Selling a Leasehold property suddenly being asked for £9321.45 Service Charge

wesleyad

james277 said:

cattie said:

Wow, a shocker of a price for insurance. I pay around £450 per year for my 2 bed ground floor share of freehold flat!  Unless your building has been fire bombed or something in the past, making it an incredibly high risk property I fail to see how such a premium has been levied. Are you sure you're not being billed for the whole street!!

Yes from my quick calls to get an insurance quote myself I believe the reason it is high, is because he owns the top flat and rents it out. So has combined his landlord's insurance with the building insurance, so he has got me paying half of his landlords insurance.

But even then there's not much difference in price between LL insurance and building, I pay £150 for LL insurance (haven't shopped in a while so might be better deals), compared to about £100 for non LL on same property.

Basically hes done one of 2 things: He's taking the mick and hoping you pay or he's been letting the insurance renew at higher and higher costs for 30 odd years.

NameUnavailable

Sounds a bit of a mess! I don't understand why the freeholder would just pay the insurance each year though and not ask you for your share, same with the ground rent.

From my own experience the telephone advice line was useless. I had someone basically reading what was on their website out loud to me. When I asked specific questions the advice was 'speak to your solicitor'. Good luck with that in any case.

I'm not sure what you can do to go after a freeholder after you sell your property. The charges must be paid up to date on completion of sale and any subsequent refund (i.e. end of year adjustment on charges) would go to the new leaseholders.

Solicitors quoted me circa £15K to take a case to tribunal (including groundwork, case meetings and attendance at tribunal). You won't get any of that back even if you 'win' and you won't win because it's clear you do owe some monies.

You can and should ask for details of the insurance - a copy of the policy and details of the premiums, to make sure you are only being asked to pay your correct share.

eddddy

NameUnavailable said:

Solicitors quoted me circa £15K to take a case to tribunal (including groundwork, case meetings and attendance at tribunal). You won't get any of that back even if you 'win' and you won't win because it's clear you do owe some monies.

That sounds like really bad advice.

The arguments here are things like the leaseholder saying "I didn't receive any service charge bills or any letters about service charges"

You don't need to pay a solicitor £15k to prepare a case like that.

Even if the freeholder says "That's not true - I did send service charge bills" - paying a solicitor £15k isn't going to strengthen your case.

ratechaser

cattie said:

Wow, a shocker of a price for insurance. I pay around £450 per year for my 2 bed ground floor share of freehold flat!  Unless your building has been fire bombed or something in the past, making it an incredibly high risk property I fail to see how such a premium has been levied. Are you sure you're not being billed for the whole street!!

Yours sounds expensive too! I'm paying £650 for buildings and contents, with lots of bells and whistles on the policy, for a 6 bed detached house. 

Is there something inherently more risky about flats that bumps up the premium (more risk of damage from below and above maybe)?

eddddy

ratechaser said:

Is there something inherently more risky about flats that bumps up the premium (more risk of damage from below and above maybe)?

Yep - insurance for blocks of flats is always more expensive than for similar sized houses.

One reason that's often quoted is the high number of 'escape of water' claims. A leak occurs or a sink overflows on an upper floor, and 2 or 3 flats below make damage claims.  There are more kitchens, bathrooms, boilers and plumbing in a block of flats than a similar sized house. 

I also suspect that flat owners are more likely to make claims than house owners. Perhaps because house owners have to claim on their own insurance - and they have to cover the full resulting increase in premium.  Whereas, it seems a bit more remote if you're claiming on the freeholder's insurance, and any increase in premium is shared.

coachman12

Did O/P take up my suggestion to read sections 20 and 21 of The Landlord and Tenant Act 1985.
It's all downloadable online.

NameUnavailable

eddddy said:

NameUnavailable said:

Solicitors quoted me circa £15K to take a case to tribunal (including groundwork, case meetings and attendance at tribunal). You won't get any of that back even if you 'win' and you won't win because it's clear you do owe some monies.

That sounds like really bad advice.

The arguments here are things like the leaseholder saying "I didn't receive any service charge bills or any letters about service charges"

You don't need to pay a solicitor £15k to prepare a case like that.

Even if the freeholder says "That's not true - I did send service charge bills" - paying a solicitor £15k isn't going to strengthen your case.

What is bad advice? I'm just warning the OP that taking his case to tribunal could be much more costly than he might think. Yes he can represent himself, but they don't seem very tolerant of people not knowing the relevant laws and procedures and if the freeholder has legal representation the OP will be very disadvantaged IMHO.

Even if the OP gets a 'victory' which will be a lower bill to pay at best, the costs of taking the action could exceed any savings he may make as well as putting his buyers off. If they pull out he then has to declare to any other potential buyers that he had to take his freeholder to tribunal over the service charges - how easy will it be for him to find another buyer with that nugget of info supplied to their solicitors?

bouicca21

My building management say it's expensive to insure blocks of flats.  But for comparison here in London, my mid 20th century purpose built block of 6 pays a little over £2000 for buildings and terrorism cover.

eddddy

NameUnavailable said:

What is bad advice? I'm just warning the OP that taking his case to tribunal could be much more costly than he might think. Yes he can represent himself, but they don't seem very tolerant of people not knowing the relevant laws and procedures and if the freeholder has legal representation the OP will be very disadvantaged IMHO. 

Even if the OP gets a 'victory' which will be a lower bill to pay at best, the costs of taking the action could exceed any savings he may make as well as putting his buyers off. If they pull out he then has to declare to any other potential buyers that he had to take his freeholder to tribunal over the service charges - how easy will it be for him to find another buyer with that nugget of info supplied to their solicitors?

As I said - a big part of the OP's case is very simple... "I didn't receive any Service Charge Demands or letters about service charges for 5 years".  If the tribunal agrees, that should get the OP about £6k back.

The application fee to the tribunal is £100. If the tribunal decides a hearing is required, it's another £200.

Here's the legislation - it's straightforward, the OP doesn't need a solicitor to interpret it:

20B Limitation of service charges: time limit on making demands.
(1) If any of the relevant costs taken into account in determining the amount of any service charge were incurred more than 18 months before a demand for payment of the service charge is served on the tenant, then (subject to subsection (2) ), the tenant shall not be liable to pay so much of the service charge as reflects the costs so incurred.

(2) Subsection (1) shall not apply if, within the period of 18 months beginning with the date when the relevant costs in question were incurred, the tenant was notified in writing that those costs had been incurred and that he would subsequently be required under the terms of his lease to contribute to them by the payment of a service charge.]

Link: https://www.legislation.gov.uk/ukpga/1985/70/section/20B

It's a pretty clear cut case.

The OP already has a buyer. The case won't go to tribunal until after the flat is sold.

coachman12

At last, someone is quoting the 1985 legislative provisions I have been telling the thread about for ages.