Serious problem with management company, involving law breaking, now won't respond to us.

Bendy_House

I don't know, but is there any risk of action by the management company against leaseholders because they haven't been paying the maintenance charges? Is the ground rent being paid to the LL by everyone?

I imagine leaseholders would/should be given plenty of notice before any action, but I'm just wondering if some folk are running a risk, and even complicating matters by THEM also not doing as they should?

I guess as long as the Ground Rent is being paid, there should be little risk.

eddddy

john600602 said:

My complaint was escalated to the ombudsman who got a totally inadequate response back from the management company.  

I'm not sure that the Property Ombudsman is the best route in this case.

Your major concern seems to be about service charges, and as you say, the Ombudsman won't investigate Service Charge issues.

The Ombudsman is usually more concerned about "Quality of Service" and "following guidelines". So the outcome might be that Ombudsman tells the management co off for providing a poor service - and orders them to pay you £250 for the inconvenience you suffered.


What did your solicitor say about going to tribunal to challenge the service charges? That seems a much better option for you.

It sounds like you'd have a good case for saying that at least some service charges are not 'reasonable' - because there are no receipts to show that money was actually paid.

Bendy_House said:

I don't know, but is there any risk of action by the management company against leaseholders because they haven't been paying the maintenance charges? Is the ground rent being paid to the LL by everyone?

Yes - there is a risk to not paying the service charge (and ground rent) bill.

Management companies typically add late fees, the solicitors fees, then debt collection fees to the bill. (And eventually they'll ask your mortgage lender to pay, and mortgage lenders usually do.)

If none of the bill is legitimate, then none of those extra fees will be legitimate. But if part of the bill is legitimate, a tribunal might say the leaseholder was wrong to withhold the full amount - so all those extra fees apply.

Generally the advice with service charge bills is "pay now, challenge later". But the OP should take their solicitor's advice on that.

john600602

We received a letter from the management a couple of months ago saying if we didn't pay the service charge they may start formal proceedings without notice (this was sent to ALL owner occupied flats, three quarters of the block).  Oddly, one man, quite new to the block who was at that time unaware of the full extent of the problems, had paid by cheque but the cheque was never cashed and he too received the notice).  They then went back on this and I have it in writing that they will NOT be chasing any money until we have the outcome from the ombudsman. They were indeed apologetic but never do anything to rectify the situation.
With regards to ground rent, this is also in dispute as they don't know who the landlord is (or more specifically, their address), this came to light when a neighbour wrote to the address that has always been issued on the service charge ever since I've lived there (7 yrs) and it was returned by Royal Mail "no such address".  This is another issue the ombudsman is looking at.  Leasehold advisory service told me it is illegal to send a demand for ground rent without these details, as such we had a valid reason for not paying in addition to the email I have stating that we do not need to pay until the ombudsman completes their enquiry. I'll add at this point the most recent service charge does not even give the option to pay ground rent. We have told them and they just appear through their imcompetence to have "forgot" to put it on. Previously it was always listed as a separate payment and indeed if paying by cheque, two cheques were required, one for service charge and the other for ground rent though both payable to the management company.  Ironically throughout this debacle, the landlord/freeholder has never attempted to get in touch to find out why there has been a missed ground rent payment from everyone.
With regards to the service charge it states on the Gov.UK site they HAVE to supply receipts, sinking fund, accounts etc on request, it states clearly it is a CRIMINAL OFFENCE not to. With regards to the solicitor, they said basically it would be costly and it's a last resort, and to go for FTT which we are planning to do depending on the outcome from the ombudsman, as you say, the ombudsman may not have the powers we need.  As residents investigate this company it seems to be a tangled web, we were originally told it was a "new branch" of the original management company but a document from Companies House shows the firm already existed in its own right and simply changed it name (we have the change of name official certificate).  Searching the name of the director shows up 45+ different management companies and from what we can see he is in a considerable amount of debt.  The facts at the moment are there are no accounts since 2019, no proof the sinking fund even exists (which should have tens of thousands in it), no certainty of the landlord's details, and no receipts to show, which is logical as most the work charged for doesn't happen.  I would have thought failure to be able to provide any of this to the property ombudsman was a very serious matter.  13 months now of residents, and now the ombudsman asking for proof of sinking fund and they simply keep saying they are looking into it and will send it soon.  We are constantly assured everything is fine but it obviously certainly isn't. The block mostly consists of pensioners (I am not), with some in their 80s and 90s and the distress this is causing them can't go un-noticed let alone the fact the building and grounds are falling into neglect.  All the management do is want more and more money for less and less work. I can see it going to the solicitor (if FTT fails, I haven't done it before so don't know how good it is) but I dread to think how much the solicitor would potentially cost.  On a side note I'm disgusted that for a practically non existent service they have again upped their management fee to almost £5k a year on a block of just 14 flats.

eddddy

john600602 said:

I can see it going to the solicitor (if FTT fails, I haven't done it before so don't know how good it is) but I dread to think how much the solicitor would potentially cost. 

I think you've misunderstood a few important things - for example what a Tribunal is:

• A tribunal is essentially a court. It's run by HM Courts & Tribunals Service. Tribunal Judges are very similar to court Judges.

• If you lose a case at the First-Tier Tribunal (FTT) and you want to appeal the decision, you have to submit an appeal to the Upper Tribunal, then an appeal to the Court of Appeal, and then an appeal to the Supreme Court. (But I'm not suggesting you do any of that.)
  
  
• A tribunal case is supposed to be similar to a "small claim" in court. You shouldn't need a solicitor.

• When your solicitor says it's expensive to go to tribunal - they mean it's expensive to use a solicitor to go to tribunal (because solicitors charge around £250 per hour for their time). So you should prepare your claim yourself.

For the tribunal, you need to write a "shopping list" of the costs that you are challenging. Maybe something like this:

• 1) Service charge bill dated 1/1/2020.  £2,800 has been charged for "General Repairs". The management company is unable to provide any details of the repairs carried out, or any invoices. Therefore it is not reasonable to include that charge. Therefore, my 1/14th contribution of £200 is not payable.

• 2) Service charge bill dated 1/1/2021: £700 has been charged for window cleaning. The management company has been unable to provide a bill for this, and I have never seen any window cleaners at the property. Therefore it is not reasonable to include that charge. Therefore, my 1/14th contribution of £50 is not payable.

Here's a an example where a leaseholder went to tribunal with a "shopping list" of 13 items.:   https://assets.publishing.service.gov.uk/media/5fb3de83d3bf7f63d7075a19/LE53GW_BIR_00FN_LIS_2020_0012_decision.pdf

The tribunal went through each item in the list - and reduced some items by £1 some by £80, and some by £0.

Overall, the leaseholder's service charge was reduced by about £600.

john600602

Thank you, that's very helpful. Yes, this is all new to us, none of the residents have ever been in this position before.