Compensation for misleading service charge estimates

Honeybadger_2

Last year I bought a flat from Barratt Homes where they gave a service charge estimate of £1200 to £1300 - but guess what? At the time of publishing this in their marketing material they knew what the ACTUAL cost was going to be ... £2300.79!!!!

I took them to the Consumer Code for Homebuilders and was awarded compensation. You can read the full adjudication at "www" dot "honeybadgerblog" dot "co" dot "uk".

If you have a similar issue and want some help or advice then please get in touch!

Jeffrey_Shaw

How did they 'know' the sum in advance?

G_M

Note:

* Scotland
* Adjudication - not binding on courts or other adjudicators
* There are caveats in the finding. Adjudicator found that the original estimate was accurate, but that additional charges, which had been warned of but for which estimates had not been given, had been later added into the service charge. It was the lack of transparancy for the amounts of these additional charges which resulted in the partial finding for the claimant.

Honeybadger_2

Jeffrey Shaw - they "knew" the sum because they received the estimate of £2300.79 from the management company in April 2012, they then charged this amount at completion in July 2012. In June 2012 they were marketing the flat with the service charge "estimated" at £1200 to £1300.

propertyman

Developers don't want to understand service charges, they see it as negotiable and as a key point in competing with other developers.

Barratts recently took their management in house after being associated with OM Peveral, and hired one of the former senior execs to run it.:eek:

Same old same old.

Well done Honeybadger

Honeybadger_2

Thanks Property Man. I have written to all the other residents in the apartment block because they will all be a victim of the same scam. There are 65 other units - so far I have 3 responses ...

I am probably going to reject the adjudication and take them to the County Court.

It is quite hard to defend marketing a property with a service charge estimated at £1300 when you know you will be charging £2300.79 at completion. I want to see what the opinion of a real judge is rather than an adjudicator for a scheme that is funded by the homebuilding industry!

propertyman

Well you'll have to look at

1: the itemised estimate and see the actual costs for those elements rather than just the final grand total

2: determine if the water heating hot water are reserved as service charge, and not something else, under the lease eg utilities rent


ie the counter argument being that SC in 1 was accurate and that the items in 2 are "different" and therefore your total is misleading.


3 its a poor show that the costs in 2 weren't estimated as water is clear charge from the local water company who all give guides on average household and pp consumption and the system installers can do likewise for the CH and HW.

It is common for a developer not to show these partly for marketing purposes, which means you'll have to try ad prove they omitted them, and partly as in 2 above- they dont need to of they are no reserved in the lease as SC..

A benchmark will be how much would a householder use in such systems, add it to the £1200 and then look at your loss, if a quick read of the literature would show that a household own costs for HW CH and W as distinct to a normal SC would have been budgeted for and expected and it was apparent from the literature how it was broken down.
NB these details are prepared months in advance at plan stage, I know I do them

Honeybadger_2

Property Man - the heating and hot water issue is quite complicated (btw - your last post finishes mid-sentence) - we pay for water via Thames Water, we pay for heating and hot-water via a bill that is received from the management company - but this is NOT metered as is stated in the marketing material. There seems to be a CHP (combined heat and power) installation - I do not know who receives the power but I am following-up on that. The service charge for heating and hot-water seems to be for servicing and maintenance. I have not got to the bottom of it because Barratt have been very obstructive. At one point I got an email from their Deputy General Counsel telling me not to email anybody else at the company. I was told that if I did, I would not get a response.

When I take it to the Court all I am going to say is that Barratt stated a charge of £1300 in their marketing material then charged £2300.79 at completion. They can do all the explaining.

To me, it seems very, very wrong. It is like taking your car to the garage and have the mechanic ring-up £2300.79 at the till, with him then giving you an "estimate" of £1300 to your face, then when you come to pay at reception you just get a load of excuses of why it has come in at £2300.79 - even though this was known to be the charge when you were being given the "estimate".

Annisele

Honeybadger wrote: »

When I take it to the Court all I am going to say is that Barratt stated a charge of £1300 in their marketing material then charged £2300.79 at completion. They can do all the explaining.

I think you'll need more than that to take it to court.

Generally, the remedy for misrepresentation is to be put into the position you would have been in but for the misrepresentation - not to be put into the position you'd be in if the misrep had been true.

So, if the judge agreed that there had been misrep, the key question would be what you would have done if you'd known the true position. If you would still have bought the flat, you might not be awarded anything at all.

Another problem you'll have is that the adjudication suggests your solicitor did have the true figure before you committed to the purchase. You might not have had it yourself, but your solicitor is your agent.

tim123456789

propertyman wrote: »

Developers don't want to understand service charges, they see it as negotiable and as a key point in competing with other developers.

I looked at one block which was estimating 1800 for a one bed and up to 3400 for a 3 bed, outside London, where anything above 1500 is seen as expensive. I walked!

and then it was plus your share of the communal metered water supply which they estimated at 550 per unit. The (established) block that I have offered on comes in at 55 per unit so god knows what they expecting their tenants to do with all this water.

Honeybadger_2

Tim - those charges are off the scale! I don't blame you for walking!

Annisele - I'll give the misrepresentation act a miss and use the property misdescriptions act, the fraud act, the Consumer Protection from Unfair Trading Regulations and the Consumer Code for Homebuilders. These all put the duty firmly on Barratt.