Service charge hike 65% - what can i do

harp1983

hi

this has probably been asked before.

but my service charge from trinity estates came through

im so shocked.

it is supposed to be 1000

but its come in at 1649

do i really have any recourse?

they have provided a breakdown. so how can such a charge hike be challenged.

they are such a poor management company. what will stop them continually charging what they want

AdrianC

Have they provided accounts?

Is the increase in the amount they've spent maintaining the building/development, or the amount going to a sinking fund for future maintenance? Or is it because of an increase in their management fees?

eddddy

harp1983 wrote: »

they have provided a breakdown. so how can such a charge hike be challenged.

The law says service charges must be 'reasonable'. If you think there are things on the breakdown that are not 'reasonable', you can pay under protest and challenge them at a tribunal.

But you probably need to be systematic/forensic, if you want to challenge charges.

e.g. "The charge for contractors to cut the grass is £x - which is not reasonable. I have quotes from 3 contractors who would only charge £y".

harp1983

the letter came today and is due for payment on 1st jan

it covers the year 2019

so they have said its based on estimates and work they need to do for the year

even if i have the breakdown im not sure how i can determine whats reasonable. and how i would get quotes for works and from who and on what scale.

AdrianC

harp1983 wrote: »

the letter came today and is due for payment on 1st jan

it covers the year 2019

so they have said its based on estimates and work they need to do for the year

...with anything unspent going into the sinking fund, right?

harp1983

they have made allocations to a few sinking funds

this has previously not been the case

just not sure what this means. and why it has meant such an increase that has come as a big surprise

whambar

You could go RTM route if more than 50% leaseholders agree but the great British problem of apathy makes this easier said than done

Your lease will determine what they can and can’t charge but from personal experience leases favour the freeholder not the leaseholder

My lease does not allow for a sinking fund - as a result my annual projected charge of £1100 in 2017 was 1989 at year end so in June a “balancing charge” of £900 this year projected charge of £1300 plus £4300 in Sec 20 works so all in £6500 this year and another £200 In ground rent £6700 in a year - more than my mortage

I would prefer a sinking fund to at least mitigate eye watering bills like this year and the surprise balancing charges.

In the long term and as I have deep buyers remorse for buying a flat and not a house I’m now on market to sell flat and buy a freehold as it’s actually cheaper per month to increase mortage by £90k then pay service charge etc and eventually need to pay to extend lease

In reality unless you have the fight in you it’s a case of brace and assume the position

harp1983

i cant believe that anove story
i could never afford that

i would need to sell and move back in with my parents. thsts insane

if service charges can rocket like this and blow my monthly budget like this i need to reconsider options

im surprised there is no protection for things like this

SmashedAvacado

Your assertion that it is supposed to be £1000 is misinformed. It is supposed to be an estimate of the planned spending for the next year. You have assumed that this will be £1000. You are not the best person to judge this.

When you own a flat you have to expect that there will be maintenance of the building from time to time. It is only reasonable to object to a service charge budget if the expenditure planned is unreasonable. There may be works that need to be done to protect the building - and you have to pay your share. Until you look at what they plan to spend the money on, then you are premature in asking if you can object.

If you owned a house outright and the roof was leaking, you would accept that the roof needed work. Or you might think about preventative work such as repainting the outside of your house to preserve the windows. That's the same with a flat.

AdrianC

harp1983 wrote: »

if service charges can rocket like this and blow my monthly budget like this i need to reconsider options

im surprised there is no protection for things like this

You need to understand what the service charge IS.

The annual accounts that you should be provided with spell it out in detail.
The money you, and your fellow leaseholders, pay in goes to maintaining the common areas. They go to paying the electricity bill for common area lighting. If it's flats, they pay for maintenance to the fabric of the building. If it's a development, they pay for maintenance of the unadopted roads. They pay for any green areas and any parking areas.

Anything left over goes into a sinking fund - in effect, a savings account for the future maintenance. Anything spent that exceeds what goes in comes out of that savings account.

Only a portion actually goes to the management company - and they should be clearly spelt out as their management fees. Have they risen?

I've got the annual accounts for the service charge for a flat in a smallish block here. Of ~£12k of expenditure, management fees are £1,500, plus accounting and CoSec fees of another £700.

Insurance is a total of £3,400. Lift maintenance is £2,200. Electrical costs (supply plus repairs) are £1,600. Cleaning of the common areas is £760. And £1,600 has gone into that savings account, which now totals £4,500.

I can see from the accounts what the 2018 budget was, compared to the actual, and how that compared to the 2017 actual. I can see that, in this instance, the buildings insurance has risen massively - ~2.5x 2017 actual, against a budget increase of about 10%. I'm going to query that with the management company. Last year, there was a surplus from the charge that was distributed back to leaseholders. TBH, I think I'd rather it'd gone into the sinking fund, but I can understand the logic - and it is defined in the lease.

That total cost is then spread across the flats, in proportion according to their size.
Next year, the external staircase desperately needs work - and it's going to be charged extra on top, since it'll probably be a chunk more than £4,500. It's been patched before, but not well. It needs doing properly, desperately. Who else should pay?

If you owned a property freehold, that's mostly bills that YOU would be paying. The only bits you wouldn't be are those bits that relate directly to somebody else doing it on your behalf - their time in doing it, and the legal/accounting costs of making sure they're doing it honestly.

Norman_Castle

harp1983 wrote: »

they have made allocations to a few sinking funds

this has previously not been the case

just not sure what this means. and why it has meant such an increase that has come as a big surprise

Is the £600 increase a payment spread over a few years to cover future major works? This is what a sinking fund is. Doing it this was avoids getting a very large bill in one year. Ask about the new charges and what they are for.