Increased invoice for same service charge

Freecall

Ozvaldo wrote: »

So if the lease states it should be a fixed service charge not variable where do we stand then??

It would be interesting to see the exact wording of that. Some leases do not specify a service charge at all of course so anything is possible but if the lease does cover the issue then there would normally be a mechanism for recovering costs set out.

When were the flats built? Is it a very old lease?

eddddy

Ozvaldo wrote: »

So if the lease states it should be a fixed service charge not variable where do we stand then??

Realistically, nobody would write a lease like that.

But if somebody had, I suspect that the freeholder would apply to have the lease varied under Section 35 (2) (e) of the Landlord and Tenant Act 1987.

http://www.legislation.gov.uk/ukpga/1987/31/section/35


What if the roof needs replacing at a cost of tens of thousands of pounds? How could a freeholder pay that out of a fixed service charge?

But if you think that the any charges you are being asked to pay are unreasonable, you have the right to inspect invoices/receipts covered by the service charges, and you can challenge the charges at a tribunal.

NeilCr

G_M wrote: »

It's hard to be sure without looking at the invoices, reading the lease, and checking the management company's accounts (to see where the money has been spent.

However it is quite common for a fixed amount to be paid, in advance, either annually, bi-annually, or (as here?) quarterly.

Then at the end of the period, the freeholder/management company checks what was actually spent (rather than what was expected to be spent).

If the actual expenditure was greater than the advance payment (perhaps some extra maintenance was required, or the garden contractors increased their fees etc), then an additional invoice is sent to cover the shortfall.

Once a year the full accounts should be submitted, showing what income the Manco received (from all the leaseholders) and where it went (maintenance, communal electricity bills etc, Manco's fees, accountant's fees etc). The income and expenditure should balance.

Whether this is the case here I can't tell.

Yes. This.

I am a director of our estate. We give residents/owners the choice of paying monthly or twice a year, in advance. They are from 1 January- 30 June (sent out in January) and 1 July - 31 December (sent out in July). Towards the end of the year before last we had a big, unforeseen problem with the gates on to the estate - that cost a lot. So, after the accounts were audited, there was an additional charge

In a previous year we underspent against the estimate so there was a refund. Spot on budgeting for a whole year is nigh on impossible. I think there is a tendency to overbudget but it is the unexpected that gets you

G_M

Ozvaldo wrote: »

I'm still slightly unsure how this way of charging a service is deemed as legal??
I am myself a sole trading roofer and if I was to agree and be paid an invoice by a client and then I realised further down the line that I should have charged a greater amount them I'm sure it would be down to me to swallow the loss and that it should have been estimated better on my part?
Sorry if this not a great example of my understanding of the situation but it makes me feel that the door is open to unexpected charges.

As a contractor, I'm sure you know that there are different ways of charging.

1) a fixed price quotation. You tell the customer it will cost £X. If it takes you longer than expected etc, you swallow the cost and make a lower profit

2) an estimate. You tell the customer it will probably cost £X. If it takes you longer than expected etc, you invoice extra and explain why.

3) a time basis. You tell the customer it will cost £X per hour/day. If it takes you longer than expected etc, youcharge extra based on the actual time it takes.

Even if the contract is variable surely this would still only effect the original invoice not allow a follow up invoice for more funds??

Not if the original invoice is payable in advance. The actual cost won't be known till all work is complete.

So if the lease states it should be a fixed service charge not variable where do we stand then??

If the lease says it's a fixed charge, then that's what you pay. but that is highly unusual in leases. Hence in post 5 above I said:

It's hard to be sure without looking at the invoices, reading the lease, and checking the management company's accounts

Read the lease. I can't!