Service Charges - query

Altior · 4 March 2023 at 11:09AM

Background is that initially my property was shared ownership, new build coach house in 2011. I fully staircased a few years ago, so outright own, but leasehold and there is a service charged linked the property. As stated, it's a coach house and I have no communal or shared areas that GUHG look after, I'm responsible for the upkeep of all of my property.

The service charge is/was just the buildings insurance. It was less than £3 pcm back in 2011, so only a very nominal amount. This rose in line with the rent based on the terms in the lease, RPI +0.5%.

Since I fully staircased, GUHG started sending me an itemised service charge. There was a named person in a letter, telling me essentially that he has taken over and identified some errors in my account, and was correcting/backdating them. If I had queries, to contact him. They seemed quite silly to me, but still nominal at this point. The breakdown of the service charge now includes not only insurance, but Homeowner Audit Fee, GHUG management fee, and deficit from previous year.

I called the named person to clarify this and it seemed a bit silly, but whatever. Buildings insurance for a year in my property would be circa £60 per annum, but he said they have to estimate the value of the property, it gets lumped in with all of their properties, and all of this takes admin. Because it's estimated, the estimate might be incorrect and there's a surplus or deficit from the previous year.

The upshot was that this added together was £19 per quarter, the buildings insurance and all of the associated fees to calculate the buildings insurance!

However, I received a letter from them yesterday stating the proposed new charges from April, per quarter are £88! This is not a means issue, I can pay it but more than quadrupling the building insurance service charge after 11 years seems absurd! How do I know it won't quadruple again for 24/25...

I only get building insurance out of the charge, but now the itemised section includes 'Fly tipping and Waste Removal', 'Repairs and Maintenance' and 'Health, Safety and Fire Precaution'. !!!!!!!! I don't get anything from any of these, nor do I need them in the future.

I will be contacting them on Monday, but reaching out to property experts here so that I may be armed with any necessary information. I looked at my lease, it's impenetrable legalese as one might expect, essentially stating that the landlord can recover reasonable costs as part of the service charge. The letter includes a website page, that is equally impenetrable, but does talk about a tribunal - Summary of customers' rights and obligations - GUHG

I'm hoping that this is just a very poor error, and they aren't trying to stitch me up because of the recent negative economic situation (ergo, they are skint and going after people). GUHG is a not for profit organisation.

user1977 · 4 March 2023 at 11:25AM

Altior said:

it's a coach house and I have no communal or shared areas that GUHG look after, I'm responsible for the upkeep of all of my property.

No communal parts at all? Private road/parking, structural parts of the building, service media, etc?

Altior · 4 March 2023 at 11:32AM

user1977 said:

Altior said:

it's a coach house and I have no communal or shared areas that GUHG look after, I'm responsible for the upkeep of all of my property.

No communal parts at all? Private road/parking, structural parts of the building, service media, etc?

None that GUHG look after. The rest of the properties around me are all freehold. I don't actually know who is responsible for the forecourt but it won't be GUHG it will be linked to the developers. Nobody actually does look after it, the car park light has been out for about 5 years!

comeandgo · 4 March 2023 at 11:32AM

What I have seen previously is that all the properties in the scheme pay a portion whether you directly receive or use that service or area. Your deeds should set out the charges and proportion.

Altior · 4 March 2023 at 11:44AM

comeandgo said:

What I have seen previously is that all the properties in the scheme pay a portion whether you directly receive or use that service or area. Your deeds should set out the charges and proportion.

Cheers for responding. The entrance to the forecourt (which I live over), leads to the rear gardens and parking (car ports) for three other properties. It's something like 10 metres square. This is a very nice area with decent neighbours, these are half million pound properties, there's no maintenance needed (or delivered). As above, the forecourt light is out, but I'm certain that this is nothing to do with my housing association. As per my OP, I've only paid buildings insurance as the service fee for over a decade.

There's no specifics in the documents that I have about fees, or potential fees, outside of insurance.

user1977 · 4 March 2023 at 12:01PM

Altior said:

comeandgo said:

What I have seen previously is that all the properties in the scheme pay a portion whether you directly receive or use that service or area. Your deeds should set out the charges and proportion.

