PLEASE READ BEFORE POSTING

Hello Forumites! In order to help keep the Forum a useful, safe and friendly place for our users, discussions around non-MoneySaving matters are not permitted per the Forum rules. While we understand that mentioning house prices may sometimes be relevant to a user's specific MoneySaving situation, we ask that you please avoid veering into broad, general debates about the market, the economy and politics, as these can unfortunately lead to abusive or hateful behaviour. Threads that are found to have derailed into wider discussions may be removed. Users who repeatedly disregard this may have their Forum account banned. Please also avoid posting personally identifiable information, including links to your own online property listing which may reveal your address. Thank you for your understanding.

High Service Charge Increase

I wounder if anyone can provide me with help

Last years service charge was sent as an "estimated service charge invoice" as it does every year i assume. I paid it in full.

This years "estimated service charge" invoice has increased by £250 which is high but yes costs have gone up. However we're also being charged for a "shortfall in service charge" for 2023 of £210, can they do this? It seems very unfair to wait until the 2024 service charge to add this on because they didn't charge enough last year.
«1

Comments

  • user1977
    user1977 Posts: 13,377
    First Anniversary First Post Name Dropper Combo Breaker
    Forumite
    Would you have preferred that they charged you more last year instead? It seems clear it was merely an estimate.
  • eddddy
    eddddy Posts: 16,145
    First Anniversary First Post Name Dropper
    Forumite
    edited 26 December 2023 at 9:57AM

    A service charge is almost always "your share of all the bills that need to be paid during the coming year".

    (For example, your lease might explain that you have to pay 10% of all the bills relating to your building - for insurance, repairs, maintenance, etc)

    So the management company tried to estimate (guess) in advance how much all the bills would be, and it sounds like they estimated (guessed) too low.

    Maybe the cost of electricity was higher than they expected, and/or they had to arrange more repairs than they expected, and/or the buildings insurance premium was more than they expected.


  • Marky4040
    Marky4040 Posts: 113
    First Anniversary First Post
    Forumite
    edited 26 December 2023 at 10:03AM
    user1977 said:
    Would you have preferred that they charged you more last year instead? It seems clear it was merely an estimate.

    Yes i would actually, i mean come on, most of what they charge for is difficult to rationalise anyway since they only send you headings like "ground maintenance" "repairs" "electricity" etc . You don't actually get to see the bill they were sent do you.
    Anyway all other annual bills are fixed aren't they so you know what you're paying annually. 

    I accept your point about the estimate but it seems a little unfair to whack on an additional £400 for this year. If you're paying "managment" and "accountant" fees as part of the charge, shouldn't they be abit more accurate with the estimate? How are you supposed to budget your annual bills?
  • Service charge for... garage, flat, ??

    What does your agreement or lease state on the matter please? Without knowing that, difficult to comment....
  • user1977
    user1977 Posts: 13,377
    First Anniversary First Post Name Dropper Combo Breaker
    Forumite
    There are ways of challenging what they're spending, if that's what you actually have a problem with. But the principle of paying an estimate on account, which gets adjusted after the actual amounts are known, is the norm.

    And yes, they may employ professionals, but none of them has a crystal ball. Do you know what all of your own expenses are going to be for the coming year?
  • Service charge for... garage, flat, ??

    What does your agreement or lease state on the matter please? Without knowing that, difficult to comment....

    For an apartment mate. I can't find anything in the lease which talks about service charge for the previous year, only that i'm responsible for paying the service charge and can contest at tribunal etc if i think it's unreasonable.

    I just think it's a little unfair to be asking for last years shortfall in the new service charge year. Premier Estates is the MC
  • So are you saying the management company should run at a loss of £210 per property?
    "I can lead you to the money saving well but cannot make you drink from it"

    As mum always said "don't respond to imbeciles just ignore them" wise words mum 
  • One way that legislation etc protects you is that the management co can only set an annual change based on the previous years expenditure, inflation plus any extra costs that have been agreed for the next year. 

    This is very prone to undercharging because a cost suddenly increases or you get an unexpected repair etc. 

    They could have a surveyor do an annual check but they would identify so many problems that's your service charge would easily treble.

    You have to balance the books, you can't keep on making a loss nor making a profit.
  • Jonboy_1984
    Jonboy_1984 Posts: 1,195
    First Post First Anniversary Name Dropper Combo Breaker
    Forumite
    The estimated service charge is for the flats financial year. They have 9 months after the financial year to finalise and reconcile the accounts and confirm the estimate covered all charges. The end result should be break-even. 

    Unforeseen expenses can include things such as vandalism, uninsured(or less than insurance excess) weather damage, flytipping by tenants, wear and tear found in routine inspections, other random things, or in our last flat the cleaning contractors going bust halfway through the year and the new company being vat registered pushing up the costs by 20%.

    As a leaseholder you have agreed to pay your share of all these costs by buying the lease (contract) and the estimate up front/balance later is a normal way of collecting the funds.
    If they underspend the funds collected, the excess balance should be deducted from the next year's budget
    Some blocks also have a sinking fund built up over a few years to cover such expenses in the first instance but you then pay to top it back up

    N. B. Extra costs over £250 per flat for an individual expense should be consulted on in advance via the section 20 unless an emergency repair is needed.

    I must admit I think the way these responsibilities are not often explained properly by the legal profession when buying isnt ideal... 
  • What do your fellow apartment owners say about these charges?   I'm happy to be billed as late as you like, although it's helpful to know what's coming.  

    How long have you owned it?

    Best regards 
Meet your Ambassadors

Categories

  • All Categories
  • 341.8K Banking & Borrowing
  • 249.7K Reduce Debt & Boost Income
  • 449.2K Spending & Discounts
  • 234K Work, Benefits & Business
  • 606.2K Mortgages, Homes & Bills
  • 172.5K Life & Family
  • 246.8K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 15.8K Discuss & Feedback
  • 15.1K Coronavirus Support Boards