Service charge hike 65% - what can i do

harp1983

so explain to me how to budget for next year? the year after?

at what point does it become unreasonable then?

when you buy a flat you are told the service charge is £1000 and can go up. you expect some movement but within 2 years that much?

so im not the best person to judge it? the best person to judge this is the service people? who have the power to charge any amount? i have an excel sheet they sent in front of me. do i just accept the numbers on there?

you say i cannot object until I know what is being spent. but i can be angry and upset about having to find £700 out of no where.

I'm looking at a breakdown of costs which are inflated from vs the previous year.

so what now? next year should i assume it goes up the same then? and the year after?

if i owned a house and i had to do works f i would be in control of the quotes, who does the work, what priority i give to get the work done. i would have total viability of what needed to be done

ii live in a flat because i could not afford a house. what i didnt expect is for unlimited levels of service charge to be applied

the impact of having to find money to cover that fee i cant even explain

others have said you can object based on reasonableness. but my whole point and query is how can you even judge that or assess it.

and my experience so far of having issues with the company is that they can do what they want and get away with not supporting the residents. we pay a service charge yet get no help, communication of things fixed that have been broken.

AdrianC

harp1983 wrote: »

so explain to me how to budget for next year? the year after?

To a certain extent, you can do so - but you can't ever have total control.

when you buy a flat you are told the service charge is £1000 and can go up.

You cannot be told with any accuracy "it is £1,000". You can only be told "it has been £1,000 in the past, and it's £1,000 this year"

so im not the best person to judge it? the best person to judge this is the service people? who have the power to charge any amount?

No, they do not.
The covering notes to the accounts I have in front of me were written by the accountants who prepared the accounts. They say...
"Our work was carried out having regard to (TECH 03/11) Residential Service Charge Accounts published jointly by the professional accountancy bodies with ARMA and RICS. In summary the procedures we carried out with respect to the service charge accounts were:
1. to check whether the figures contained in the accounts were extracted correctly from the accounting records maintained by and on behalf of the Landlord;
2. to check, based on a sample, whether entries in the accounting records were supported by receipts, other documentation or evidence that we inspected; and
3. to check whether all service charge monies for this property ... agreed or reconciled to the bank statement(s) in which the funds were held."

i have an excel sheet they sent in front of me. do i just accept the numbers on there?

No, you can contact them and ask for more detail, or an explanation.

I'm looking at a breakdown of costs which are inflated from vs the previous year.

Give more detail.

if i owned a house and i had to do works f i would be in control of the quotes, who does the work, what priority i give to get the work done. i would have total viability of what needed to be done

Lovely, but how many people live in these flats? Should they get on the roof or down in the basement every time a decision needs to be made as to what work needs to be done? Some of them are happy to point-and-pay, others want to DIY it. Some of those DIYers are utterly incompetent.

ii live in a flat because i could not afford a house. what i didnt expect is for unlimited levels of service charge to be applied

They aren't "unlimited". They're about £2/day more than you expected. Yes, that £2/day is the difference between £3/day and £5/day - but, since you've given no detail, we have no way of helping you understand why.

Perhaps they are unreasonable. Perhaps clarification is needed from them. Perhaps there's an obvious reason that you're missing.

and my experience so far of having issues with the company is that they can do what they want and get away with not supporting the residents. we pay a service charge yet get no help, communication of things fixed that have been broken.

So you want them to do more, while simultaneously wanting to pay for less?

Norman_Castle

so what now? next year should i assume it goes up the same then? and the year after?

If the £600 is for a sinking fund it shouldn't keep increasing. Talk to the other residents, maybe between you you can get a proper explanation for the increase and then you can judge how reasonable it is.

harp1983

To a certain extent, you can do so - but you can't ever have total control.

So what advice would you, or should I give to any first time buyer when it comes to budgeting for such things. Right now I really don’t know.
I was advised that the yearly service charge is £1k. I understood this could fluctuate. But not to the extent I have seen. From all the people I spoke to, this was one area I was not warned could have such great fluctuations.
Right now I have no idea what I would need to save for next year. Its pretty reasonable to have an expectation of what it should be so people can weigh it up with affordability.

