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Service Charge Increasing by 35%
LeagueOfWolf
Posts: 63 Forumite
I feel so helpless.
Our block management company have been taking stuff out out reserve fund every year for upgrades that they invoice themselves for.
Our block is an old 1980s block of 12 tiny council style studio flats. In suburban London Zone 4.... in a rough location. There are no proper communal area. Its just front of our doorways directly infront of stairs. I would say 10sqm. Block is brick walls, with tile roof. It's old but in OK condition. Interior is something of a council flat style looking with carpet.
They hiked our service charge by 35% to £2150 a month. 25% increase was for their management fees. The rest was gradual inflation but I noticed they doubled our reserve from 268 to 583. I looked at 10 blocks in our area very simular standard ones and it looks like 2 bedroom flats service charge are paying what we pay .The rest all pay 1200-1600... with 1600 being max and they are all 1 bedroom flats. Ours are studios.
Every year they put in "refurb" works that include painting, redoing carpet, painting windows which they charge us insane amount which is always most of our reserve fund. I.e it cost £9000 for replacing the cheapest possible carpet in a 10sqm sized communal stairs!!! And when we packed up a fuss they showed us invoice for this.
They're professional, communicative and responsive as a company I'll give them that but they use this go their advantage saying we need these works done to maintain the block. I do agree but not with the pricing. They now are saying we need to upgrade our roof. I asked them have they had a surveyor in to inspect for upgrade and the answer was no its expensive, that they know it needs upgrading as its 40 years old and that they have a chartered surveyor on the team so they know it needs changing. Then they put these works in our forecast for £7000. I said if no one has seen it, and no one has said it needs upgrading how do they know it will cost £7000 and what needs replacing ??
We looked up the company on gov.uk and its also owned by the same directors.
They are husband and wife. It looks like they are increasing our reserve funds to account for these upgrades which is legitimate . I am okay with maintenance block but these improvements or decorations arent visible or are lowest quality and seem to be there to create work for their sister company to invoice and take money out our reserve 😪🤧
Which they are always constantly doing every year in diguise as "improvements" for your block. Whilst we see no improvements in our block its just as run down as it was 6 years ago .
It just felt didgy since when I check the paper work the "upgrades" always cost the total amount in reserves even though its clesrly expensive i.e £9000 for carpet so we just end up with nothing in there.
Next few years they've forecasted £12000 for internal external paintwork in our tiny flats as well.
They've been doing this since I moved in and I have felt off from the start but never sure as they always have a reason for everything saying if they don't update our roof it will collapse. Which I understand are preventative measures... but no ones even seen it yet? Or priced it? If the reserve fund is being increased to cover future works how did they come to how much it will be?
Only 1 other leaseholder responds to me. I am director of the block I am hoping to move management companies but it requires majority of votes in which no one else in the flats reply to my emails etc so I feel quite helpless.
When I ask management company about these things they say they have to maintain the block. They told the other leaseholder the other company is not theirs although we found it on gov.uk so not sure what to do
Our block management company have been taking stuff out out reserve fund every year for upgrades that they invoice themselves for.
Our block is an old 1980s block of 12 tiny council style studio flats. In suburban London Zone 4.... in a rough location. There are no proper communal area. Its just front of our doorways directly infront of stairs. I would say 10sqm. Block is brick walls, with tile roof. It's old but in OK condition. Interior is something of a council flat style looking with carpet.
They hiked our service charge by 35% to £2150 a month. 25% increase was for their management fees. The rest was gradual inflation but I noticed they doubled our reserve from 268 to 583. I looked at 10 blocks in our area very simular standard ones and it looks like 2 bedroom flats service charge are paying what we pay .The rest all pay 1200-1600... with 1600 being max and they are all 1 bedroom flats. Ours are studios.
Every year they put in "refurb" works that include painting, redoing carpet, painting windows which they charge us insane amount which is always most of our reserve fund. I.e it cost £9000 for replacing the cheapest possible carpet in a 10sqm sized communal stairs!!! And when we packed up a fuss they showed us invoice for this.
They're professional, communicative and responsive as a company I'll give them that but they use this go their advantage saying we need these works done to maintain the block. I do agree but not with the pricing. They now are saying we need to upgrade our roof. I asked them have they had a surveyor in to inspect for upgrade and the answer was no its expensive, that they know it needs upgrading as its 40 years old and that they have a chartered surveyor on the team so they know it needs changing. Then they put these works in our forecast for £7000. I said if no one has seen it, and no one has said it needs upgrading how do they know it will cost £7000 and what needs replacing ??
We looked up the company on gov.uk and its also owned by the same directors.
They are husband and wife. It looks like they are increasing our reserve funds to account for these upgrades which is legitimate . I am okay with maintenance block but these improvements or decorations arent visible or are lowest quality and seem to be there to create work for their sister company to invoice and take money out our reserve 😪🤧
Which they are always constantly doing every year in diguise as "improvements" for your block. Whilst we see no improvements in our block its just as run down as it was 6 years ago .
It just felt didgy since when I check the paper work the "upgrades" always cost the total amount in reserves even though its clesrly expensive i.e £9000 for carpet so we just end up with nothing in there.
Next few years they've forecasted £12000 for internal external paintwork in our tiny flats as well.
They've been doing this since I moved in and I have felt off from the start but never sure as they always have a reason for everything saying if they don't update our roof it will collapse. Which I understand are preventative measures... but no ones even seen it yet? Or priced it? If the reserve fund is being increased to cover future works how did they come to how much it will be?
Only 1 other leaseholder responds to me. I am director of the block I am hoping to move management companies but it requires majority of votes in which no one else in the flats reply to my emails etc so I feel quite helpless.
