Help challenging freeholder section 20 charges

Shortypie89

Hi all,

- Charged 55.5k for works estimated at 20k

I bought a one-bed flat in July 2016. Just before buying I discovered a section 20 notice had been issued the previous November. In the forms the freeholder signed, he estimated my share of the costs to be £20,000. I negotiated a £15k discount with the sellers and bought the flat.

In October 2016, the freeholder sent quotes for the work to all leaseholders in the building. The price had massively increased - my share was now c. £46,000.

At the time other leaseholders and myself all sent various objections but the freeholder refused to work with us to find a cost effective solution (obviously he was benefiting from management fees, and had most likely appointed a mate to carry out the work). I hadn't lived in the flat when the original notice was served so never had a chance to put forward quotes. There was definitely a need for some work, but this the freeholder was clearly massively over charging us (it's a Victorian property, converted into 7 flats over 3 floors).

The work was carried out last summer/autumn. We've just all received an unexpected final invoice. This means the total cost of the works (for me alone) is now £55.5k.

Does anyone have advice on how we can challenge this / solicitors we can use? I previously contacted a LOT of solicitors but very few seemed to have knowledge/experience in this area, so I was left quite unsure how to proceed without racking up large legal bills for nothing. I know we can go to a property tribunal, but we would need advice on how to present out claim.

Obviously many of the leaseholders don't even have the money for these kind of costs, and have had to remortgage / sell etc.

Thanks

whambar

Ouch - that’s one kick in the goolies

There have been some ruling cases at LVT use a popular search engine to view Sec 20 works ruling Hamilton King as an example particularly about cost inflation

I have had similar problems in past with works they could exclude everyone we nominated for one reason or another and got the required 3 quotes they needed to tick the box and appointed based upon cost no argument thereon was considered

Home Owners Alliance has plenty of info on service charge etc, for that cost legal advice would be write and certainly before going to Tribunal etc as potentially very costly. Do you have any free legal advice first maybe with contents insurance ?

I know the above doesn’t answer much - but it’s a complex situation and either way very costly as I can’t imagine most folk having a spare £55k sitting around and the work has been done not proposed

Copy of schedule of works , tender submissions, surveyors reports, project managers reports and invoices will be a good place to start - req these as bound to need

lindze

I couldn't read and run as this sounds so horrendous!

I have been through the leasehold tribunal process and it was easy. In the first instance I would check the Leasehold Advisory Service website so you know what grounds you would use to challenge this. Book a telephone appointment with one of their advisers.

Read and understand your flat lease, know what you have signed up for and agreed to and at the same time what the freeholder has agreed to.

I wanted the tribunal to rule whether my freeholder's charge for works were reasonable and all I did was package up why I thought it was unreasonable and provided other quotes etc. I also used the leasehold advisory website to research previously heard cases that were the same as mine for inspiration.

Anyway my freeholder hired a solicitor and we negotiated back and forth until they backed down one day before the hearing with my bill reduced by 50% .

Go for it and hold your nerve. Research what is a reasonable cost for what work has been done. Get together with your fellow leaseholders and submit your case together - strength in numbers! Think about applying for the right to manage the building yourselves.

Shortypie89

lindze wrote: »

I couldn't read and run as this sounds so horrendous!

I have been through the leasehold tribunal process and it was easy. In the first instance I would check the Leasehold Advisory Service website so you know what grounds you would use to challenge this. Book a telephone appointment with one of their advisers.

Read and understand your flat lease, know what you have signed up for and agreed to and at the same time what the freeholder has agreed to.

I wanted the tribunal to rule whether my freeholder's charge for works were reasonable and all I did was package up why I thought it was unreasonable and provided other quotes etc. I also used the leasehold advisory website to research previously heard cases that were the same as mine for inspiration.

Anyway my freeholder hired a solicitor and we negotiated back and forth until they backed down one day before the hearing with my bill reduced by 50% .

Go for it and hold your nerve. Research what is a reasonable cost for what work has been done. Get together with your fellow leaseholders and submit your case together - strength in numbers! Think about applying for the right to manage the building yourselves.

Thanks very much for advice.

I will try to get an appt. with the Leasehold Advisory Service. I talked to them initially (April 2017) and I believe at the time they said a key reason to challenge could be if the cost of repairs had risen as a result of the freeholder's negligence to maintain the property, but that only leaseholders who had been living at the property for a while could challenge on that basis. Still, a good idea to try them again!

How did you get the other quotes? Were you able to do that in the initial consultation period? I'm concerned that the tender documentation is so hard to read in this case it would be hard for many people to read and respond to it.

Did you hire a solicitor or were you planning on representing yourself at the tribunal?

We did originally consider applying for RTM, but we weren't eligible as the commercial premises on the ground floor must be just over 25% of the building, annoyingly.

Shortypie89

whambar wrote: »

Ouch - that’s one kick in the goolies

There have been some ruling cases at LVT use a popular search engine to view Sec 20 works ruling Hamilton King as an example particularly about cost inflation

I have had similar problems in past with works they could exclude everyone we nominated for one reason or another and got the required 3 quotes they needed to tick the box and appointed based upon cost no argument thereon was considered

Home Owners Alliance has plenty of info on service charge etc, for that cost legal advice would be write and certainly before going to Tribunal etc as potentially very costly. Do you have any free legal advice first maybe with contents insurance ?