You cannot be told with any accuracy "it is £1,000". You can only be told "it has been £1,000 in the past, and it's £1,000 this year"

See above. That’s all well and good when I’m in this situation now. But I would hope any other potential first time buyers are aware of such information.
An expectation rather than accuracy is what is important. And yes when you are told when buying the property the service charge is kept reasonable and not having lifts is a big factor for this etc. You take a £1000 as an approximation.

No, they do not.
The covering notes to the accounts I have in front of me were written by the accountants who prepared the accounts. They say...
"Our work was carried out having regard to (TECH 03/11) Residential Service Charge Accounts published jointly by the professional accountancy bodies with ARMA and RICS. In summary the procedures we carried out with respect to the service charge accounts were:
1. to check whether the figures contained in the accounts were extracted correctly from the accounting records maintained by and on behalf of the Landlord;
2. to check, based on a sample, whether entries in the accounting records were supported by receipts, other documentation or evidence that we inspected; and
3. to check whether all service charge monies for this property ... agreed or reconciled to the bank statement(s) in which the funds were held."

Not sure what you are referring to. Cannot see anything in my documentation sent that resembles this should I be requesting something specific?

Seems like you have total faith that everything has been accurately quoted and costed. Wish I had your faith.

No, you can contact them and ask for more detail, or an explanation.

I will but am not sure what I should be asking. And even what I receive what I would be looking for? This isn’t an area I have much knowledge or information on. But will request info anyway

Give more detail.

Topline vs LY
Landscape maintenance +1k
Door entry maintenance +1.5k
Communal dish maintenance +1.6k
Pest control +600
Electric +3k
General maintenance + 2k
Refuse control +2k
Building insurance +4k
Management fee +1k
Various sink funds +7k
Others stuff ranging in various increases

Lovely, but how many people live in these flats? Should they get on the roof or down in the basement every time a decision needs to be made as to what work needs to be done? Some of them are happy to point-and-pay, others want to DIY it. Some of those DIYers are utterly incompetent.

No but you were making a point about having a house also comes with its own costs. So not sure what point you are now trying to make? That any increases should be accepted at any value because stuff just needs doing? Have a think about that in your own personal circumstances.

They aren't "unlimited". They're about £2/day more than you expected. Yes, that £2/day is the difference between £3/day and £5/day - but, since you've given no detail, we have no way of helping you understand why.

That logic is a bit silly tbh. It’s £2/day more than I expected? That’s ok then? They may as well charge me another £365. That’s only another £1 a day?

Completely unhelpful for the sake of it

Perhaps they are unreasonable. Perhaps clarification is needed from them. Perhaps there's an obvious reason that you're missing.

I’m sure im in the wrong then. I’ll just pay whatever they want and anyone else wants?

So you want them to do more, while simultaneously wanting to pay for less?

Real funny. So our communal doors x2 are always broken. The bin store door is always broken. They have never fixed them. Do you pay for services that you don’t receive?
I can’t even stomach they have done a good job and have upkept things well enough o feel they are justified in charging any amount more. You do not live here. You have not faced the issues other people in my block have faced. So drop the ridiculous comments.

I’m done with the forum. Just wasting time getting annoyed at unhelpful certain comments.

Thanks to those who had some information to provide. I got a couple of messages too with useful numbers and advice. I’ll move forward from there.

Definitely more awareness is needed for potential first time buyers. I’ll definitely be sharing my experience with them with the aim of ensuring people are aware of it, when judging their affordability post purchase of their property.

thanks

Rosemary7391

harp1983 wrote: »

so explain to me how to budget for next year? the year after?

at what point does it become unreasonable then?

