Service Charge Fees

Beed70

We live on a relatively new estate (around ten years old) having lived on it since it opened. As a result of it being a new estate, grounds maintenance including cutting of grass in communal areas, waste bin emptying, and street lighting amongst other services are serviced by an Estate Management Company - one that has changed several times over the past ten years - rather than by the local council.

We have generally paid the service charge requested at the end of each six-month period but due to many residents on the estate choosing not to pay the back fees due to what is admittedly poor service we get from the estate management company in question they are now trying to charge u s in advance for services to the end of the year to cover the shortfall.

We have stood firm and not paid as we do not feel we should be paying for services we have yet to get, but this week have received correspondence which shows they have now charged us a £60 late fee, and if we don't pay the revised bill within 14 days it will be 'referred to solicitors for legal action' and will charge us the £180 referral fee.

My basic question is can they do this? How can we be charged a late fee for services we have not had? Can they legally do this and what rights, if any do we have to challenge this? 

Alderbank

Beed70 said:

My basic question is can they do this? How can we be charged a late fee for services we have not had? Can they legally do this and what rights, if any do we have to challenge this? 

Can they do this? Yes.

How can we be charged a late fee for services we have not had? They can place a charge on your property, preventing you selling. Ultimately they can repossess your house.

Can they legally do this? Yes

What rights, if any do we have to challenge this? No rights at all. Pay up.

Leaseholders in an apartment block of flats can challenge their management company about costs and quality of service and can even choose to sack the management company and do the job themselves.
No such rights exist for freeholders on one of the many new estates where the paths, grassed areas, playgrounds etc. are maintained by a private company instead of the Council.
The present government accept that this 'fleecehold' is unjust and unfair. They keep promising to do something about it, but 'doing something' keeps getting kicked into the long grass (pun intended). Three years ago they said they will ask the Competition & Markets Authority to look at it when they get round to it. In February they said it again.

HorNet is a group of UK homeowners campaigning for better regulation of new build estate charges and ultimately want to see them banned.

They want to see full public or council ownership and management of open spaces and want all new estates to be built to the standard required for the Council to adopt. They believe that owners should also have the right to manage their own private facilities and spaces.
https://www.homeownersrights.net/?_ga=2.236950596.419832615.1695171599-1602497025.1695171598

This is not really a consumer rights issue. If you search the category 'Housebuying, renting and selling' for 'Fleece hold' you will find more posts.

Which country are you in? As usual, things are different here in Scotland.

eddddy

It's generally very risky to withhold service charges. The people you pay service charges to often have draconian enforcement powers.

Assuming you are in England or Wales - is your property leasehold or freehold?


If it's freehold, you probably signed a Deed of Transfer when you bought the property. Essentially, that is a contract where you agree to pay your service charge.

You should read that deed/contract to see what terms you have agreed to - for example, whether it allows the Estate Management Company to claim fees in advance, and whether it allows them to charge late fees, solicitors fees, etc.

If you don't pay service charges, the deed might give management company the right to take possession of your house.


If it's leasehold, the lease is essentially your contract. You should read the lease to see what service charge terms you have agreed to. But the law allows freeholders to charge you late fees and legal fees, if you don't pay your service charge.

Most leases also allow the freeholder to forfeit the lease (i.e. repossess your property), if service charges aren't paid.


In general, the best route is to pay - perhaps saying you are paying "under protest". Having paid, you can make a claim / challenge - but the route is different for leasehold and freehold properties.

Flugelhorn

just read all the bumph that you got when you  bought the house, they can charge the late charges etc and it is very unwise not to pay. 

daveyjp

Freehold management charges are the new wild west, there is no specific consumer protection as there is for leasehold properties, you therefore need to take action under established contract law.

You therefore pay what is due, but advise it is being paid under protest.

You then need to begin legal action against the management company for not delievering the services they are charging for.  For that you may wish to bring a single action as a group of householders as costs may rise quickly.  You may also end up paying the legal fees of the management company through management charges!

MorningcoffeeIV

Beed70 said:

How can we be charged a late fee for services we have not had? 

You're not being charged a late fee for services not yet received.

You're being charged a late fee for paying late.

Save yourself a fortune and pay now.

RefluentBeans

I may be overthinking this - but surely going from a payment for services that have been delivered to payment before services delivered represents a material change in contract. Surely this should allow for termination (or at least renegotiation) of the contract, or what’s to stop the maintenance contract going up by 300x ‘to reflect ongoing financial changes’ or some other excuse? 

I’m just going by the same logic that you use when your broadband charges increases significantly, and so could be completely wrong. Doesn’t seem right that one party has no power in the terms of the contract if they have to pay the upkeep fees that you can’t leave. 

But as to immediate actions - I would still do what others have said - pay now, under protest. And state, in writing, you feel the service provided is not sufficient. Give specifics of their breaches - for example missed bin collections, overfilled public bins, public areas not being kept tidy. Personally, I would get a group together and one person each day do a walk around the estate and take photos of areas of concern and then report those. 

outtatune

RefluentBeans said:

I may be overthinking this - but surely going from a payment for services that have been delivered to payment before services delivered represents a material change in contract. Surely this should allow for termination (or at least renegotiation) of the contract, or what’s to stop the maintenance contract going up by 300x ‘to reflect ongoing financial changes’ or some other excuse? 

I’m just going by the same logic that you use when your broadband charges increases significantly, and so could be completely wrong. Doesn’t seem right that one party has no power in the terms of the contract if they have to pay the upkeep fees that you can’t leave. 

But as to immediate actions - I would still do what others have said - pay now, under protest. And state, in writing, you feel the service provided is not sufficient. Give specifics of their breaches - for example missed bin collections, overfilled public bins, public areas not being kept tidy. Personally, I would get a group together and one person each day do a walk around the estate and take photos of areas of concern and then report those. 

I expect that the deed or lease contain that very provision, for exactly these reasons. But even if it doesn't It'll cost the OP a lot more than £180 for a solicitor to establish that.

nyermen

As others have said - I presume this is setup as a freehold estate charge or similar.
I believe that after non-payment, the management company can go to court with no further contact, and be granted a lease on your property for 100 years (or something like that?).  Your freehold would then be worthless until the end of that lease.

user1977

RefluentBeans said:

I may be overthinking this - but surely going from a payment for services that have been delivered to payment before services delivered represents a material change in contract. Surely this should allow for termination (or at least renegotiation) of the contract

It would be pretty normal to pay in advance in this sort of scenario, rather than expect the management company to be running an overdraft (which ultimately would be at your expense anyway...).

RefluentBeans

user1977 said:

RefluentBeans said:

I may be overthinking this - but surely going from a payment for services that have been delivered to payment before services delivered represents a material change in contract. Surely this should allow for termination (or at least renegotiation) of the contract

It would be pretty normal to pay in advance in this sort of scenario, rather than expect the management company to be running an overdraft (which ultimately would be at your expense anyway...).

My point being as the payment terms have changed now, that is a material change in terms of the contract. They can give all sorts of reasons for it, but any material change in contract surely can’t be decided purely by 1 party with the other party having no chance to agree or disagree?