Service charges

chillibean95

Hi all after a bit of advice 
please excuse my ignorance but I am a young first time buyer

I bought my two bed new build apartment in December 2020 and have been living there since. At the time of buying my property we were given an estimation of annual service charges and ground rent by the building company which I was satisfied with. Myself and other residents have just received the bill this month from our management company and it is twice what we were quoted by the building company at the point of sale. What’s more, they have given us a breakdown of our fees and they include extortionate charges for “cleaning” and “window cleaning” of a fair few thousand yet I have seen someone hoovering the corridors of the building once since I’ve lived there! 

We have openly complained to the management company and requested a review of our fees however they are being increasingly difficult to deal with. The manager of our building is not replying to emails (he doesn’t seem to want to leave a paper trail) and is saying different things to different people. He has now promised (via telephone) to deliver a new statement for us to pay this week, but I am just after any advice: 

does any one have experience of dealing with increasing service charges like this? 

Do we have a leg to stand on to complain to the building company that the prices we were quoted at the point of sale are actually half of what we are now expected to pay? 

Where do we stand on challenging the management company about some of these extortionate fees? Or are we legally bound to pay them, with the chances of them ever increasing year on year? 

Thank you 

chillibean95

To give some background I live in a small block of about 18 flats, we do not have a lift in the building, I do not live in London and the company are asking for £156 a month! 

madteapot

Yes as a leaseholder you have right to get information about service charge expenditure. Lookup section 21 and section 22 of landlord and tenant act 1985. 

As a first point read your lease to see if the landlord has obligations to provide accounts for each year. If it does then first step is to write to the landlord and management company requesting to fulfil this obligation by providing accounts for service charge expenditure. If it does not then send section 21 notice to provide a summary of the accounts. Once the summary of accounts are provided you can further investigate by sending section 22 notice within 6 months of summary being provided to allow access to allow inspection of the accounts, receipts and any other documents relevant to the service charge information in the summary.

The leasehold advisory service has very comprehensive guide along with template letter for section 21/22 notices here https://www.lease-advice.org/faq/how-can-i-find-out-what-my-service-charge-is-being-used-for/. 

If other leaseholders agree with you then team up and send the notices/request together. If the management company still doesn't play ball look into Right to Manage if that is something other leaseholders want to take up.

NameUnavailable

You can challenge the costs at Tribunal but it can be a costly process and you will need to do a lot of legwork to prove that the charges aren't 'reasonable' by getting alternative quotes etc.

Unfortunately if you withhold the charges the freeholder can start the process to forfeit your lease - you could lose your home altogether. So, you have to pay under protest and then follow up. However I would try to get some information on the details of what they are charging for first if you can.

Does the monthly fee include the ground rent? How much is the ground rent? Be especially careful of defaulting on ground rent if it is over £250 outside the London area, as it is then very easy for the lease to be forfeited.

chillibean95

Hi both thanks for your replies

yes £156 is the monthly charge for a quarterly service charge (for the block of flats), an annual service charge (for the entire estate) and a £150 ground rent charge. 

I don’t suppose I would have any luck challenging the building company (Lovell) on misleading us with fees in the first place would I? 

I am also concerned that on the breakdown of charges we have been sent they are charging £3.5k and £2.5k for “cleaning” and “window cleaning” respectively but I have seen cleaners and window cleaners once in the building in the 8 months I have resided there, it is only a small building and this doesn’t seem a fair costing for the service we appear to be receiving. We are asking to see receipts but not getting anywhere.

also the annual charge is for the upkeep of the estate and they are charging £500 for “street lighting” if the management company are indeed responsible for the street lighting in the area then can my council tax be reduced accordingly? As I was under the impression council tax pays for things like street lighting 

we as a building are thinking of going to our local press to warn of what has happened to us being stumped with all these charges after being told a much lower price by our building company. Is this advisable ? 

NameUnavailable

I doubt very much the local press will be interested. This is pretty standard stuff with leasehold property.

