Property management company - duty to seek lowest utility prices?

emv

Hi

I live in a private village where communal areas are currently owned by a developer & will eventually be trasferred to a management company with all residents as directors. We've just received a bill for 18 months of electricity which had been estimated & is now much higher than expected. I accept that BUT there is no contract in place so the bill is all at out-of-contract rates which are about 40% higher than standard rates. I would expect there to be an obligation to get the best possible value or at least to enter a contract so the bills are lower. We are all freeholders & the land is freehold so no protection under the laws relating to leasehold as far as I am aware.

Em

G_M

1) if there were no contract, the supply would be disconnected.

2) If the bill is estmated, and "much higher than expected" why do you not insist on a reading being given to the supplier? Have you written to the Developer/Manco?

3) What have the other freeholders said when you spoke to them? Are they also aggrieved, or not interested?

4) When is the transfer due? After that you'll have more direct control.

emv

1. No contract as in we're being charged out of contract rates, can cancel at any time but rates are very high.
2. We have only just been made aware that the estimated readings were much lower than expected, we've now seen a copy of the bills.
3. All seem unhappy but also seem able to pay up now & query later.
4. The transfer will happen in 2 - 3 years time, after the sale of the final house & there are about 15 that haven't been built yet :-(

moneyistooshorttomention

What is this electricity for? I'm trying to think what communal facilities there could be that you are responsible for paying for the electric for?

Presumably this communal electricity bill is being divided between all the houses involved (ie including the 15 that have yet to be built). What are the arrangements for the developer to cover the share attributable to those 15 houses that haven't yet been built? (Yes - that was said in a cynical tone of voice - as I'd be willing to bet the developer is trying to divide up their share of the bill between those houses they've already built). Surely the developer should be covering that share of the bill attributable to them herself/himself?

eddddy

emv wrote: »

We've just received a bill for 18 months of electricity which had been estimated & is now much higher than expected. I accept that BUT there is no contract in place so the bill is all at out-of-contract rates which are about 40% higher than standard rates.

I guess the electricity is supplied via a business electricity contract (as opposed to a domestic contract).

As you say, a business 30 day rolling business contract is typically much more expensive than a 1 or 2 year fixed business contract.

emv wrote: »

I would expect there to be an obligation to get the best possible value or at least to enter a contract so the bills are lower.

There would only be that obligation, if it said so in the agreement you signed with the developer.

Obviously, you and the other freeholders can ask (or put pressure on) the developer to sign up for a better electricity contract.

AdrianC

As Eddddddddy suggests - you're comparing domestic tariffs with commercial tariffs. The management company will not be eligible for domestic tariffs.

If you're freeholders, then what is this developer managing? I think you'll find that, as well as the freehold of your own property, you're paying for leased access to the communal areas of the development. Your own freehold is irrelevant to that.

emv

This is electricty for a private sewage plant, seems to be costing about £4kpa (also being investigated to see if that's right).

There are no lease clauses, the deed states that ownership of the land will be passed to the property management company after the sale of the last property & we all have to share costs. Does that constitute a lease without the word lease being used? I accept what we're paying for but just not the rate, the cheapest business electricty contract is significantly cheaper than what's currently being paid.

da_rule

There isn't likely to be a lease, it appears that the remaining freehold property (the sewage plant, any grass areas, unadopted roads etc) will be transferred to the management company. You then have a covenant on your title that you will pay the requested amount to cover their costs etc.
It could be a difficult argument with both the developers and the management company as they aren't paying it and might not want the hassle of switching.
Also, getting them to tie themselves into a fixed term deal may not be desirable to them as it creates a long term liability.

emv

It just feels a little like a license to demand money. Last year we challenged £000s of 'work carried out' and asked to see invoices. Funnily enough those charges all disappeared from the bill.

da_rule

Yeah, I would agree. I live on a new build estate and we pay a private company to cut the grass, cut back hedges, clear ditches, maintain the road (the local council did not adopt it) and we pay for the electric for the street lighting.
There are, I believe, ways in which the residents can remove a management company and do it themselves, but this could be a lot of hassle.

emv

I know there's the Right to Manage for leaseholders & as we're all going to be in control of the management company eventually it would make sense to be able to be doing it now then we'd have control of the contracts, bills etc. But I'm not sure if the same right applies in our situation.