S20 for work on leasehold property

DullGreyGuy

Our managing agents have stated the flat element of the roof needs notable repairs, its a little under 20 years old so probably not too surprising. After a couple of emails about suggestions of companies to approach etc all under the heading of a S20 notice they have now come back with a table of 4 companies saying 2 declined to quote and the quotes for the other 2.

Prices are substantial, probably to pay the kickback, but in addition there is a 12% "Resident liaison fee". I can see that the management agent will have a modest amount of extra work to do but dont see how its proportional to the cost of the work. Can anyone help with what they are allowed to add on top of the invoice price under a S20? 

eddddy

Does the lease mention a resident liaison fee of 12% for this kind of situation? If it does, it will be harder for you to challenge.

If the lease doesn't mention the fee - the law says it must be "reasonable". So, for example, it should reflect the amount of work the managing agent has to do.


So you could say that you are 'concerned' about the amount of the management company fee, and ask them for a break down of the fee - including the number of hours work the management company will do, and how much per hour they charge.

(As an example, it might be reasonable to charge £50 or £60 + vat per hour for admin work. Perhaps more per hour for specialist work.)

DullGreyGuy

Thanks for the suggestion @eddddy is it likely to mirror the name in the lease or be captured under some other common term to try and search for it? I've always found the lease difficult to read and similar to US contracts rather than modern UK contracts.

From experience our lease on paper is relatively favourable but they aren't beyond using loosely relevant terms and paying "experts" to say they apply

eddddy

You could say something like this to the management company...

"Can you confirm which clause in the lease allows you to charge a 12% resident liaison fee, or if it is not mentioned in the lease, can you provide a breakdown of the work you will be doing and the costs you will be incurring that adds up to an amount equal to 12% of the contract cost."


I'm sure they will reply with justification for charging the 12% - and you will have to decide whether it is "reasonable" justification, or whether it's a load of "puff".

Then you might threaten to challenge the fee at a tribunal. That threat might make them reduce it, but if they don't you'll have to decide whether to really go to tribunal. (But you need to protest quickly, before they proceed further with the project.)

DullGreyGuy

Many thanks, I did go back with a similarly worded question.

At over £7k fee I struggle to see how it'd be 120hrs of effort unless they can bill for the people challenging the 120hrs of effort being reasonable in which case it all becomes very circular.

DullGreyGuy

So the management agent came back @eddddy and stated that their contract with the freeholder allows them to add a 12% fee and then quotes the part of our lease which states the leasee with pay the leasor 1/34th of all payments and expenses incurred by the leasor in carrying out its obligations of maintenance under the 7th part.

Is that sufficient of a get out for having to justify the charge?

eddddy

The comments below are based on what you've said in your posts - there may be other relevant info, which hasn't been mentioned:

DullGreyGuy said:

So the management agent came back @eddddy and stated that their contract with the freeholder allows them to add a 12% fee 

The Landlord and Tenant Act 1985 Section 19 (1) (a) says that service charges must be reasonable.

So that is the law. No contract between the managing agent and freeholder can override the law.

If the 12% fee is not reasonable, they cannot charge you the 12% fee.

But if you and the managing agent can't reach an agreement on what is reasonable, you might have to go to tribunal to get a decision on whether the 12% fee is reasonable.

Link: https://www.legislation.gov.uk/ukpga/1985/70/section/19

DullGreyGuy said:

then quotes the part of our lease which states the leasee with pay the leasor 1/34th of all payments and expenses incurred by the leasor in carrying out its obligations of maintenance under the 7th part.

So are there 34 flats in the development? It sounds like they're saying there might be 34 flats, so you have to pay 1/34th of the cost.

If that's the case, it sounds like they are adding something to their email which is true but irrelevant to your question.

Perhaps as a kind of distraction technique, to take your attention away from the real issue of the 12% fee.

(Presumably, you are not disputing that you have to pay 1/34th of the cost.)

eddddy

You could try arranging a 15 minute free call with LEASE (a government funded organisation) for advice :  https://clients.lease-advice.org/#/

But it's important to make sure you tell the managing agent asap, that you do not agree with the 12% charge.

(And you could also say that you are taking legal advice, and you might challenge it at tribunal - if you want.)


A tribunal would expect you to tell the managing agent that you don't agree with the 12% charge asap, so that the agent has the opportunity to reconsider the charge before the work starts.

DullGreyGuy

Yes, there are 34 units and all costs are shared equally so that bit isnt in dispute... I mean its a little unfair because we have direct street access and therefore dont use the communal area or lifts but we knew all that when we bought the property so a moot point.  I'm sure the one unit that is a tiny studio flat doesn't like it either but again it is what it is.


On the basis they've now emailed everyone saying the 12% fee is in their contract with the freeholder seems I'm not the only one raising it! Have asked them to provide a rationalisation on how its reasonable beyond the fact its simply in the contract with the freeholder so lets see what they say next. Thanks for your help @eddddy

eddddy

DullGreyGuy said:

On the basis they've now emailed everyone saying the 12% fee is in their contract with the freeholder seems I'm not the only one raising it! 

Yep - if I wanted to be flippant, I could point out that the freeholder could put a clause in the contract saying that the agent can drive at 100mph on the motorway.

But that won't override UK legislation that says the agent can only drive at 70mph.

(But I wouldn't suggest putting flippant remarks like that in the email to the agent!)

DullGreyGuy

eddddy said:

But that won't override UK legislation that says the agent can only drive at 70mph.

(But I wouldn't suggest putting flippant remarks like that in the email to the agent!)

I try not to but I struggle with how unreasonable they can be...

Long running argument of what can and cannot be done on balconies/roof terrace as the lease just says you can't put your laundry on it but they ban BBQs (irrespective of energy source) quoting the fire brigade that they are high risk of damage so in breach of the lease and their insurance broker saying it'd increase premiums and so in breach of the lease.

Did initially point out that BBQs are about 30th on the list of causes of fires and they haven't banned smoking, candles, chip pans etc. Also pointed out that most the balconies/roof terraces have BBQs on them so any impact of them would have already been felt in the insurance premiums (I know someone who works for the underwriter who says its not a rating factor) but they use a broker that's known to be ropy (I've worked for them before) and they wrote a letter saying it would increase the premiums. 

Several other cases of them using catch all clauses like that