror stories about them though, and to be fair they are presented quite well and also offer RTM.

I wonder what would be their reaction if we were to enquire about and RTM setup with us retaining them as the management company be we call the shots?

Is it a win win situation for them?

dan74_2

OK this worries me. I formerly requested a breakdown of the "general repair" cost for which they are demanding £420. I just got this response.

"As far as the certified accounts are concerned, you will only receive a summary of income and expenses in the format you did for the past years. It will list the income, and then the expenditure in categories e.g. buildings insurance, management fees, accountants fee, building repairs, risk assessments and so on, but it will only be a total for each category. There is no obligation on the part of the Freeholder or Hillcrest to provide a detailed breakdown for each and every category. "

Is this right ?

tim123456789

Is it right that the lease allows them to do this - perhaps

Is it right morally, not IMHO.

If MAs want to play the "we do the legal minimum over what is right" then vote them out is my view.

There is no better way of sending the message

tim

propertyman

1) all the items that they charge for, excepting their management fees, should be on an "as incurred" basis". If they haven't actually spent the money then they can't claim it.

Well no that's correct in the broad sense that it could be read- that only applies of the lease charges service charges in arrear.

In the majority of cases Sc is estimated in advance for the year and on account payments made as set out in the lease.

In order to have a reserve fund ( if the lease allows for one)contributions have to be made and therefore it is the calculation that is important as to waht it is making a provision for. As it is non annual items such roofing decorations carpets lifts etc the amount of £200 is scarily scarily low.

dan74_2

propertyman wrote: »

£200 is scarily scarily low.

yes, this is because we already have a credit balance in the account of £4,500

propertyman

dan74 wrote: »

"As far as the certified accounts are concerned, you will only receive a summary of income and expenses in the format you did for the past years. It will list the income, and then the expenditure in categories e.g. buildings insurance, management fees, accountants fee, building repairs, risk assessments and so on, but it will only be a total for each category. There is no obligation on the part of the Freeholder or Hillcrest to provide a detailed breakdown for each and every category. "

In the strictest sense no they do not have to break it down however where they have skated the issue is that if the accounts have been certified under section 21 of the landlord and Tenant Act 1985, then under section 22 you have the right to inspect the receipts payments etc on written notice.

NB a leaseholder is a tenant.
Request to inspect supporting accounts &c.

(1)This section applies where a tenant, or the secretary of a recognised tenants’ association, has obtained such a summary as is referred to in section 21(1) (summary of relevant costs), whether in pursuance of that section or otherwise.
(2)The tenant, or the secretary with the consent of the tenant, may within six months of obtaining the summary require the landlord in writing to afford him reasonable facilities—
(a)for inspecting the accounts, receipts and other documents supporting the summary, and
(b)for taking copies or extracts from them.
(3)A request under this section is duly served on the landlord if it is served on—
(a)an agent of the landlord named as such in the rent book or similar document, or
(b)the person who receives the rent of behalf of the landlord;
and a person on whom a request is so served shall forward it as soon as may be to the landlord.
(4)The landlord shall make such facilities available to the tenant or secretary for a period of two months beginning not later than one month after the request is made.
[F40(5)The landlord shall—
(a)where such facilities are for the inspection of any documents, make them so available free of charge;
(b)where such facilities are for the taking of copies or extracts, be entitled to make them so available on payment of such reasonable charge as he may determine.
(6)The requirement imposed on the landlord by subsection (5)(a) to make any facilities available to a person free of charge shall not be construed as precluding the landlord from treating as part of his costs of management any costs incurred by him in connection with making those facilities so available.]]

propertyman

dan74 wrote: »

yes, this is because we already have a credit balance in the account of £4,500

Well take 4 flats and think of the next time ext decs int decs new carpets are due, and how old the roof is, and the building services electrics pipework etc, and any roads paths or walls and fences.

£4000 is not a lot...£1000 each unlikely you could paint the outside for that.