Service Charge Deficit Payments

daints91

Hi all,

This is my first post so I'll do my best to explain my situation.

I bought a 2 bedroom ground floor apartment in 2011 and we've paid service charge ever since. Since 2011 our Service Charge has increased by roughly £250 a year up until now when we are paying £1300 a year. Last year the Service Charge company RMG issued an invoice which was incorrect. I challenged this and they sent another 4 weeks later but in-between this period my service charge was due. Obviously I didn't pay it whilst awaiting for the new updated invoice but I was fined an admin fee of £18 which I only noticed two days ago. I rung up to challenge and they refused to over turn it no matter what I said they blatantly refused. The manager also refused to speak to me on this occasion which was saddening considering how much we pay them.

Anyway this morning I received a Surplus/Deficit statement. Something I've never received before. RMG had added £210 onto my service charge to cover excess costs in 2013. Obviously I intended to question this and went and spoke to the neighbours on the opposite side of the estate who have the exact same build as myself but before I go into detail with this I'll explain my block.

First and foremost there is 5 apartments in this block. I live on the ground floor and have my own front door. I have never benefitted from the service charge which includes (Fire equipment maintenance of which we actually have none, Hallway Cleaning, Electrical Door Entry (Which I would never need to use) Electrical repairs, Hallway Repairs, General Maintenence repairs etc.)

I've always paid my service charge but after this statement this morning I went over to the mirroring building which is the exact same build just 30m across the road. After conversing with them they actually received a credit note of over £500 off their service charge. After digging deeper it came to light that they had complained about having their own front door and not receiving any benefit so received a refund yet the service charge company never spoke to me about this. It's always been the feel that it's us V them and they have never bothered to speak to us or to even build a relationship.

Anyway I looked through the documentation that accompanied the statement and we have vastly over spent on our budget, the only block out of 8 to do so. We have spent the following;

Door Entry System £Act: 390 Budget: 25

No work has ever been carried out on the door entry system nor have I ever had the need to use it.

Fire Equipment Maintenence £Act: 204 Budget: 125

Bar two fire alarms there is no other equipment.

Now the most interesting one is this;

Electrical Maintenance and Repairs: £700 against a budget of £234 and a Electricity bill of £858 against a budget of £325.

Now this is where it gets more interesting, Looking at the accounts of the other block they haven't had a budget set for electricity nor have they overspent on electrical maintenance. Now the best part, 2 months ago I had a man from Kent come and visit me and ask who pays the electric because it hasn't been paid for 3 years.... I told him RMG were our management group and he left.

After further studying the accounts the estate is actually in a surplus of £14k so they have handed £14k worth of credit out yet charging me. There is also over £5k service charge that they are owed off tenants that haven't paid so roughly £19k mis-match.

I don't understand how our block is so different to the others and if there has been work carried out why haven't we been made aware and why am I being charged? The electricity I can't understand either as we have had to two Lampposts blown for over a year. Every Account is in credit bar ours which in total is £1533 in debt.

The key words of the lettering are

"The deficit on the apartment block however has been incurred due to reactive electrical repairs, electricity costs, door entry system repairs and general repairs."

I have received zero benefit from any of this and have witnessed no work being carried out around the area. As a matter of fact the service we have received has vastly deteriorated over recent months.

I've wrote a letter stating I won't be paying my service charge or the excess until I've received advice. Sorry for the essay I just hope someone can help. The service we've received has been atrocious and the sums we pay are extortionate.

I also laughed at the following;

Over the year we have paid the following (This is on the accounts)

Printing, Postage and stationary - £1606.
Management Fees - £20000
Company Secretary fees - £668
Accountancy Fees - £2745

We are paying them for the paper they use, how does that affect the home we live in?

Please can someone help and advise?

Many thanks in advance,

Daniel.

thequant

read the top readers response on this article


This news is a great relief and this legislation is long overdue. I live in an apartment managed by this company called RMG living Ltd. This company company is the epitome of all unethical practices that you can imagine. The service charge has gone steadily up every year and has now reached unbearable. Often you would get a letter from a debt management company called PDC (which in fact is owned by the same parent company that owns RMG!) demanding the service charge or reserve fund along with an exorbitant amount of debt collection charges, which is often more than the initial charges itself. RMG would claim that they have sent you multiple reminders, none of which you received, which they would blame on Royal mail. This has happened to me and many of my friends and you can see multiple similar complaints in the internet forums. Despite this enormous service charge, the maintenance is rubbish. I wish more people came out about companies like this.

Read more: http://www.thisismoney.co.uk/money/mortgageshome/article-2055707/Leaseholders-overcharged-700m-management-fees-according-Which.html#ixzz35J5ahcbt
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thequant

another useful link


http://www.legalbeagles.info/forums/showthread.php?27299-Advice-needed-regarding-DCA-letter-for-non-payment-of-Property-Management-Charge

daints91

Thanks for your help the quant, I've had a good read and it seems this RMG are a company that have no morales. What is your opinion on the matter?

