A2 dominion service charge increases insanely high!

eddddy

321p123 said:

I have an itemised statement for the upcoming year, there are 6 shared owner flats.
I pay 16.66 percent of charges which equates to the shared owners paying 100 percent of the quoted prices.
So maybe we do only pat for our hallway in that case they are asking 6600 gbp a year for 6 low powered lights that only come on if you walk under them !!! 
I'm just after some guidance on wether I'm right in saying that cannot be consuming that amount of electric 

So, I guess you're saying you have received both of the following

• You have received an itemised estimate (or budget) for the upcoming year. (It will be adjusted at the end of the year, when the real numbers or known)

• You have received a bill asking you to pay 16.66% of that estimate. (Again, it will be adjusted at the end of the year, when the real numbers or known)

So you need to check your lease to make sure that 16.66% is your correct share.


Regarding the electricity - you can ask the management company how they have estimated this years cost. I've seen comments that commercial electricity prices have increased by about 350%  over the last year  So if they took last years bill and multiplied it by 4.5, maybe that would be a reasonable estimate.

You could also ask the management company what is being run from the communal supply as well as the lights.



(As an aside, I came across a flat occupant who fed an extension lead through their letter box, and plugged it into the communal supply - and ran their electric heater etc, off the communal supply. But that was a bit of an extreme case.)

321p123

Yes my share is 16 .66 percent so the whole bill is split between the 6 shared owner properties.
It's always 16.66 every year that amount won't change.

Sure the hoover is used by cleaners for 2 minutes per week on a Tuesday and the intercom is of course powered also but other than that it is just lighting.

It is stated on my bill as electricity and lighting only.

Koalabear2022

321p123 said:

Yes my share is 16 .66 percent so the whole bill is split between the 6 shared owner properties.
It's always 16.66 every year that amount won't change.

Sure the hoover is used by cleaners for 2 minutes per week on a Tuesday and the intercom is of course powered also but other than that it is just lighting.

It is stated on my bill as electricity and lighting only.

Is it possible the electricity estimate also include heating to the communal areas which can be quite expensive? Our electricity budget this year is £142,000 for 90 apartments up from £24,000. That's £1578 per apartment. 

321p123

Koalabear2022 said:

321p123 said:

Yes my share is 16 .66 percent so the whole bill is split between the 6 shared owner properties.
It's always 16.66 every year that amount won't change.

Sure the hoover is used by cleaners for 2 minutes per week on a Tuesday and the intercom is of course powered also but other than that it is just lighting.

It is stated on my bill as electricity and lighting only.

Is it possible the electricity estimate also include heating to the communal areas which can be quite expensive? Our electricity budget this year is £142,000 for 90 apartments up from £24,000. That's £1578 per apartment. 

I don't think the halls are heated if I'm honest, there is no rads or anything visible and it's always cold in winter and baking in summer.

Anthony555

A2 & other HA's are relying on the FACT that *win or lose* the tenant must cover ALL court costs in the event of a fee dispute.  
That is why they will happily refer you to a First Tier Tribunal (Property Chamber).
I'm not a legal expert so am not sure if it's possible to raise a GROUP CASE but will look into it and report back.

Otherwise, they calculate that, as long as their legal fees are higher than the annual rise, they can charge what they want as you won't take them to court.

FYI my issue is a 166% rise in 'insurance costs' on a 1 bed flat - whereas I can find 20 quotes online for under half the price they're demanding via comparethemarket etc.).  It's a joke - as are many of the other spurious charges they apply.

Unfortunately due to this legal quirk (tenant pays ALL their costs win or lose) they believe they're free to price gouge.
Write to your MPs about this.  Where there's a will there's a way.

eddddy

Anthony555 said:

A2 & other HA's are relying on the FACT that *win or lose* the tenant must cover ALL court costs in the event of a fee dispute.  
....

Unfortunately due to this legal quirk (tenant pays ALL their costs win or lose) they believe they're free to price gouge.

That's not the generally the case - assuming you're still talking about a leaseholder challenging a service charge.

The tribunal (and the wording of the lease) can decide who pays costs.

Perhaps somebody was warning you what could happen - for example, if you take a case to tribunal that has no chance of succeeding, so you're just wasting everyone's time. In that case, you could be ordered to pay both parties' costs.

Anthony555 said:

I'm not a legal expert so am not sure if it's possible to raise a GROUP CASE but will look into it and report back.

Yes - multiple tenants/leaseholders can group together and make a single application to the tribunal.


