Service Charge Increase

Norman_Castle

bouicca21 said:

Outstanding charges cannot be recouped unless they are legitimate. Hence the question about the section 20.

I'm sure you're right but I believe copyboys question was a general question rather than one specific to this thread.

BecaRay

bouicca21 said:

Have you been through the section 20 process?

The Section 20 they sent us was for £38,200 for internal repairs. I can't find a Section 20 for this work, but we did have a letter in April 2021 saying we would need to pay for the work to be done, because the owner had put in planning permission (for an extension to the current building) but because that got reject the leaseholders would be eligible to pay for the full amount. 

I am not arguing about paying for the work to be completed, I agree the roof and outside facia need to be repaired, I don't think they have been maintained since the building was built! I will happily pay my contribution, but I thought it needed to come outside of the Service Charge as it is a Major Works project not part of services we receive in the building. That way it can be paid over a longer period of time, alongside the standard service charge.  

bouicca21

if it isn’t covered by the Section 20 (check carefully) then they need to do another.  I think you should be talking to the leasehold Advisory Service.

saajan_12

BecaRay said:

bouicca21 said:

Have you been through the section 20 process?

The Section 20 they sent us was for £38,200 for internal repairs. I can't find a Section 20 for this work, but we did have a letter in April 2021 saying we would need to pay for the work to be done, because the owner had put in planning permission (for an extension to the current building) but because that got reject the leaseholders would be eligible to pay for the full amount. 

I am not arguing about paying for the work to be completed, I agree the roof and outside facia need to be repaired, I don't think they have been maintained since the building was built! I will happily pay my contribution, but I thought it needed to come outside of the Service Charge as it is a Major Works project not part of services we receive in the building. That way it can be paid over a longer period of time, alongside the standard service charge.  

Check with other leaseholders or even ask the freeholder for a copy, but there should be a Section 20 covering this if above the threshold per property. 

Do you have a sinking fund? Depending on the terms in your lease, yes ideally major works would be taken out of that so the cost is spread out and taken from charges ALREADY paid. However if no fund, then the freeholder isn't a bank and doesn't have a pot of money to pay for work now and charge in the future over the next x years. 

coypondboy

HouseHunter223 said:

coypondboy said:

so of you were downsizing like me and did not have a mortgage and could not pay the service charge as on a fixed pension I would lose all my life savings tied up in the flat and be homeless. Crikey how unfair is that at least with renting or having a mortgage this won't happen?

If you pay mortgage on a house and the roof collapses (in a way not covered by insurance) you would have to pay to replace it. At least here, the burden is shared among properties.

Someone has to pay for repairs if they're required.

How does it work for those caught up in the cladding crisis where the freeholder has to fix the building in order to meet the new building safety regulations going through parliament at the moment and will be law in June/July?

eddddy

BecaRay said:

...but I thought it needed to come outside of the Service Charge as it is a Major Works project not part of services we receive in the building. That way it can be paid over a longer period of time, alongside the standard service charge.  

Typically, the freeholder will need to have received the money from the leaseholders before the work starts - otherwise the freeholder will have no money to pay the building contractors.

So if the work is planned for, say, 3 years time - the freeholder might collect payments over 3 years (that's essentially what a sinking fund is).

But if the work is urgent - the freeholder might need to collect the money more quickly, perhaps in one payment.



As others say, a section 20 consultation usually needs to be done (if it hasn't been already). That usually takes about 2 months. But if the work is really urgent (e.g. major leaks in roof, risk of further damage if nothing is done), the freeholder can apply to a tribunal for dispensation, or do the consultation retrospectively. 

BecaRay

eddddy said:

BecaRay said:

...but I thought it needed to come outside of the Service Charge as it is a Major Works project not part of services we receive in the building. That way it can be paid over a longer period of time, alongside the standard service charge.  

Typically, the freeholder will need to have received the money from the leaseholders before the work starts - otherwise the freeholder will have no money to pay the building contractors.

So if the work is planned for, say, 3 years time - the freeholder might collect payments over 3 years (that's essentially what a sinking fund is).

But if the work is urgent - the freeholder might need to collect the money more quickly, perhaps in one payment.



As others say, a section 20 consultation usually needs to be done (if it hasn't been already). That usually takes about 2 months. But if the work is really urgent (e.g. major leaks in roof, risk of further damage if nothing is done), the freeholder can apply to a tribunal for dispensation, or do the consultation retrospectively. 

So thought we have been paying into a sinking fund for the past 4yrs, which is the reason they gave for Service Charge increases every year. It has been between £500 and £800 quarterly since we moved in 4yrs ago. 
Having spoken to the management company today, they are saying that they need to investigate the funds in the sinking fund. Which seems suspicious to me.  
They have also admitted that work has now got to the point that it is so desperate that they need to do the work urgently. 
To put it into context, for 4yrs they have been saying the roof needs repairing and two years ago they had to repair a small section over my property as a leak damaged by bathroom ceiling, bathroom wall and living room ceiling. So instead of being able to increase service charge over a few years they need all the money now, which is why the increase is so dramatic. 
I am so scared, I have no idea how I am going to be able to afford this. The only thing they are saying is we can pay monthly instead of quarterly but even then it is £1200 a month