Service Charge Fraud?

loveprada

I live in a block of flats where 8 of the flats belong to our landlord. I have a strong suspicion we are subsidising what he should be paying on those 8 flats into the maintenance pot. One of his flats is below me and had a major overhaul, there were builders in there for perhaps 10 weeks and now my service charge has gone up by £300 (as well as all the other flats). Is there any way to invoke a check on how our funds are spent without incurring huge legal/professional fees?

AdrianC

Don't you get accounts from the management company?

da_rule

Under section 21 of the Landlord and Tenant Act 1985 you can request a summary of the accounts from the landlord. Then, under section 22 you can ask to see receipts and invoices etc.

You don't have to pay the service charge (under section 21A) until the required information under section 21 has been provided.

HampshireH

Just request an annual statement of costs to evidence the charges.

No you shouldnt be paying for renovation work in another flat (unless you have some weird tenancy)

You don't say how many flats there are in total but just based on a minimum of 10 (you being the 9th and an assumption of 2 per floor) a 3k increase in normal annual costs (electric, grounds maintenance & cleaning) is a lot if nothing has changed

loveprada

Thank you all, there are 34 flats and the service charge seems to jump exponentially each time he buys a flat and he has bought 2 in the last year or so unfortunately.

Yes we do get "accounts" but they are doctored and the expenses fall under generalised headings so they're vague/meaningless.

AdrianC

You do realise you're alleging criminal fraud here?

Rosemary7391

If you're not satisfied with the accounts you've received then request more information.



What do you mean by "doctored"?



Comparing with previous years' accounts to ascertain where the increase is would be useful.

sal_III

loveprada wrote: »

Thank you all, there are 34 flats and the service charge seems to jump exponentially each time he buys a flat and he has bought 2 in the last year or so unfortunately.

Yes we do get "accounts" but they are doctored and the expenses fall under generalised headings so they're vague/meaningless.

If there are 34 flats and the LL (I assume the Freeholder) has only 10, he doesn't have a majority. If you don't like how the property is managed get the other leaseholders on board and change the management company.

Even if it's generalised heading it should give you an idea where the funds are supposedly going. Have you actually questioned / asked for details? Or are you jumping to conclusions and accusations of fraud?

loveprada

I went to an event recently re leasehold enfranchisement. After the talks I asked one of the solicitors about whether our freeholder could get away with not contributing service charges on his flats. The solicitor made a puzzled expression and said something like "well who would he pay - himself?"
That just about sums it up!

eddddy

AFF8879 wrote: »

Not sure I understand the terminology here. Do you mean you own the flat, and by “landlord” you mean freeholder?

In this context, the 'landlord' and the 'freeholder' are the same person

The OP will be the leaseholder of the flat.

eddddy

loveprada wrote: »

I went to an event recently re leasehold enfranchisement. After the talks I asked one of the solicitors about whether our freeholder could get away with not contributing service charges on his flats. The solicitor made a puzzled expression and said something like "well who would he pay - himself?"
That just about sums it up!

I think you've misunderstood the solicitor's comment.

Given there are 34 flats, I would guess that each flat owner (leaseholder) is responsible for 1/34th of maintenance/repair costs.

So if freeholder/landlord spends, say, £3400 on repairs, each leaseholder has to pay him £100.

The freeholder/landlord owns 8 of the flats, so he collects a total of £2600 from the remaining 26 leaseholders.

So he has spent £3400, but only gets back £2600 - so he has effectively paid out £800 (i.e. £100 for each flat he owns).