Extra added Service Charge for year

RMWilliams23

Hi
Was looking for some advice. I recently received a letter in the post from Warwick estates property management saying that they have overspent for the year by almost 10% more than they're original yearly budget and require me to pay them 95 pounds extra for the year. Reasons behind this apparently are electricity and water costs increasing, gardening maintenance, certain people leaving large items in refuge and need to pay for collection, gate maintenance and doors and locks maintenance. Also building insurance rising by 10%, cleaning and general repairs.

My question is do they have the right to charge an extra 95 pounds outright from me from their incompetence of overspending by £78000 in 1 year? Especially as these overspend issues haven't been communicated to myself until the end of their financial year?

Any help would be much appreciated. I would begrudgingly pay this charge if needed but wanted some advice on the matter first.

Regards

sparky130a

RMWilliams23 wrote: »

My question is do they have the right to charge an extra 95 pounds outright from me from their incompetence of overspending by £78000 in 1 year? Especially as these overspend issues haven't been communicated to myself until the end of their financial year?

They've overspent by £78,000 and they're only after you for £95 for the year?!

Expect a big bill next year!

eddddy

RMWilliams23 wrote: »

My question is do they have the right to charge an extra 95 pounds outright from me from their incompetence of overspending by £78000 in 1 year? Especially as these overspend issues haven't been communicated to myself until the end of their financial year?

What do you think they have done that is incompetent?

The way things work is as follows...

The freeholder has to do everything the lease says they must do. But they must act reasonably (e.g. not pay contractors more than is reasonable.)

Then the cost of doing all those things is split amongst the leaseholders - according to the proportions specified in the lease.

The freeholder (or their agent) often estimates how much it's going to cost to perform their duties, and asks leaseholders to pay in advance 'on account'.

Their estimate may be high or low, so there's likely to be a refund or extra payment at the end of the year.

If you think any of the charges are unreasonable (e.g. they're paying too much for the gardening, or charging you for something that the lease does not allow them to), you can challenge it.

RMWilliams23

It was a 78000 overspend out of a 850000 budget as its a big complex.

Well the only things to be looked at is that gardening within my block is almost non existent and there has been a door handle broken for a number of months without replacement. But more than likely they will just blame the extra spend on water , electricity and insurance rises which in my opinion they should know about well in advance of their initial budget.

I bet the installation of a new gym (that hardly anyone uses because it's still insufficient for a gym) and a former Gladiator to open the gym had nothing to do with any of the overspend! But then none of the residents really had any choice about a lot of these big, pointless expenditures.

But thanks for the advice anyway, looks like il just have to bite the bullet and pay (at some point) as it seems that service charge is definitely a place companies exploit for extra profit.

sparky130a

RMWilliams23 wrote: »

It was a 78000 overspend out of a 850000 budget as its a big complex.

Well the only things to be looked at is that gardening within my block is almost non existent and there has been a door handle broken for a number of months without replacement. But more than likely they will just blame the extra spend on water , electricity and insurance rises which in my opinion they should know about well in advance of their initial budget.

I bet the installation of a new gym (that hardly anyone uses because it's still insufficient for a gym) and a former Gladiator to open the gym had nothing to do with any of the overspend! But then none of the residents really had any choice about a lot of these big, pointless expenditures.

But thanks for the advice anyway, looks like il just have to bite the bullet and pay (at some point) as it seems that service charge is definitely a place companies exploit for extra profit.

I'm sorry, are you saying they spent under budget then?

RMWilliams23

Sorry I wasn't clear. Their budget was 850 thousand and they spent 920 thousand for a 70 odd thousand overspend

G_M

No. You should get the extra elecricity and stuff for free.......

Come on! It's perfectly normal.

At the start of the year they estimate what expenses they expect to have during that year. You probably (sort of) do the same with your finances, so you can work out how much you can afford when booking your summer holiday.

But I bet you don't know exactly what everything will cost you during the year ahead, do you? Utility prices might rise. Your boiler might break down and need fixing/replacing.

Well, in the same way they can't tell exactly what they'll have to pay out in advance. So at the end of the year they do the accounts and see if they've spent more, or less, than they estimated.

Then they either bill you for the extra, or give you a refund (perhaps by reducing you next year's bill).

NeilCr

I'd say get hold of a copy of the original budget and the actual spend. Ascertain, exactly where the overspend is and, if you think it is unreasonable question it. For example, was the installation of the new gym budgeted for and did it come in on cost?

As a director of an estate I know what an inexact science the annual budget is. It is, of course, interesting that residents only kick off about inaccurate budgeting when there is an overspend. If we underspend and they get a refund it doesn't appear to be such an issue!

sparky130a

RMWilliams23 wrote: »

Sorry I wasn't clear. Their budget was 850 thousand and they spent 920 thousand for a 70 odd thousand overspend

Have a word.

They have a budget of over three quarter of a million pound?

eddddy

RMWilliams23 wrote: »

I bet the installation of a new gym (that hardly anyone uses because it's still insufficient for a gym) and a former Gladiator to open the gym had nothing to do with any of the overspend! But then none of the residents really had any choice about a lot of these big, pointless expenditures.

Does the lease (or some other agreement you signed) allow them to charge you for a new gym?

Most leases allow the freeholder to charge you for repairs and maintenance. Installing a new gym isn't repairs or maintenance.

(Or was it more like bringing an old gym back up to the standard it was when the leases were originally granted?)

Mickygg

sparky130a wrote: »

Have a word.

They have a budget of over three quarter of a million pound?

What an odd thing to say. You can't state this without knowing the facts such as how big the complex is, what spec it is, what the buyers were told would be built etc.