To some extent this is what it's like being a homeowner. You have to have a budget set aside for maintenance and unexpected costs like this. Even in a flat - your boiler might need replacing, the cooker might go, a leak might mean you need to replaster - you need some savings and slack in your budget to cover this sort of thing. Some of it can be insured but not everything. You can't assume your costs will be the same from month to month because the just won't be. I put aside £100/month for extras like this and used some of it last year when I had to pay out £400 for replastering.



To get an idea of what is likely to happen with your service charge, have a look around your building. What is likely to need doing soon? Is the roof sound? Are the stairwells in good order? Fences outside? Pointing/rendering? Etc etc.



If you wanted to post the breakdown you have people can help check it makes sense (you'd also need to say what sort of building and how many flats).

AdrianC

harp1983 wrote: »

Not sure what you are referring to. Cannot see anything in my documentation sent that resembles this should I be requesting something specific?

That's in the covering notes for the full accounts which the management company send to leaseholders annually as a matter of course. If yours don't, then ask for them.

Topline vs LY
Landscape maintenance +1k
Door entry maintenance +1.5k
Communal dish maintenance +1.6k
Pest control +600
Electric +3k
General maintenance + 2k
Refuse control +2k
Building insurance +4k
Management fee +1k
Various sink funds +7k
Others stuff ranging in various increases

"Various sink funds" is money going into that savings account.

So that's 2019 budget vs 2018 actual?

No but you were making a point about having a house also comes with its own costs. So not sure what point you are now trying to make?

It's very simple. You have to pay to maintain - but because you live in a common building shared with other people in your same situation, it's not as simple as "But I get to decide what and when".

That logic is a bit silly tbh. It’s £2/day more than I expected? That’s ok then? They may as well charge me another £365. That’s only another £1 a day?

I'm simply putting the amount into perspective... You say you're going to have to sell the flat and move back to your parents... For £2/day?

Jane_B

As the fees are estimated this can happen, if works need doing or planning for next year they will add that to the fee.

If you have vehicle gates which are getting older they will sometimes increase their estimate to cover the potential of replacement etc.

Pay up, and next year check the accounts and make sure they have used the extra money on necessary items. Not much else you can do.

You have to pay to maintain the property and the area around it, its simple maths, if they think there will be more costs next year they will charge for it, if they don't use all the money it will go as a credit on the account and be carried over to the next year.

Okrib

You can look at the accounts. You can ask for a breakdown on monies spent for works carried out.

Service charges are always an estimate. The management pack when you bought the flat would have had the last few years management accounts which would have set out what they have been.

If there are works to be done, then the works need to be done, and leaseholders are generally ultimately responsible for paying for them.

If you feel that strongly about it, you could investigate starting a Right To Manage application, where you could potentially take over the running of the block with your fellow residents.

I would check on the insurance, as often the same company is stuck with when getting other quotes can bring the price significantly down for equivalent cover.

But ultimately, especially if there is a sinking fund, the service charge is a good thing. It stops you being hit with a surprise bill for thousands of pounds.

breaking_free

harp1983 wrote: »

Definitely more awareness is needed for potential first time buyers. I’ll definitely be sharing my experience with them with the aim of ensuring people are aware of it, when judging their affordability post purchase of their property.
thanks

I think you've given yourself the best (belated) advice right there.

If you'd been aware of the potential frequency and cost of maintenance issues before buying you'd have budgeted accordingly. All the old timers here have purchased properties before and understand that you don't put away your chequebook after you move in - in fact the opposite is often true.

Homes, like cars, are prone to breaking down and you need to put money aside for future planned works and unexpected repairs.

If you want to play the good Samaritan then please do what you've said in your quote that I posted above; you'll be doing a lot of people a favour and they'll thank you for it.

SmashedAvacado

OP - service charge is money you spend to maintain the building you live in. Its not them charging you something. It's you paying for something that needs to happen to the building you live in. That will preserve its value, keep it safe and insured and in the same condition that you would otherwise have expected it to be kept in. That's not something you need anything other than a bit of common sense to understand.

That's like when you own a house saying that it not fair that the roof needs repairing because when you bought the house, the roof was fine and no-one told you there could be a problem.