It sounds like you are on a new estate so it is quite likely that the roads are not adopted by the council and you therefore have to pay for road maintenance and street lighting (no you don't get any discount off the council, you just have to hope that they adopt the roads in the future).

Service charges can vary hugely from year to year, and there is no cap on how much they charge you at any time. So whilst you were given an estimate by the developers you don't have any recourse to them.

You have to go down the formal route to challenge the costs at tribunal - if you do this then it will be much better to do so as a group of leaseholders, assuming others are willing. Be aware that the lease my include a clause to allow the freeholder to recover any legal costs back under the service charge, so they can employ a legal team to defend them and you pay for it regardless! You can ask the tribunal to rule that the legal fees can't be recovered from you but that will very much depend on how they view the case you bring.

user1977

chillibean95 said:

if the management company are indeed responsible for the street lighting in the area then can my council tax be reduced accordingly? As I was under the impression council tax pays for things like street lighting 

No, in the same way that you don't get a discount if you don't send your kids to their schools, or if you don't use the library, or if you never call the fire brigade. It is, as the name suggests, a tax, not a charge for providing you with specific services.

AdrianC

I have no kids, and live five miles from the nearest streetlight. I get no CT discount.

madteapot

I would forget about local press and seeking discount on council tax as those are dead ends and would be waste of time. You might get a little photo op from local press but this is widely known as to how leasehold works. 

I would focus on extracting as much information from the management co or freeholder as possible regarding the accounts and how service charge is being apportioned for each services. According to LTA 1985 the service charge must be reasonable and the onus of proof of reasonableness is on the landlord if challenged in tribunal.

However before approaching the tribunal you + any other leaseholders should get your ducks in row. Investigate the service charge accounts first. If something seems off request to see invoices, receipts etc. If you still think something is being charged at higher rate i.e. cleaning/window cleaning then obtain written quotes from three different companies yourself and see where they stand against what is being charged. Keep in mind any quotes you obtain independently are for like for like yearly service.  If they are vastly different you can ask the management co to explain why those charges are so high and if they are willing to review who they contract out the services to. They don't have to comply to this but if they are half decent they just might if they sense you will take it to tribunal.

As others have said you are legally bound to pay them however you can always pay under protest. 

bouicca21

Whether that amount is or is not extortionate depends on what you get for it.  

OP, you have not seen the cleaner(s).  Are you at home enough to be sure they don’t come?  My service charge also distinguishes between ‘cleaning’ (= running a vacuum cleaner over the carpet in the communal areas once a week) and ‘window cleaning (= jet wash windows once a month). Then there are other charges like lighting the communal areas, mowing the grass, insurance, etc.  My service charge demand includes the accounts so I can see what I am getting and how much each component costs.

You are certainly paying more than I do - but I live on an adopted road so I am not paying estate maintenance charges and I pay my ground rent separately.  On the whole I don’t think your £156 a month is vastly over priced, unless things are way cheaper outside London.  I suspect you need to get a grip on just what a service charge covers and the financial implications of living on an unadopted new build estate.  Start by reading your lease to see just what the management company is obligated to do and then focus on the accounts.

Flick85

Your service charge will also be contributing to a sinking fund for the building/development, so if things go wrong in future it doesn’t come as an extra bill for you. For reference, I’m in a block of flats in Yorkshire, and my service charge is £120 a month + £100 a year ground rent. A few years ago, we had to use our sinking fund to deal with a colony of pigeons living on the roof (and damaging it badly) after a derelict dairy they’d been living in for a decade was demolished opposite my building. It’s frustrating to pay a lot, but being able to use the sinking fund to deal with that issue was extremely helpful especially as it came off the estate accounts and not just allocated to our block. This decision was taken because although the issue was worst on my building, it was affecting the quality of life across the whole development, the amount of !!!!!! on cars was horrendous. 

That said, our management company is pretty useless all told. But, we can’t change them as there are over 200 apartments in this development under same company, with the vast majority run as buy to let with student tenants and it’s only the live-in owners who have to deal with their crapness on a regular basis, and the other landlords don’t care enough to try to change 🤷‍♀️