Property Management Service Charges

FeelingFlat

I bought my leasehold flat in 2018 knowing that the property management service charges were around £600-£700 every 6 months, which stayed fairly consistent up until this year.  In January 2022 there was a bill for over £1700 for 6 months advance (which I paid) and now I've received another bill for over £1800 for the next 6 months of the year, without any evidence of where the extra money has been spent or the intentions for the new funds. If anything, the service provided by the company has got worse since 2020 and there appear to be many unresolved maintenance issues for the building. I asked for justification of the January bill and never received it - communication with the company is very difficult. To complicate matters, there is building work to be done on the property next year, but it has been implied that this will be an extra bill of almost £3000 and will not be covered by any service charges, and there is apparently very little in the reserve fund to reduce the cost of the work.
I feel like I want to challenge these unjustified charge increases but don't really know my rights to do so, and am worried that if I take legal action it will just end up costing me more than if I just paid the increased charges.
Could anyone offer any insight or advice please?  Thank you in advance.

tryingmybest99

You do have rights to challenge (but generally pay first, then dispute it). I don't have any experience in this area, but I am a new leaseholder myself and I have bookmarked the following two links from the leasehold advisory service, in case it comes up for me in the future; maybe reading through will help a bit? The first link includes what they should have included on the service charge demand. The second link has a more general guide plus links and more information on the tribunal process

https://www.lease-advice.org/fact-sheet/service-charges/

https://www.lease-advice.org/advice-guide/service-charges-other-issues/

eddddy

Did the freeholder / management company provide a forecast / budget at the beginning of the year?

i.e a breakdown showing what they expected to spend your £3500 (and other leaseholders service charges) on.

Maybe showing costs like:
Buildings insurance - £x
Communal Electricity - £x
Cleaning - £x
Gardening - £x
Management fee - £x
etc

If you compare the 2018 budget/accounts with this year's budget - you should be able to see where the additional money is to be spent.

There may be a bunch of 'one-off jobs' that need doing this year - hence the high service charge - and then it will go back down again next year.

Or perhaps the building is starting to get a little bit older, so it generally need more maintenance.

daveyjp

The management company should be providing details of expenditure each year and a forecast for the following year.

Without details of what is being charged for and what repairs and maintenance are being undertaken it is impossible to know if the increase is acceptable, but you should be requesting statements of where money is going,

You say there is no reserve fund, part of the increase could be to reverse this situation.

FeelingFlat

eddddy said:

Did the freeholder / management company provide a forecast / budget at the beginning of the year?

i.e a breakdown showing what they expected to spend your £3500 (and other leaseholders service charges) on.

Maybe showing costs like:
Buildings insurance - £x
Communal Electricity - £x
Cleaning - £x
Gardening - £x
Management fee - £x
etc

If you compare the 2018 budget/accounts with this year's budget - you should be able to see where the additional money is to be spent.

There may be a bunch of 'one-off jobs' that need doing this year - hence the high service charge - and then it will go back down again next year.

Or perhaps the building is starting to get a little bit older, so it generally need more maintenance.

At my request they sent me the 2022 budget but it only justified the "estate" part of the charge... which hasn't actually increased.  The "apartment" bit of the charge is the one that's increased threefold, and there was no justification for that - I asked for further clarification and was ignored.

Having read up on my rights I'm pretty sure I should now be entitled to see receipts for where the money has been spent?

I've also been advised that I have no legal right to withold the payment but I can "pay under protest".  Not quite sure how to do this practically though, the templates seem to be focused on sending a letter with the payment to a landlord, but my 'landlord' is a faceless company not a person, and I pay by bank transfer to the management company anyway, not the 'landlord'.

Anyone done an official "pay under protest" another way?

FeelingFlat

UPDATE:
Some success in terms of communication with the property management company!
I have now had it (almost) confirmed by them that the increase in apartment charge was to cover the extra building work I mentioned, and therefore we shouldn't have had the £3k bill!  So I am going to pay up for the latest service charge (not under protest), but consider making a complaint to the company about their poor communication.

Thank you all for the bits of advice, it was definitely worth knowing my rights even though it looks like (hopefully) I won't have to take any legal action now. It put me in a stronger position when asking the company for information, and I would definitely recommend others read up on those rights if they're new to leasehold property.  I wish I'd have been more clued up when I first bought the place.