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Freehold Company Admin Charges

Recently purchased a new build flat 2 years ago.

In last 6 months, the freehold was sold to a company called 'RG Securities No.3 Ltd' who have appointed Pier Management as the collectors of the ground rent and to purchase insurance.

Previously, both the service charge and purchasing of buildings insurance was done by by the managing agents, along with the maintenance of the property.

So we now pay a service charge to one company and then pay a separate company for ground rent and to purchase buildings insurance.

This is somewhat annoying as is another separate payment to make every 6 months. But my query is, they now charge us an 'Admin' fee to purchase the buildings insurance. We also have a car parking space that they need to insure and for this we also need to pay an admin fee (which is more than the cost of the insurance).

Currently the admin fees are £20 per item, is this at all reasonable? I've never previously paid admin charges on simple things like this and it seems a kick in the teeth as they are already purchasing much more expensive insurance policy and no doubt getting their own kickbacks from it.

It is 'Pier Management' who I have read some scare stories about online!
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Comments

  • Anyone any ideas?
  • Have been fined for not paying our carparking insurance fee even though we have never received a notification in the first place.

    Our insurance is £10 for the year but they charge a £20 admin fee to purchase it. Ontop of this, they have then charged us a further £20 'Notification' fee and are threatening another £70 if not paid within 7 days.


    Has anyone any advice? I understand the protections against managing agents but what about the people that the freeholder appoints to purchase insurance and collect ground rent?
  • Interesting... were you served with a s.5 Notice (first refusal) in respect of the Freehold purchase?

    That aside, does your lease allow for such charges?

    It is not unusal for ground rent (and buildings insurance) to be billed separately to service charge when there are two independent parties (Freeholder and management company), so no issue there.

    My view is that administration fees exceeding the value of the charge is unreasonable. I am confident that the First Tier Property Tribunal would agree. I would suggest you contact the lease advisory service regarding this and if there is precedent on this matter.

    In preparation of taking this further, you should ask the Freeholders what the value/percentage of their commission is on this policy. They are obligated to disclose this.
  • Yes, we were given first refusal on the Freehold. I wanted to purchase it but sadly I could not convince enough of the other leasees to jump in.

    That is very interesting about them having to disclose their commission, I will certainly go ahead and ask them this. I'm not entirely sure why one needs to spend several hundred pounds on insuring a car-park with nothing but cars in.

    I will also look up the First Tier Tribunal, is this an expensive/complicated procedure? Has anyone got any experience of this?

    Just looking at the reviews on TrustPilot for the company fills you with unease:

    https://uk.trustpilot.com/review/www.piermanagement.com

    I cannot understand how companies like this are still around
  • Start with the "Leasehold Advisory Service" for advice/information. They are exceptionally helpful too.

    https://www.lease-advice.org/

    Depending on your findings, you can take the matter to the tribunal. I would suggest you get specialist advice to guide you through this process. Fees would need to be agreed.
  • eddddy
    eddddy Posts: 18,178 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    edited 7 April 2018 at 12:41AM
    My view is that administration fees exceeding the value of the charge is unreasonable. I am confident that the First Tier Property Tribunal would agree.

    Do you have any references that support that view?

    (Isn't that a little like saying that if a tap washer costs 50p, a plumber shouldn't charge more than 50p to fit it.)

    If an insurance policy costs £10, but it takes an administrator, say, one hour to arrange it...

    ... I'm pretty sure a tribunal would agree that the freeholder can charge the leaseholder for 1 hours work. (Which might be at a rate of £50 per hour.)


    Edit to clarify:

    The fee charged by the freeholder is probably 'reasonable' if it reflects the amount of time spent by the freeholder/management co.
  • eddddy wrote: »
    Do you have any references that support that view?

    (Isn't that a little like saying that if a tap washer costs 50p, a plumber shouldn't charge more than 50p to fit it.)

    If an insurance policy costs £10, but it takes an administrator, say, one hour to arrange it...

    ... I'm pretty sure a tribunal would agree that the freeholder can charge the leaseholder for 1 hours work. (Which might be at a rate of £50 per hour.)


    Edit to clarify:

    The fee charged by the freeholder is probably 'reasonable' if it reflects the amount of time spent by the freeholder/management co.


    One of the issues I would believe that it is unreasonable is that there are probably 15 parking spaces and so when you multiply it up, it is more like £300 they charge for arranging the parking insurance.

    They then charge exactly the same for the buildings insurance which for the 24 flats, add up to £480.

    Would this be worth taking to the tribunal?
  • eddddy
    eddddy Posts: 18,178 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    One of the issues I would believe that it is unreasonable is that there are probably 15 parking spaces and so when you multiply it up, it is more like £300 they charge for arranging the parking insurance.

    They then charge exactly the same for the buildings insurance which for the 24 flats, add up to £480.

    Would this be worth taking to the tribunal?

    As a starting point, ask the management co to explain what they do for the £300 and £480.

    In at least one other case, a tribunal seemed to accept that £50 per hour was a reasonable rate to charge for admin work.

    So if the management co administrators genuinely spend 6 hours dealing with parking insurance, the tribunal might accept £300 as reasonable.

    If an administrator just spent 10 mins on the phone renewing last years policy, £300 would be unreasonable.


    (The law says fees must be 'reasonable' - but there is no precise legal definition of 'reasonable'.

    If you went to tribunal, you would have to explain why you thought the fee was not reasonable, and the management co would have to explain why the fee was reasonable. The tribunal would then decide who had the better case.)
  • HampshireH
    HampshireH Posts: 4,999 Forumite
    Eighth Anniversary 1,000 Posts Name Dropper
    Reference the car parking fee. Have you asked what this policy covers? Their public liability insurance should cover any claims and their employers liability insurance should cover their staff.

    As for the vehicle your insurance would cover that.
  • Edddy

    Cheap_infor has somewhat answered for me.

    Any trade (including managing agents) will have a cost associated with their time/services.

    Using your example, if a plumber changed my 50p washer, it would be unreasonable for me to expect him to charge 50p. He needs to get to my property (travel or van costs), parking cost, his expertise (and tools), a wage for the time, any other related expediture and then his profit on top. He is not a charity, and I could have always attempted to do the repair myself for 5op!)

    So, its not unreasonable for the agent to charge for their time for organising the renewal, raising the charges (post & stationery) and to make a profit. However, I have made the assumption that there will be a fair few parking spaces and that it is a straight forward renewal. Having dealt with fair few insurance renewals in my time, it would be hard to justify excessive time on this.

    As mentioned, the lease will determine what fees can be charged. It would also be interesting to know how the management fees are charged (ie if both the freeholder and the management company charge a management fee.)

    As originally asked, if their is a generous commission being paid to the agent/freeholder, this should be taken into consideration too.

    Finally, there is often differences of opinion about what is fair and reasonable (not only on this forum but at the Tribunal too!) so thus my advice about having conversation with a represenative from Lease Advisory service.
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