Service charges on my property - Advice please

nolimit966

Hi there,

3 years ago I purchased my flat from the local housing association which is in a block along with also has 3 others. The property was a new build which was build 8 years back (I was originally a housing association tenant).

The service charge for year 1 was £640
For year two this increased to £1660
Then year three its now £1080.

The reason (in the breakdown) for the huge increase in year 2 was the sinking fund (which increased from £280 to £1100). There was no maintenance / repairs to the property, roof, external or structure amends done what so ever (its a new build & still under builders warranty).

When i flagged the increase in year 2 to the housing they could not give me an exact answer to why a new build has increased so much & offered a reduction. After a further 3 phone calls they managed to drop this down to £400 sinking fund for that year).

According to my agreement my service charge in total is capped to £2300 a year (maximum) and also the max sinking fund is £1000 per year so it looks like the certainly made a mistake (by trying to charge more than this).

I have just received a letter recently to say they have had the electric gates maintained recently and that I now owe £290 for this which needs to be paid before December the 25th.

Would this go under section 20?
(The landlord must consult you before starting any work which will cost you more than £250)

I was never told beforehand this work was going to be completed but do they need to if its maintenance/servicing?

Any advice would be great

Thank you

m0bov

Does your lease allow for a sink fund? What is the sink fund to be used for?

nolimit966

the lease does allow for a sink fund. Its used for repairs, maintenance to the exterior, the brick work, communal areas (the path, gates etc) and the roof.

m0bov

If there is money in the sink fund then no need for extra charges which as you say, you dont need to pay them. Maybe contact leasehold tribunal?

Have you considered RTM? You could contact your neighbours and try and arrange some sort of get together.

nolimit966

I just checked on the paper work & electric gate maintenance is not included in the sinking fund. That's separate to it.
Unfortunately i'm the only person out of the 4 in my block that have purchased the property.

I did ask about RTM but they said they dont offer it unless everyone else in the block owns it too.

AdrianC

nolimit966 wrote: »

The reason (in the breakdown) for the huge increase in year 2 was the sinking fund (which increased from £280 to £1100). There was no maintenance / repairs to the property, roof, external or structure amends done what so ever (its a new build & still under builders warranty).

When i flagged the increase in year 2 to the housing they could not give me an exact answer to why a new build has increased so much & offered a reduction. After a further 3 phone calls they managed to drop this down to £400 sinking fund for that year).

According to my agreement my service charge in total is capped to £2300 a year (maximum) and also the max sinking fund is £1000 per year so it looks like the certainly made a mistake (by trying to charge more than this).

I'm not sure you understand what a sinking fund is.

Think of it as a communal savings account, into which everybody pays so that there's money available when it's needed.

I have just received a letter recently to say they have had the electric gates maintained recently and that I now owe £290 for this which needs to be paid before December the 25th.

Would this go under section 20?
(The landlord must consult you before starting any work which will cost you more than £250)

Yes, it probably should. In which case, you'll only have to pay £250 at most, and the rest will have to come out of the sinking fund...

nolimit966

AdrianC wrote: »

Think of it as a communal savings account, into which everybody pays so that there's money available when it's needed.

Thanks for the info.
Its still bizarre the fact that its jumped up a substantial amount even though there is no upcoming work or maintenance planned (that I am aware of with it being a new build). I have written a letter this afternoon to shed some more light on this but still don't understand why a few phone calls can reduce it. It must of been a mess up from their side but its just unclear how that could of happened unless they presumed I was in an older property which needed repairs..

AdrianC

nolimit966 wrote: »

Its still bizarre the fact that its jumped up a substantial amount even though there is no upcoming work or maintenance planned (that I am aware of with it being a new build).

But when it is needed, there'll be money there to pay for it.

Slithery

nolimit966 wrote: »

Its still bizarre the fact that its jumped up a substantial amount even though there is no upcoming work or maintenance planned (that I am aware of with it being a new build).

No it isn't, as it's gone into the sinking fund.
When it does need major work doing would you prefer the £50k bill in one go?

mrschaucer

AdrianC wrote: »

I'm not sure you understand what a sinking fund is.

Think of it as a communal savings account, into which everybody pays so that there's money available when it's needed.

That's all very well, but the OP seems to be the only person paying into it as the only owner!

daveyjp

The complication is the HA element. If some occupiers rent and some own you need clarification of the SC and SF payments.

SC is used for payments of a recurring or short term nature. Insurance, communal electricity, gardening, management fee, repairs which can be expected every few years, decoration every 3-5 years etc. Excess funds in one year reduces payment next, shortfall means a slight increase the next.

SF is used as a depreciation fund to pay for the replacement of very expensive items which need replacing over the very long term. Roof, lifts, windows etc.

One should not be used to pay the other.