126% Service Charge increase!!! Really?!

HPG1

Will try to keep this as short as possible! Offer accepted on a flat (leasehold), mortgage is in place and valuation completed. I received the LPE1 form from my solicitor which details the following:

"Is any increase in the Service Charge over 10% or £100, whichever is the greater, anticipated in the next 2 years?'

"Within the next 2 years, are any Section 20 works proposed to the Property"

Landlord ticked No to both questions, it is signed and dated 21st July 2017. Service Charge is confirmed as £700 per year, Ground Rent is £250 per year.

My boyfriend owns the ground floor property (2 flats in the property) and he has just received a letter from Circle Residential Management for an interim Service Charge bill for just under £800 for the period between 25 Dec 2017 - 24 June 2018 (6 months) £1586 over a 12 month period!!!

He is going to dispute this charge as it is heavily inflated for the property a simple 2 bed flat in Tilbury. No major works are planned or necessary and the Landlord was previously managing this himself via his company.

Obviously, this affects me so I need to find out where I stand. This is a huge cost and from what I have found thus far, Circle Management do not have glowing reviews to say the least!!

I realise I need to contact my solicitor but I am on edge until Monday.

Any feedback would be greatly appreciated.

Thx

HampshireH

What is the breakdown of services he has been provided with?

HPG1

Thank you for your reply.

Breakdown as follows:
Building repairs: £360.00
Year end accounting: £162.30
Buildings insurance: £158.06
Surveyors fees & expenses: £240.00
Health & safety: £300.00
Management fee: £363.83

Total for tenant: £1584.19
Total for property: £3,168.37

csgohan4

the cons for having a flat unfortunately is service charges and leases, your at their mercy

Richey_

Are you buying the flat above your boyfriend ?

HPG1

Yes, I am buying the first floor. He already has the ground floor.

eddddy

To dispute the service charge demand, he'll probably need to be very specific about why the estimates are not 'reasonable'.

For example:

"You are estimating that insurance will cost £158. I have 3 quotes each of around £100."

"The surveying that is required should only cost £100" or "No surveying is necessary"

"You are estimating a management fee of £363. Other management companies charge £200 for managing similar properties."

HPG1

Thank you all for your responses.

Yes, we are looking into obtaining quotes for all of the 'services' listed.

Not sure how they have reached these prices for this property! We were also looking at Right to Manage. Either way, it's a spanner in the works but we'll have to deal with it.

I think the both of us owning both flats makes it easier in one respect as we don't have any other leaseholders to consult with.

getmore4less

HPG1 wrote: »

Thank you for your reply.

Breakdown as follows:
Building repairs: £360.00
Year end accounting: £162.30
Buildings insurance: £158.06
Surveyors fees & expenses: £240.00
Health & safety: £300.00
Management fee: £363.83

Total for tenant: £1584.19
Total for property: £3,168.37

If I read this right these are the charges for 6 months on a property that only has 2 flats.

for a year we have the potential for
(rounded a bit)

say £6340 total

£1440 Actual work
£ 650 Insurance.

around 33% on real costs

£960 survey for <£1500 of work?
£1200 H&S what's that?

34%

£650 accounting
£1450 Management fees

that's the other 33%

HPG1

The breakdown above is for 50% share of the total charges over 12 months which is £1584.19.
Ground floor flat £1584.19 (boyfriend)
First floor flat £1584.18 (me)
Total for property £3168.37
They are asking for 6 months now and I presume the remainder will be requested at some point in May 2018.

getmore4less

OK 1/2 the numbers or lets say its for 2 years.

My point was there is a lot of money there for not a lot of real work.

what do the accounts for the previous years look like?

Since they know they are likely to loose this cash cow if you get the right to manage(what about buying the freehold?) is this an attempt to get one last dip into the money pot?