Some info that might be useful:

https://www.lease-advice.org/article/recovering-legal-costs-through-the-service-charge-a-recent-decision-of-the-upper-tribunal-lands-chamber/

https://england.shelter.org.uk/professional_resources/legal/home_ownership/service_charges/service_charges_to_recover_court_costs

Anthony555

Times Article From 2019 - Not sure if the pay legal costs loophole has been closed yet:

Leaseholders win justice over rip-off fees

Those who sue their freeholder and win will soon no longer have to pay the loser’s costs

Martina Lees

Sunday March 10 2019, 12.01am GMT, The Sunday Times

The housing secretary is to close loopholes that force leasehold homeowners to pay tens of thousands of pounds in legal fees when they win a dispute in court. Following a Sunday Times investigation, James Brokenshire made the pledge after being presented with cases where freehold agents recouped legal costs as high as £60,000, even though they were ruled to have partially overcharged leaseholders.

The cases reveal an “inequality of arms” in the leasehold property system that could prevent owners of a fifth of homes in England and Wales from getting justice.

In a legal loophole, most leases allow freeholders to reclaim their legal costs from leaseholders even if they lose a case, but leaseholders have no right to do so if they win.

A tribunal last year reduced the £10,100 service charge bill for a central London flat owned by Richard Barclay by £1,200. Quadrant Property Management, which runs the building, then sent him a new bill claiming more than £61,300 for its legal fees — dwarfing the sum in dispute.

“I dared to ask, ‘Why has the management contract not been re-tendered in 25 years?’” said Barclay, 45, a health entrepreneur. “My life is a permanent state of emergency.”

Quadrant served its initial demand in the bankruptcy court, rather than the first-tier tribunal designed for such cases. The case has bounced between the two jurisdictions, pushing up legal costs. The bankruptcy court has since reduced Barclay’s legal bill by £12,500, but he is still fighting most of the cost at the tribunal.

Quadrant’s lawyers said the firm had served the demand after Barclay “persistently failed to pay service charges due under his lease”. The tribunal ruled that all the other costs challenged by Barclay “were reasonable” and refused to ban Quadrant from recouping legal costs via service charges, Quadrant added.

In another first-tier tribunal case, leaseholders of 30 flats in Feltham, west London, won about £29,000 off their service charge bill in 2015. Yet the leaseholders appear to have been made to pay more than £44,000 for the managing agents’ legal fees under clauses in their lease.

Invoices show A2Dominion housing association, which manages the block, charged its leaseholders £24,167 for legal costs in 2014-15. A year later FirstPort, one of Britain’s largest freehold managing agents, charged leaseholders of the wider estate a second time for what appear to be the same legal costs — invoicing for £20,160.

“It’s a constant fight,” said Pamela Rose-Canales, 45, a finance worker who paid £210,000 for her two-bedroom flat. “My two boys, 14 and 8, have to share a small bedroom. Yet with all the service charge and mortgage I pay, I could in real terms afford a three-bedroom house. But I am trapped.”

In 2017, two neighbours in the Feltham block took A2Dominion to tribunal over £12,500 for roof repairs after storm damage. Instead of claiming the cost from buildings insurance, A2Dominion had charged the full amount to leaseholders via service charges. Two days before the hearing, A2Dominion refunded their money. This time, the tribunal banned the housing association from recouping its legal costs through service charges.

In response, A2Dominion said the 2015 tribunal “ruled largely in our favour”. FirstPort added that the ruling had entitled both agents to “charge reasonable costs of the application to the service charge”.

A2Dominion accepted it “incorrectly” charged residents for roof repair “that was claimable via the building insurance . . . The residents were refunded.”

After The Sunday Times told Brokenshire of the Barclay and Rose-Canales cases, his office confirmed: “It is the secretary of state’s intention to close the legal loopholes that allow freeholders to unjustifiably recoup legal costs from leaseholders. This will form part of our broader package of leaseholder reforms. We will do this as soon as parliamentary time allows.”

The government has pledged to ban the sale of newbuild leasehold houses and to limit ground rents on new leases to nominal amounts. It is awaiting the results of three leasehold consultations by the Law Commission, which advises parliament, on how owners can buy or extend a lease, take over the right to manage their development, and convert to the commonhold property system.

“I want to ensure that we have a leasehold market where people are able to challenge,” Brokenshire said in an interview. “If there are obstacles like costs of court that are getting in the way and stopping that from happening, then, absolutely, that’s something we need to respond to.

