Security contracts related to service charges

vid811

Hi, 
I'm a leaseholder and therefore pay a service charge on a monthly basis. The lease states that the service charge can increase year on year to cover any increases in costs to the services provided.
After receiving a massive hike in costs for security it has come to light that the contract the management company awarded to the security company includes a clause that they can increase costs in line with RPI each year. The increases that we have received to date have been in line with Living Wage/Pension increases.
Is it acceptable / usual for a company to increase costs by Living Wage increase percentage + RPI each year? On average this is about 5-6%. Looking to the future, will these costs become so much in relation to the increase in wages of the end user (myself and other tenants) in real terms, seeing as our wages are not going to increase in the same vain?
One would think it would be one or the other, not both, when increasing costs but I'd like to know other peoples thoughts.
Thanks

user1977

Is that a cap on how much they can increase, or a minimum increase?

vid811

It isn't stated either way, but they are allowed to increase by minimum RPI + Living Wage increase

user1977

That might be better than them having free rein to charge what they like.

eddddy

So presumably the contract lasts more than 12 months. Is your share (or any other leaseholder's share) of the annual cost over £100?

If so, a section 20 consultation would normally be required.

The s20 consultation should involve getting multiple quotes - so if one company was quoting excessive yearly increases, I imagine they would have been disregarded, and another company's quote accepted.




If no s20 consultation was required for some reason - you can still challenge your service charge bill, if you think it's not 'reasonable'.  In this context, not 'reasonable' would probably mean that another security company could have provided the same service for less money (e.g. with lower increases each year). 

Maybe a starting point would be to ask the management company if they got any other quotes, and if so, what they were.

NameUnavailable

Do be aware that there's no limit on service charges, what you pay now is no indicator of what you might have to pay next year or the year after, if any major works are required.