There's no specifics in the documents that I have about fees, or potential fees, outside of insurance.

So ask them on what basis they think they're invoicing you.

Definitely nothing explained to you by your solicitor at the time you bought / staircased?

Altior · 4 March 2023 at 12:06PM

I've dug out the letter from 24 Oct 2022.

I am writing this letter to advise that your service charges for 2022-2023 were left off your account. We also did not provide you with a Budget Letter for 22-23.

I would like to take the opportunity to apologise for this error and going forward this should not happen again.

I have completed a new Budget Letter which is also enclosed in the letter. There are some outstanding arrears on the account as the charges have now been added to your property. I have also enclosed a statement so that you can see these charges and arrears as it stands. If you wish to discuss this with myself in further details please do not hesitate to contact me so I can help you.

Trainee Service Charge Officer

----

Breakdown of current charges for: XXXXXX

Description

Leasehold Annual Adjustment £2.10DR
Service Charge - Building Insurance £11.72DR
Service Charge - GUHG Management Charge £1.56DR
Service Charge - Homeowner Audit Fee £3.93DR

Total Charges: £19.31

Altior · 4 March 2023 at 12:15PM

user1977 said:

Altior said:

comeandgo said:

What I have seen previously is that all the properties in the scheme pay a portion whether you directly receive or use that service or area. Your deeds should set out the charges and proportion.

There's no specifics in the documents that I have about fees, or potential fees, outside of insurance.

So ask them on what basis they think they're invoicing you.

Definitely nothing explained to you by your solicitor at the time you bought / staircased?

No, part of the reason I accepted this property back in 2011 was that there was no service charge (outside of the insurance).

There was a problem with the lease set up originally though as the HA solicitors used a template for a flat, rather than a coach house. So it actually stated that the ground floor (& car port) weren't part of my ownership. The conveyancer who completed staircasing said this was a significant oversight by my original solicitor, but he cleared it up when completing the final purchase.

Altior · 4 March 2023 at 12:27PM

Friday's letter now lists:

Proposed total new charges payable of £87.86 per quarter, in place of the existing total charges of £19.31 payable per quarter.

The starting date for the new service charges will be 1 April 2023.

Detailed table of charges for 2023/2024:

Insurance £14.51
Repairs and Maintenance £31.16
Fly tipping and Waste Removal £3.73
Homeowner Audit Fee £4.01
Health, Safety and Fire Precaution £26.46
GUHG Management Fee £7.99

Total £87.86

eddddy · 4 March 2023 at 2:32PM

Altior said:

I looked at my lease, it's impenetrable legalese as one might expect, essentially stating that the landlord can recover reasonable costs as part of the service charge.

Unfortunately, it's your lease which describes what you can be charged for. So you really need to understand what the lease says. (Nobody here can guess what your lease says.)

I guess you could try asking your contact at GUHG to point you out the specific clauses in the lease that make you liable for paying for the specific amounts they're asking for. That might point you in the right direction.

Altior said:

None that GUHG look after. The rest of the properties around me are all freehold. I don't actually know who is responsible for the forecourt but it won't be GUHG it will be linked to the developers. Nobody actually does look after it, the car park light has been out for about 5 years!

I suspect the set-up might be something like this:

The developer owns the freehold
GUHG have leased a bunch of properties from the developer (That type of lease is called a Headlease.)
You have leased one of those properties from GUHG (That type of lease is called a sublease)

And perhaps...

The developer arranges the maintenance and repairs
GUHG pay a service charge (in respect of their bunch of properties) to the Developer for the maintenance and repairs
You have to pay GUHG a service charge (in respect of your property) to reimburse GUHG for what they've had to pay the developer

(Regarding the broken car park light - have you or anyone else reported it? If nobody has reported it, the people responsible for fixing it might not know it's broken.

But if they send out somebody to fix it, that will be another repair charge that has to be paid by you and the other property owners. The more repairs that are done, the higher your service charge will be.)