“I am concerned if this inequality of arms is preventing people from getting the outcomes, getting the fairness, getting the justice that they require.

“It troubles me to think that the costs of court and that imbalance might be preventing that,” Brokenshire added. The housing secretary spoke to The Sunday Times after making a speech on fairness hosted by the charity Create Streets.

New research for Money suggests the government underestimates the size of the leasehold sector by almost a fifth. Analysis of all leasehold titles registered on the Land Registry, compiled by the search app LandInsight, shows 5.3m (21%) of homes in England and Wales are leasehold. With Wales thought to have 200,000 such homes, that exceeds the government figure of 4.3m for England. Scotland has abolished leasehold.

Unusually in civil law, the leasehold property system has “an entirely one-sided” legal cost regime favouring the powerful, said Martin Boyd, chairman of the Leasehold Knowledge Partnership (LKP) campaign.

England’s first-tier tribunal, created in 2013 as a “low-cost” environment for leasehold cases, has no power to award costs to either side except if they behave unreasonably. Boyd said: “To our knowledge, no landlord has ever had to pay their leaseholder’s legal costs on that basis.” The LKP chairman often represents leaseholders at tribunal.

Yet landmark rulings in 2011 and last year allow freeholders and managing agents to reclaim legal bills under clauses in the lease — either via a full administrative fee against the leaseholder involved, or through a service charge spread across the development.

The pain-free way to take on your freeholder
Check your lease. You can only be charged for items listed in it. If it does not mention fees for management or improvements to the development, you do not have to pay these.

For a service charge demand to be valid, it must list the landlord’s name and address and include a summary of your rights and obligations.

Work with neighbours. “Challenging service charge costs on your own is almost always impossible,” said Martin Boyd of the Leasehold Knowledge Partnership (LKP) campaign. “Check the big-ticket items such as insurance, staff costs, door entry system, lift contracts and utilities. To challenge these costs, you will need comparable quotes showing significant savings.”

Exercise your legal right to ask for a summary showing how the charge is worked out and what it is spent on, with receipts. If a freeholder refuses to supply this, they face a £2,500 fine.

Don’t withhold payment and don’t admit that the charges are payable — for example, if you aim to sell, don’t promise prospective buyers that you will pay all charges.

Write to the landlord or managing agent with evidence of why the charges are unreasonable. If this fails, consider formal mediation.

You may be able to take over the right to manage the development. The Law Commission is consulting on ways to make this easier.

Then apply to England’s first-tier tribunal (£100 application fee, plus £200 hearing fee) or Wales’s leasehold valuation tribunal (£50-£350 application fee, plus £150 hearing fee) for a determination of whether the charge is payable. The charity Advocate finds free legal help from barristers (weareadvocate dot com). 

If you win enough of the tribunal case, you can apply for an order to limit the landlord’s right to pass on some or all of their legal costs through the service charge or administrative fees. Beware: tribunals can refuse this, leaving you with mammoth bills.

Get free advice from the government’s Leasehold Advisory Service (lease-advise dot org) or the straight-talking campaigners at LKP (leaseholdknowledge dot com).

eddddy

Anthony555 said:

Times Article From 2019 - Not sure if the pay legal costs loophole has been closed yet:

I agree with your general sentiment - but I think you've missed some important stuff that's in the article you've quoted. 

So for clarification:

Anthony555 said:

The tribunal ruled that all the other costs challenged by Barclay “were reasonable” and refused to ban Quadrant from recouping legal costs via service charges, Quadrant added.

In that specific case, the tribunal ruled that Quadrant could recover their legal costs via the service charge.  (But that's not true of all cases.)

I can't find the decision for that specific case - but the article seems to explain the reason for the decision - it seems the tenant 'lost' most of their complaint, they only 'won' a small part of it. (Perhaps the part they lost had no chance of succeeding - so the tribunal thought the tenant had wasted everyone's time.)


But the article also mentions another case:

Anthony555 said:

Two days before the hearing, A2Dominion refunded their money. This time, the tribunal banned the housing association from recouping its legal costs through service charges.

So in that specific case, the tribunal ruled that HA wasn't allowed to recover their legal costs through the service charge - because the HA had 'lost' the entire case.

So as I said, the tribunal can decide who has to pay legal costs - based on the outcome of the case.


(Also, just for clarification, your earlier post talked about the 'tenant' paying the landlord's legal costs.  But the article you quote talks about the legal costs being added to the service charge - so it's likely to be divided across all the tenants.)