Property Management Fines - legal or not?

Cornucopia

I received a demand letter the other day from my friendly (not) Property Management Company. These are the people who run the building & collect service charges.

The letter contained a demand for payment with a threat of a £60 penalty charge if not paid within a certain time limit.

I'm aware of the debate in other sectors (banking, parking) where these kinds of demands are limited to a valid cost (or cost estimate). Is this a general thing, or does the law vary sector to sector? In other words, is this fine valid or unlawful?

csgohan4

Have you paid your service charges? if not why not?

pinkshoes

It depends what the charge is for. In your lease you would have agreed to pay a service charge, so if they have to spend extra time and effort chasing unpaid fees up, then a charge is fair.

Or perhaps they should increase the service charge to take into consideration the amount of time chasing up fees of those who do not pay?

If they are demanding an unexpected £1000 for a repair and giving very little notice, then that is another matter.

DandelionPatrol

If there is a right to a Penalty, then it must be explicit in the lease. If they call it a Penalty and there is no right to a Penalty in the lease, there is no right to it.

However, if the Service Charge becomes late, according to either the lease or law, then they have a right to claim the costs of claiming the charge. If it is just late according to their own idea, but not according to the lease or law, then they have no rights to the costs.

G_M

Indeed.

As always, the starting point is to read the lease and see what it says about late/non payment. Thereafter:

The Commonhold and Leasehold Reform Act 2002 introduced rights in respect of administration charges. These are defined as 'an amount payable by a tenant as part of or in addition to rent, which is payable directly or indirectly for:

• the grant of approvals under the lease or applications for such approvals;
• for or in connection with the provision of information or documents by or on behalf of the landlord or a person party to the lease other than the landlord or tenant;
• costs arising from non-payment of a sum due to the landlord;
• costs arising in connection with a breach (or alleged breach) of the lease.'

Any administration charge demanded by the landlord must be reasonable in order for the landlord to recover the charge, and must be accompanied by a summary of the leaseholder's rights and obligations in respect of administration charges. If the summary is not included, the charge is not regarded as being payable.
In some cases a lease also allows the recovery of legal costs incurred in courts and or tribunals to be recovered from an individual leaseholder. This can arise on occasion from two scenarios:

1. costs arising from non-payment of a sum due to the landlord; and/or
2. costs arising in connection with a breach (or alleged breach) of the lease

When the costs incurred result from one or other of these they will be technically classed as an Administration Charge. Such charges must be reasonable, amongst other things, in order to be payable; but if they are reasonable and payable they are recouped from an individual leaseholder. It follows that the lease should be reviewed to establish if there is an obligation on a leaseholder to pay an Administration Charge where there is any prospect of legal costs being incurred.

http://www.lease-advice.org/publications/documents/document.asp?item=14#23

Cornucopia

I will check the Lease. Thanks for the comments (the useful ones, anyway ).

Marktheshark

Google how to sack your management agent.
YOU employ them, they are your servants and you are their boss.
With enough support you can sack them.

Cornucopia

I would definitely like to do that, but I doubt I would get the support of the other owners (many of whom are Landlords). I'm also aware from previous experience that neither Leaseholder-appointed Management Companies nor self-managed buildings are necessarily the answer (the former is often no significant saving, and the latter can result in poor levels of maintenance).

Certainly the fees are extortionate for what little the Company actually does - and several of the tasks that they are responsible for are not being done properly.

I'm thinking of moving... ... to a freehold property.

chris_m

Cornucopia wrote: »

I will check the Lease. Thanks for the comments (the useful ones, anyway ).

Unless a post has been deleted and I didn't see it, all the comments that have been made are useful.

G_M

Cornucopia wrote: »

I would definitely like to do that, but I doubt I would get the support of the other owners (many of whom are Landlords). I'm also aware from previous experience that neither Leaseholder-appointed Management Companies nor self-managed buildings are necessarily the answer (the former is often no significant saving, and the latter can result in poor levels of maintenance).

At least with a Leaseholder-appointed Management Companies you have more direct control & easier to a_ hold them to account and b) sack them

And yes, a self-managed building would only work if you were yourself prepared to put in the time to manage it and could identify, say, 2 other leaseholders also willing.

As for getting the support from other leaseholders for RTM, yes, if most are LLs (possibly even overseas LLs?) it's tough. You'd have to persuade them they'd save money......