No mention of service charge in lease but management co seeking it anyway

NeilCr

Is there any sort of sinking fund? For example for problems/maintenance/etc of the roof. That might be a good reason for having a service charge

omega1987

mrginge wrote: »

So when repairs have been required, how have you paid for them in the past?

The lease stipulates which leaseholder is responsible for what repairs, for instance the cost of roofing and structurel works is shared 50/50 between myflat and the one above, some items are specifically my responsibility or theirs I. E. Paths and windows. The lease makes it clear who is responsible for what but the landlord doesn't pay for repairs or maintenance.

The only large scale maintenance works that have been done since I've owned the flat are repointing which was paid for 50/50 by me and the upstairs neighbours.

omega1987

NeilCr wrote: »

Is there any sort of sinking fund? For example for problems/maintenance/etc of the roof. That might be a good reason for having a service charge

No there is no sinking fund other than personal savings and insurance just like a regular freehold property.

KiKi

So was there a freeholder previously, who let the leaseholders fix things as per the lease? And now there's a new freeholder who wants to do things differently (ie, get money in advance to pay for stuff rather than waiting until stuff needs to happen)?

Is there a reason the leaseholders didn't want to buy the freehold, as your previous set up is what leaseholders often do when they have a share of the freehold (there's often no need for a management company if you trust each other to take responsibility and pay up).

omega1987

KiKi wrote: »

So was there a freeholder previously, who let the leaseholders fix things as per the lease? And now there's a new freeholder who wants to do things differently (ie, get money in advance to pay for stuff rather than waiting until stuff needs to happen)?

Is there a reason the leaseholders didn't want to buy the freehold, as your previous set up is what leaseholders often do when they have a share of the freehold (there's often no need for a management company if you trust each other to take responsibility and pay up).

It's my understanding that the lease doesn't change when I new freeholder takes over and a service charge cannot be imposed unless the existing lease allowes for one.

I wasn't in the financial situation to buy the freehold when it came up for sale as I had just got married.

JJG

A service charge is completely separate to a sinking fund. That £100 a month will just go into the companies profits.

NeilCr

JJG wrote: »

A service charge is completely separate to a sinking fund. That £100 a month will just go into the companies profits.

I can only say that on the estate where I am a director part of the service charge for the flats goes into a sinking fund for long term maintenance/repairs. Mainly because leaseholders prefer it that way

Just my experience - yours is clearly different

KiKi

omega1987 wrote: »

It's my understanding that the lease doesn't change when I new freeholder takes over and a service charge cannot be imposed unless the existing lease allowes for one.

I wasn't suggesting that was the case, I was just trying to establish what had happened. Your original arrangement seems fairly unusual IME - that's usually an arrangement for when the leaseholders co-own the freehold, but obviously that wasn't the case here as you had a management company in place.

If indeed your lease doesn't allow for a service charge, then it's very possible the management company just haven't read the leases properly and are unaware of the arrangement. Or they are aware of it, but are imposing a service charge simply to ensure that the money is there when things need to be sorted without invoicing you each time because they believe that's more practical (even if not allowed in the lease). They could possibly argue that whilst there's no clause saying 'service charge', it's clear that you're responsible financially for the repair and maintenance of the building, and therefore they are simply taking that money in advance of the repairs being required, and there's nothing in the lease to say that money can't be taken in advance. maybe.

Equally, they may be chancing their arm and hoping you just do as asked! Either way, challenge it - but you'll do better if you and the other leaseholders get together and act as a group rather than as an individual.


I disagree that a service charge is different to a sinking fund - all the 'service charges' I've come across are to pay for repairs and maintenance, add to the sink fund, and yes, a proportion goes to the management company. But IME people do not pay £100 a month and then all the charges related to repairs and maintenance separately (unless there's major works required).

omega1987

KiKi wrote: »

I wasn't suggesting that was the case, I was just trying to establish what had happened. Your original arrangement seems fairly unusual IME - that's usually an arrangement for when the leaseholders co-own the freehold, but obviously that wasn't the case here as you had a management company in place.

If indeed your lease doesn't allow for a service charge, then it's very possible the management company just haven't read the leases properly and are unaware of the arrangement. Or they are aware of it, but are imposing a service charge simply to ensure that the money is there when things need to be sorted without invoicing you each time because they believe that's more practical (even if not allowed in the lease). They could possibly argue that whilst there's no clause saying 'service charge', it's clear that you're responsible financially for the repair and maintenance of the building, and therefore they are simply taking that money in advance of the repairs being required, and there's nothing in the lease to say that money can't be taken in advance. maybe.

Equally, they may be chancing their arm and hoping you just do as asked! Either way, challenge it - but you'll do better if you and the other leaseholders get together and act as a group rather than as an individual.


I disagree that a service charge is different to a sinking fund - all the 'service charges' I've come across are to pay for repairs and maintenance, add to the sink fund, and yes, a proportion goes to the management company. But IME people do not pay £100 a month and then all the charges related to repairs and maintenance separately (unless there's major works required).

Thank you KiKi

FlyingDonkeys

TrickyDicky101 wrote: »

I'd be rather concerned about a savvy solicitor/buying noting there is no collective provision for building maintenance - this would make the property unmortgageable in the same way freehold flats typically are unmortgageable. Sounds like a potential problem (for all flat owners).

There are many flats with no management companies. They organise among themselves and do very well without being given the runaround by poorly regulated managing agents inflating costs. Poor management by management companies is standard practice.