Thanks again.

propertyman

daints91 wrote: »

Thanks for your help the quant, I've had a good read and it seems this RMG are a company that have no morales. What is your opinion on the matter?

Thanks again.

Morals or no its irrelevant to solving your problem.:money:

propertyman

The admin fee of £18 is only due under the terms of the lease allow it. As k them on what basis it is charged and until the answer you will withhold it as, as I assume that they failed to dos so, the invoice they sent only came with the summary of rights for service charges, And not the one for admin charges.
http://www.landlordzone.co.uk/forums/showthread.php?55587-Late-payment-

A deficit collection is when the actual costs exceed the estimated costs, as it appears to have been the case.How and when they are calculated depends on the lease, but in most cases a set of accounts is produced, and the excess, loss, or surplus, profit is treated as the lease says. This will allow you to enquire about prior years, 10, 11, & 12.

Own access. In some cases leases exclude such flats from contributions but some don’t. If your lease says you pay a fixed % or fraction then sadly you are stuck with that, like it or no. If however it is a calculated or variable amount which can be reassessed than you can through the Tribunal have your contributions past and present adjusted.

Same Building yes they might have a surplus it all depends on what was actually spent in your and on theirs.

If the account that your received was supported by a set of accounts, as it should be and were certified under the landlord and tenant Act 1985 then you have the right to inspect the underlying invoices. http://www.landlordzone.co.uk/forums/showthread.php?43830-Leaseholders-Right-to-Summary-of-Expenditure-LTA-1985-s-21

It may appear as it can be that there is problem as there is not one meter for every stair core, as suppliers charge per meter and developers, not the agent who gets lumbered with it, go for the cheap option and don’t think about the apportionment of future costs.

Often their utility team don’t have a clue about the future build and set up accounts willy nilly and suddenly discover that for five years they have been paying a bill for electric for a site they left five years ago, and suddenly expect the agent to hand over a cheque, and in turn the residents.

Once you look at the invoices and knock on a few doors to look for meters then you might find the problem. Follow this up with mainstay as RICS members they must respond and you can take it to the ombudsman service as well as Tribunal.

But as you see its not simply the agent, its as much the builder who will often say do you want he ********* work or not rather than solve a problem of their own making.

I hope you can see what there might be an error and as mainstay have to solve it, don’t take the fist option of making an enemy out of them. Save that for when and if they are complete idiots.

Similarly the lease that you have might have stuck you in the hole and that’s a matter for your lawyer not having told you that, not the agent or the developer.

Start with the lease, look at the vouchers and so some homework as it seems the meter and apportionment is the problem.

Hope the links help thats why I wrote them.

propertyman

thequant wrote: »

another useful link


http://www.legalbeagles.info/forums/showthread.php?27299-Advice-needed-regarding-DCA-letter-for-non-payment-of-Property-Management-Charge

The OFT rules don't apply on this. Sch 11 CLRA 2002 does.

thequant

daints91 wrote: »

Thanks for your help the quant, I've had a good read and it seems this RMG are a company that have no morales. What is your opinion on the matter?

Thanks again.

Well there's lot of issues there, property man has covered a lot of them in his post.


I think you need to break each issue down separately and deal with them.


But ultimately it sounds like your management company is looking to sweat it's asset as much as possible. I would seriously look in gaining the right to manage or buying out the freehold to remove them.

thequant

propertyman wrote: »

Morals or no its irrelevant to solving your problem.:money:

I would have to disagree on this, understanding your enemy is important as to the way you tackle the problem.


If it's genuine dispute and the company does have "morals" then it may be possible to resolve the situation without going down more formal routes.


If the company in question, has no morals, is looking to sweat it's assets as much as possible. Then trying to resolve the problem informally will be a waste of time.

propertyman

If you go in with that attitude then you haven't read it or are too blinded with your own suspicions to learn.

if you read what is a comprehensive post, by someone who litigates these issues for a living, and throw away your they,re out to get me, you will see that is another underlying problem entirely..........

moreover you will see how to deal with it, and show to a tribunal or court or the ombudsman what a reasonable chap you have been. If your only argument is that sweaty one i wouldn't answer your call either, there us no point talking to you.

and when you start learning, you will see that it is not even their asset.....

so jn short, park your preconceptions and approach it in a new and effective way.:)

propertyman

thequant wrote: »

Well there's lot of issues there, property man has covered a lot of them in his post.


I think you need to break each issue down separately and deal with them.


But ultimately it sounds like your management company is looking to sweat it's asset as much as possible. I would seriously look in gaining the right to manage or buying out the freehold to remove them.

actually there is more likely a massive !!!! up on the apportionment of charges and the service charge matrix.

a lot of that is the electric meter and 3 years non payment . The above will get to the bottom if it seems that the one meter us serving more than one block, but only one is paying.
if the op is less closed-minded I'll help on how to deal with it .