Service charge dispute, ground floor shop in a residential building

Sam_z

Hi all

I'm trying to find out if it's possible to dispute the service charges I'm paying my building's management company. The fees keep going up exponentially, and it's becoming unaffordable for me. I'm aware of the First-tier Tribunal system, but I think they only deal with residential properties if I'm not mistaken, so I was wondering if there's similar system for commercial properties? I should add that on the invoice that I receive from the management company it mentions that I "have the right to ask a First-tier Tribunal to determine whether you are liable to pay service charges" but I guess that doesn't apply to my case since my property is a shop with a long term lease. I'd appreciate any advice on this issue.

Many thanks

daveyjp

First tier is only applicable to residential tenancies.

You are in a business to business relationship and your lease will set out the terms of the service charge,  what you pay for and how it is calculated.

Generally it will cover:

repairs, insurance, maintenance, management and possibly sinking fund.  

You need to ensure you are only being charged for what is outlined in your lease and the amount is calculated correctly.

Some reading from Google,  I have no association with the company in the link.

https://harperjames.co.uk/article/service-charges-in-a-commercial-property-lease/

First port of call for any dispute is the landlord after you have read and understood your lease and what can and can't be charged for.

Sam_z

daveyjp said:

First tier is only applicable to residential tenancies.

You are in a business to business relationship and your lease will set out the terms of the service charge,  what you pay for and how it is calculated.

Generally it will cover:

repairs, insurance, maintenance, management and possibly sinking fund.  

Here are some of the things that the management company has invoiced me for: Audit/Accountancy, Accounting Fees, Company Secretary, Contingencies, D & O Insurance, Engineering Insurance, Postage/Couriers, Telephone

There are normal stuff like building insurance, but the items above are the ones that stand out. Having read the lease, it's not exactly clear if I'm liable to be paying for those. The management fee alone for my unit is £700 per annum despite it being completely self contained, so I feel being being ripped off. I called a solicitor today and was advised that it would cost £250 per hour, couldn't give me an estimate, which doesn't sound very promising.

Any idea if there's a company who would charge a fixed fee just to read my lease and tell me what I'm liable to be paying to the landlord and the management company?

daveyjp

First port of call is the solicitor who advised you when you signed the lease.

However if you read some of the guidance if they are going to charge you for these very specific items they should be referenced in the lease.  Wide ranging 'sweeping' clauses such as 'and any other costs deemed appropriate' or similar may not be effective.

The problem is you need deep pockets to even begin to take legal action.  So I'd start with reviewing the lease, see what specific items are included in the service charge and if the partiuclar items aren't listed ask them where it states you are required to pay for them.

However like all service charge debts you are advised to pay under protest and not withhold payment whilst you dispute the charges,

Savvy_Sue

Just wondering if yours is the only commercial property in the building? And if not, what the others do? For example, if you were a shop and the rest were serviced offices, then SOME of that might very well be services they were charging for. Which could explain why they've just billed you for it as well. 

But I'm certain daveyjp knows a lot more about this gubbins than I do, and they seem to have already given very good advice.

Sam_z

daveyjp said:

First port of call is the solicitor who advised you when you signed the lease.

However if you read some of the guidance if they are going to charge you for these very specific items they should be referenced in the lease.  Wide ranging 'sweeping' clauses such as 'and any other costs deemed appropriate' or similar may not be effective.

The problem is you need deep pockets to even begin to take legal action.  So I'd start with reviewing the lease, see what specific items are included in the service charge and if the partiuclar items aren't listed ask them where it states you are required to pay for them.

However like all service charge debts you are advised to pay under protest and not withhold payment whilst you dispute the charges,

Yeah, I already bit the bullet and paid them, even though their service is really poor and they take days and multiple followup emails to respond to questions. I'm currently looking for surveyor, hopefully I'll find one to have a look at my lease for £300-£400 and let me know exactly what I should be paying for. I think the lease itself is only around 15 pages so for someone who's familiar with this field of work and its jargon, it wouldn't take more than an hour to do it.

I can't help but think how much of rubbish system this is, how is it possible that I can not have a say as to who's managing the building just because my property is shop. There are companies who charge only £200 per unit, the fact that I'm paying £700 for incredibly poor service is really bothering me. This honestly feels like something that shouldn't be legal, I'm thinking about writing to my MP to seek more advice.

Sam_z

Savvy_Sue said:

Just wondering if yours is the only commercial property in the building? And if not, what the others do? For example, if you were a shop and the rest were serviced offices, then SOME of that might very well be services they were charging for. Which could explain why they've just billed you for it as well. 

But I'm certain daveyjp knows a lot more about this gubbins than I do, and they seem to have already given very good advice.

No, there are a few more commercial units, but they're big businesses (not offices) so I don't really know their situation as I don't know who owns them, they probably don't care too much about £3k service charge.