Service charges - should I pay in advance and who is controling the costs?

Brooched

I'm a leaseholder of a flat in a building where approx 80% of flats are council flats (approx 20 flats in total). Council owns the building

1) I receive from the council the estimated service charges first(usually between Apr and June. So for 20/21 I'd receive them in June 2020 for example) Then, a 1,5 years later, actual ones. Actuals are always higher than were the estimates.

Over the past 6 years the service charges has tripled. (The  2024-2025 below is an estimation the rest are actual charges):
1 Apr 2018- 31 Mar 2019 - £370
1 Apr 2019 - 31 Mar 2020 - £520
1 Apr 2021 - 31 Mar 2022 - £720
1 Apr 2022 - 31 Mar 2023 - £730
1 Apr 2023 - 31 Mar 2024 - £930
1 Apr 2024 - 31 Mar 2025 - £1150 

In the last estimated serviced charges for 2024-2025 I see electricity prices have doubled even though they are going down in general and didn't double for sure. Plus 1.5 times the costs of ground care taking has increased . I wrote to the council (who is sending the letter) questioning this , but they said that I should wait for the actual service charges are issued. This will happen in Sept 2025. But.. I am requested to pay now according to the estimated, i,e year and a half in advance! Anything I can do to control their charges? Who is supervising such matters? 

2) Despite the charges for the Apr 2024- Apr 2025 being just an estimate and, as it stands, me not being able to question them, I'm required to pay them. The letter requests monthly payments (demand for payment) in instalments for the period 2024-2025 (£1150) rather than stating that by 31 Mar 2025 the outstanding balance should be cleared.  
Do they have legal rights to do that? I was not issued an invoice  (Invoice arrives only when the actual charges are being calculated, I.e I can only have it in Sept 2025). 

PS: I also see that the service estimate letter before the 21/22  had a tax point date which was the beginning of the corresponding period (i.e 1 Apr 2021 in this case) and there was no any demand to pay in instalments.  But after the 2022 the Tax point has disappeared from the letter and payment by instalments is required. In one of the letters they say that they are attaching an invoice, but it clearly states that it's a demand for payment

Can you please advise on the points above

Thank you very much in advance!

HampshireH

Communal electricity is likely to be on a business tariff and locked in. If that's the case you won't see domestic rate cuts apply.

Chances are the actuals will only go up. 

eddddy

Brooched said:

Anything I can do to control their charges? Who is supervising such matters? 

The law says that Service Charge demands (bills) must be reasonable. That includes demands for estimated service charges in advance.

If you believe that your estimated service charge demand is unreasonable, you can challenge it at a tribunal (but you'll need to explain why it's unreasonable).

As  starting point, you can ask the council how they calculated the estimated electricity costs and estimated ground care costs - to help you decide whether you think they're reasonable.

Here's some info about making a challenge at a tribunal: https://www.lease-advice.org/faq/how-do-i-make-an-application-to-the-first-tier-tribunal-property-chamber-for-my-service-charge-to-be-determined/

Brooched said:

2) Despite the charges for the Apr 2024- Apr 2025 being just an estimate and, as it stands, me not being able to question them, I'm required to pay them. The letter requests monthly payments (demand for payment) in instalments for the period 2024-2025 (£1150) rather than stating that by 31 Mar 2025 the outstanding balance should be cleared.  
Do they have legal rights to do that? I was not issued an invoice  (Invoice arrives only when the actual charges are being calculated, I.e I can only have it in Sept 2025). 

You should read your lease to find out when Estimated Service Charge payments need to be paid. Your lease is your contract, you are bound by what it says.


But sometimes a lease says you must pay the whole Estimated Service Charge in advance by 1st April 2024, for example, but the freeholder (council) offers you a 'side deal' which allows you to pay monthly. 

The legal position would be that if you don't like the terms of the lease (e.g. when the estimated service charge must be paid), then you shouldn't have bought the lease.

daveyjp

The 11% inflation we experienced worked is way through every part of the supply chain, minimum wage has increased, insurance has increased massively over 3-4 years, business electricity (and in particular standing charges) is more expensive.  All these add to the increases you are experiencing.