Service charge has increased 108%

[Deleted User]

Hi,

I recently purchased a property. Since moving in I have received a service charge invoice which has more than doubled. Prior to purchasing I was sent the current service charges and management pack. I didn’t see anything about this increase. Obviously I knew it would go up a bit due to inflation. But it has gone up over 100%

Am I stuck with this charge?

Thanks

bouicca21

What does it cover?  Have you looked at the accounts?

daveyjp

Far too little info to know.

The managing agent should provide the figures to explain the reasons for the increase.  

Was there a shortfall last year? Are some more expensive repairs of a cyclical nature due next year?  Are they increasing the sinking fund?  Etc etc.

eddddy

So I guess you're saying that the estimated service charge for the coming year is 108% higher that the estimated (or actual) service charge for last year.

Did the managing agent provide a breakdown of the estimate? (e.g. Insurance premium, communal electricity, different types of repairs, management fees, etc)

If not, you should ask for a breakdown. Then you can compare it to the estimated/actual breakdown for last year.


For example, it may be that more repairs are planned this year than last, or it may be that there were insurance claims last year which have resulted in insurance premiums sky-rocketing.

propertyrental

Yes you are probably 'stuck with this charge' but as others have said you need to understand why it has increased, and a breakdow of the charges will show you that.

[Deleted User]

bouicca21 said:

What does it cover?  Have you looked at the accounts?

Yes since I found out the increase, I did. 

For 2021 I have calculated and it is correct.

for 2022 I have calculated and it is not correct. So I am going back the the management company and asking them to confirm what is going on. Something is fishy.

[Deleted User]

daveyjp said:

Far too little info to know.

The managing agent should provide the figures to explain the reasons for the increase.  

Was there a shortfall last year? Are some more expensive repairs of a cyclical nature due next year?  Are they increasing the sinking fund?  Etc etc.

I cant see anything in the figures to explain it, in-fact the figures for this year have decreased. Even the document is missing my property block name wise but does have the code assigned to it.

I’m afraid I’m a first time buyer so this is new to me. I will ask about the shortfall and sinking fund when I check with them.

[Deleted User]

Tucosalamanca said:

Repair and other costs are rising faster than inflation. It's possible that the management company have realised that current charges are not making adequate provision for future repairs / liabilities (new roof for example). I would expect this to have been discussed at management meetings. Are the minutes available for you to look at, they might give you a better oversight?

I will need to ask about this if they claim nothing is wrong. Thanks 

diystarter7

Hi

Good management agents send you a copy of the years report on costs/incomes/debts what was done and why charges have risen etc etc  You can even get one-off fees where all the windows/roof, cctv etc etc needs changing or upgrading.

Best to avoid apartments for that reason imo and we have a friend in London/Greenwich on the riverfront  past the dome that has a duplex apartment - several years ago he told me his service charges were 9k and the duplex opposite was 14k as it was bigger and he was fed up and finding hard to sell at a reasonable price (what he mean was if the service charges were much lower the price of his place would have been much higher but due to services shooting up the few years he'd been there they price of the property had stagnated)

Thanks

diystarter7

Tucosalamanca said:

Repair and other costs are rising faster than inflation. It's possible that the management company have realised that current charges are not making adequate provision for future repairs / liabilities (new roof for example). I would expect this to have been discussed at management meetings. Are the minutes available for you to look at, they might give you a better oversight?

Hi

At times new managment takes over and may be taking a bigger cut or just not good at what they do etc.

Thanks

LegallyLandlord

I really feel for you. The problem is that unlike the dispute resolution service for tenancy deposits, there’s nothing for leaseholders. There is some guidance from RICS, but that’s not binding. 

I would contact the agent and ask to have a meeting to go through the increase. Try and get other leaseholders for join you. There should be an annual general meeting for leaseholders as well. 

I had a flat where the service charge went up from £1,400 to £2,500 in 2018 without warning in a period of low inflation. The agents (RMG) didn’t really justify it. I sold up last year after the service charge had been stable for 3 years.