When I ask management company about these things they say they have to maintain the block. They told the other leaseholder the other company is not theirs although we found it on gov.uk so not sure what to do
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Comments
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What do your neigbours think? Do they care or just want a quiet life?
If eough of you care and get together you could apply to manage the block yourselves ie decide what needs doing, when, and and at what cost.
It's called Right To Manage and if (I think) 50% of leaseholders apply, then you can force the current company to hand over all the money and accounts.
https://www.lease-advice.org/advice-guide/right-manage/
Is this husband/wife company also the freeholder, or appointed by the freeholder to manage the property? If the latter, who is the freeholder (Check at Land Registry here).
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If they are doing things like re-carpeting for £9k, roof work for £7k, painting for £12k - with only 12 flats in the block, they should have done section 20 consultations for each of these. Even if the money is coming from reserve funds.
(They must do a section 20 consultation if any leaseholder's share is over £250)
That would involve getting competitive quotes for all the work.
Did the freeholder do that?
More info: https://www.lease-advice.org/advice-guide/section-20-consultation-private-landlords-resident-management-companies-agents/
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Freeholder of land is someone else. They have charged £20 from beginning. No hikes I think they just don't bother with it. Tempted to pay to find their information to see if I can buy it off them.
RTM requires 50% . Only 1 lease holder cares who I speak to as he still lives there. The rest all rent out their flats and don't care about the block
there is 1 other difector who has voted favorable for this managemnt company. I obtained most of leaseholder emails sent them a message and none of them replied.
We have a vote ATM whether we want to change our management and agree with service charge the other director has already agreed. They're waiting on me as no other person responds to the voting poll.
Inclined to vote no and to change companies but if no one else votes not sure what will happen at 50/50
I have called up handful other management companies one has a new block they manage with simular situation as us and passed on their leaseholder/director details to speak to them... but I'm not sure what we can do with no one else in the blockcaring to respond .
I looks like with RTM you need a group of leaseholders to set it up and agree...
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For the carpet , painting they did not share any comparison of costs for any of these just invoice
To think of it. The only comparative costs i can recall are for fire doors done. So they got them go quote how much replacing an individual door would cost, then they quoted slightly less to replace 1 door than the other comparison quotes.
In the end they only replace 1 door. The rest had bits upgraded at extortionate price. Mine was "upgraded" same with 10 other flats.
when I calculated all the invoices for the fire door works it came up to £7560. They charged us £12500 in total labelled fire safety works. Not sure where 6K has gone or what the rest of the "works" were done apart from the doors
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I'm taking a wild guess that not following the rules for charges (which to me looks as if it has happened) may mean that these can be challenged. And, I wonder if the management company may be less keen to continue being the management company if leaseholders know their rights and start taking action.0
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LeagueOfWolf said:
For the carpet , painting they did not share any comparison of costs for any of these just invoice
As I mentioned, if the cost of any works is more than £250 for any leaseholder - the freeholder should have done a section 20 consultation.
Assuming there are 12 flats, and each leaseholder contributes 1/12th of the service charge - any works costing over £3k in total requires a section 20 consultation.
If a section 20 consultation hasn't been done, you can challenge the cost at a tribunal.
For example, It sounds like you might have contributed £750 towards the carpet. If you win at tribunal, your contribution would be reduced to £250 - so you'd get a refund of £500.
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Hello,
Thanks for your responses I asked the management company they said they have adhered to section 20 consultation and did send us comparisons for all the stated works I don't recall any of this. I think the issue is I have not been on top of all these fees and invoices which are sent in large packs of letters. I didn't know we were allowed to refuse upgrade works either? I just assumed a block management decides for us but it seems every year they decide more and more.
She also explained to me their process and that our admin fees for each flat cost is high because of economies of scale...saying management blocks under 30 costs more . They charge each flat management fee of £500 + 15% of each contracting costs...I don't think I can argue their high admin costs.
I think they've been doing a good with correspondance and transparency but at the same time just doing what a business does whch is try to make money whilst adhering to regulations.
It seems by keeping within their own ecosystem and planning decoration works 1) they own the decoration maintenance company so they earn from this 2) they get % of contract fees 3) they can say theyre doing it to maintain our run down block of flats 4) it makes sense for them to keep planning decoration works every single year whilst we get billed for it and see no visible improvements.
I'm going to refuse the increase of service charge (if i can) and then spend time calling other block management companies for cost comparison. Because it makes sense now that they constantly plan upgrades and works that NONE of us have asked for or need. I really want to find a company that's not attached to their maintenance/contractors because they might make more ethical decisions based on what the block or residents actually needs and also find one at a better rate.
I've seen some others.online charge £250 a block with 10% admin fees on top of contracting work and the similar local ones all around charge far less service charge than us
Furthermore, Regarding section 20 consultation rights...does this include increasing our reserve fund? It used to be 260ish now they've doubled our reserve fund. They have "planned" works for every year but these haven't had surveyers come in to check nor are they urgent.
If i am to suggest to keep reserve fund at previous amount but spread any works over a longer period of time since they're not urgent. Is this allowed ??0 -
Does the lease give any specific timescale’s?
On our previous 80’s flat the lease bound the freeholder to redecorate (whiten and distemper the walls, paint communal doors, windows, skirting and replace carpets) the internals every 5 years and external doors,all windows, soffits etc every 6.
(they did consult and replace all the communal windows with UPVC to lose that cost going forward).
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Can you find all the "large packs of letters" and go through them. Yes, I know!!!! You/they use the word "comparisons" does that mean they haven't actually been getting proper quotes from other companies?1
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