I know the above doesn’t answer much - but it’s a complex situation and either way very costly as I can’t imagine most folk having a spare £55k sitting around and the work has been done not proposed

Copy of schedule of works , tender submissions, surveyors reports, project managers reports and invoices will be a good place to start - req these as bound to need

Thanks, I'll make sure to request any docs I haven't already and check whether my contents insurance provides legal advice - thanks for the idea.

lindze

I didn't hire a solicitor and dealt with them on my own. I very nearly lost my nerve as it is scary, I received so many letters from their solicitors that i thought i had no chance but people around me made me stick with it and they backed down at the last minute. If it goes to tribunal it's on public record, so maybe they didn't want it out there if the tribunal had ruled against them....gives their other leaseholders ideas! Mine wanted me to sign a non disclosure so I couldn't tell my neighbours they reduced my bill!

Buildings insurance - I obtained 3 like for like qtes
Works - I contacted a surveyor who gave me a list of reasonable costs for what was done (I paid for his time). This was after the work was done though, but I had refused to pay it as it was way above what I thought was reasonable and wanted a third party to adjudicate before parting with my money
Increase of costs due to lack of maintenance - I just presented his old demand for money against the revised higher demand for the exact same work

Definitely look at previous tribunal cases as I'm sure when I was going through them the tribunal adjudicators had a pretty good idea themselves what was reasonable or not and made a judgement accordingly, but you want as much ammunition as possible really just in case.

Leasehold advisory service were really very helpful and pointed me in the right direction.

If it was me in your situation I would put a note through the door of everyone in your block and ask them to get involved. Ask if they would come to a meeting for you all to discuss it, maybe a Whatsapp group, someone in your block may have contacts that would be useful? I mean who has that kind if money lying around? They'll be just as concerned as you surely?

lindze

Oh if you do submit a tribunal application I think that there is an extra form to complete to request that the freeholder cannot pass on their legal costs to you or other leaseholders.

chunkytfg

So what work needed doing that was £388,500?:eek::eek:

AdrianC

Shortypie89 wrote: »

I bought a one-bed flat in July 2016. Just before buying I discovered a section 20 notice had been issued the previous November. In the forms the freeholder signed, he estimated my share of the costs to be £20,000. I negotiated a £15k discount with the sellers and bought the flat.

So you bought the property in the full knowledge there was an s20 in place, and negotiated the purchase price based on what you knew to be an estimate.

At the time other leaseholders and myself all sent various objections but the freeholder refused to work with us to find a cost effective solution (obviously he was benefiting from management fees, and had most likely appointed a mate to carry out the work).

I know this is difficult, but emotion and accusations help nobody.

I hadn't lived in the flat when the original notice was served so never had a chance to put forward quotes.

That was one of the things you accepted when you continued with the purchase in the knowledge there was an estimate for work under s20.

There was definitely a need for some work, but this the freeholder was clearly massively over charging us (it's a Victorian property, converted into 7 flats over 3 floors).

What work are we talking about?
What is the total bill?
Does each flat pay an equal share, or are they apportioned by size or some other factor in the leases?
Why did the work take three years from initial s20 estimate (Nov 15) to being carried out ("summer/autumn" 2018)?

Let's look at the s20 timeline...
Nov 15 - s20 issued, £20k/flat estimate.
Oct 16 - revision, £46k/flat estimate.
Autumn 18 - work carried out, £55.5k actual.

So the final bill is 20% above the estimate from two years earlier. This is entirely feasible - big jobs escalate once they're underway, plus of course two years of inflation in labour and materials.

It sounds as if the November 2015 £20k figure was probably the pre-tender notice, in which case the number is the freeholder's guesstimate of the likely cost. The October 2016 £46k figure would have been based on the tenders submitted by putative contractors. Can you confirm that?

There's a lot of detail on s20 consultations here :- https://www.lease-advice.org/advice-guide/section-20-consultation-private-landlords-resident-management-companies-agents/

HampshireH

[QUOTEBy!chunkytfg5th Dec 18, 8:18 AM

So what work needed doing that was £388,500?

][/QUOTE]


....and why is it excluded from the buildings insurance policy. That is some wear and tear:eek:

[Deleted User]

its a disgrace the way Leaseholders are treated in England.


A lot of these huge repair bills come because freeholders \ managing agents don't collect regular sinking funds , they then decide to do massive repairs all at once frightening the current leaseholder who sells up PDQ and then the whole burden falls to the new purchaser .


I was in the same situation as OP but thankfully the sums weren't so big. The solicitors make little noise about potential cost issues escalating and just said its normal for Leasehold to contribute to service charges. You imagine service charges are for regular maintenance on an older building not the costs to virtually rebuild the whole building. This money , many thousands ,was paid.


Guess what the Freehold was then sold and the new Freeholder decided the works done before were inadequate and we got another massive Sec 20cost.


The whole thing stinks.