Service Charge Increase for my property

henrygregory

Good evening all,
I am looking for some advice. I own a shared ownership property. Earlier in the year, I got my forcasted service charge document outlining how much I would need to pay for my property. As I am in a new build house (2018), I have to pay an annual service charge. This charge includes the following three components:
Managing Agent Services, Administration Fee, Buildings Insurance.

I have today had through the actual service charge certificate and I am shocked to see that the estimated vs actual for the above three respective components is 37.37%, 64.85% and 37.39% increases. This means the total service charge has increased byt 37.37%. This seems a very large jump. As I live in a house, the costs are mainly for grounds maintenance, street lighting, roads which are non-council adopted etc. As the development is still quite new, no works have been done to the roads, there doesn't appear to have been any major works and I have not been notified of anything significant. 

Has anyone else had similar? I have had cause to complain on multiple occasions as the grounds have not been maintained and still have not, so have many, many other residents. The certificate of service charges provides no further information on how these figures have been generated otehr than the three component costs mentioned above. There is absoloutely no breakdown or explanation for why it is jumped almost 40%.

Any advice would be greatly appreciated. 

gm0

At one level unremarkable.  MA costs are through the roof.  Energy (offices). Staff pay.

MA prices respond to MA costs but only via the agreed contract with the freeholder (whoever that is).  Or when it is relet. (big rise all at once as the price resets to bids to do it at all).  MA's are for the most part profit driven businesses.  Sites x Fee for scope.  

A tiny local mom/pop shop can be half the price or less of a more professional outfit.  And yet you are dependent on the tiny pool of admin staff and proprietor.  Amateur hour.  You don't pay much.  You don't get much.  Be careful what you wish for.   Fully professional modern and transparent with good online accounting.  Exists.  But this industry is fairly archaic.  You can get a lot of transparency and improved confidence and audit trail.  And double the MA fee.

A freeholder can ask an MA to "do less" "for less" but is constrained by a legal set of minimums - which will need to be in there to meet legals and remain "within" the insurance cover.

Communal energy at your site (if applicable) will have shot up and likely had a deficit to recover from the cost spike year (Ukraine).

Anything that happens requiring construction/building materials and services related to that. Huge uplift.
That also flows into buildings insurance cost as rebuilding is now massively more expensive - claim sizes = premiums.  Sensible size of rebuilding cost adjusted up = premiums.

MA's can be lazy (have chummy relations with subbies), be unresponsive (due to allocating only a small amount of payroll hours per year to being interested in resident concerns).  It is common to rate limit responding to things through the allocated staff pool fixed to the contract pice.  The trivial way to manage it.  MAs are pretty much universally hated.  As they are never doing what I want quickly enough and are wasting time on what you want.  And cost too much and do too little.   Thick skin required to work there. 

They can also make decisions that you don't like but which keep cost down.  Gardening is a classic.  Attentive and effective with actual skills is available - at a price.  Which will be added to service charge.  Cheaper mow and blow and doesn't always show up - is also widely available.

Very few MA's do much if any on site supervision of sub-contractors to check the work quality or time spent.  But then very few MA's are in fact being paid for the staff time to do that.  So while residents might wish it so - it isn't what is happening. Nor do they have staff with relevant building industry skills for the most part to do actual project management style supervision. Painting, redecorating etc.  To say this causes a few issues is to radically understate it.

But admin could be anything.    Costs of actual stuff. 

Or debt chasing (based on payment issues at your site or other prior issues and terms in their contract that let this be a variable cost rather than core to fee depending on how much there is.

On stuff - if there are lifts then you have lift callout release/repair contracts, service/maintenance contracts.  If you have parking and fobs and systems - these exist, are replaced and administered by someone. 
Guttering.  Fire inspection.  Alarms.  Etc. 

It can be quite a long, or quite a short list - depends on the site.  If there are only 3 buckets.  Then the annual costs of fettling the things you can see.  Are in one of them

eddddy

henrygregory said:

I own a shared ownership property. 

If it's shared ownership, I assume it's leasehold.

Therefore, you can request a summary of the costs, and ask to see the actual invoices/receipts that you are being asked to contribute towards.

See: https://www.lease-advice.org/faq/how-can-i-find-out-what-my-service-charge-is-being-used-for/

Browntoa

I used to be involved with a residents association dealing with the MA 

We used to get yearly breakdowns of proposal for next year's charges which we were able to challenge ( quite successfully actually as we had an experienced auditor on the association) and would be given a veto on proposed unplanned expenditure. 

We also got visibility of the tendering process, expected 3 tenders, and chose our preferred tradesman.

They should give you a detailed breakdown each year 

Remember that they should be building pots of money for shared stuff like drainage and possibly road and sewage pipe repair and long term funds for replacements of communal roofs etc 

You have the right to a resident association 

henrygregory

Thank you all. I really appreciate your posts. Very helpful.  

henrygregory

Hello everyone, an update...

I wrote to the HA in question in October. My correspondence was read and the HA confirmed this on 20th October 2024.

I have had to chase the HA once. I have had no response at all other than confirmation that the HA has my correspondence. What is an acceptable amount of time to wait for a response?

eddddy

henrygregory said:

Hello everyone, an update...

I wrote to the HA in question in October. My correspondence was read and the HA confirmed this on 20th October 2024.

I have had to chase the HA once. I have had no response at all other than confirmation that the HA has my correspondence. What is an acceptable amount of time to wait for a response?

Do you mean you wrote under Section 22 of the Landlord and Tenant Act 1985 requesting to see invoices, receipts etc?

If so, the landlord (HA) has a month in which to make them available.

If they don't, you can report the Landlord to the Local Housing Authority (i.e. the council) who has the power to prosecute the Landlord.


Or was your letter/email about ,something else?

henrygregory

eddddy said:

henrygregory said:

Hello everyone, an update...

I wrote to the HA in question in October. My correspondence was read and the HA confirmed this on 20th October 2024.

I have had to chase the HA once. I have had no response at all other than confirmation that the HA has my correspondence. What is an acceptable amount of time to wait for a response?

Do you mean you wrote under Section 22 of the Landlord and Tenant Act 1985 requesting to see invoices, receipts etc?

If so, the landlord (HA) has a month in which to make them available.

If they don't, you can report the Landlord to the Local Housing Authority (i.e. the council) who has the power to prosecute the Landlord.


Or was your letter/email about ,something else?

Thank you, yes that is correct. 

I will do so now, thanks that was really helpful. 

henrygregory

eddddy said:

henrygregory said:

Hello everyone, an update...

I wrote to the HA in question in October. My correspondence was read and the HA confirmed this on 20th October 2024.

I have had to chase the HA once. I have had no response at all other than confirmation that the HA has my correspondence. What is an acceptable amount of time to wait for a response?

Do you mean you wrote under Section 22 of the Landlord and Tenant Act 1985 requesting to see invoices, receipts etc?

If so, the landlord (HA) has a month in which to make them available.

If they don't, you can report the Landlord to the Local Housing Authority (i.e. the council) who has the power to prosecute the Landlord.


Or was your letter/email about ,something else?

Just had a quick read of my email to them, I actually sent it 16th October not 20th and put this at the bottom: 

In light of the unexpected and unexplained rise in the service charge, I formally reque​st a summary of service charge costs under Section 21 of the Landlord and Tenant Act 1985. Specifically, I would like the summary to include:
 

1. A detailed breakdown of the costs that have been incurred.

1. Information on how these costs have been or will be apportioned among the leaseholders.

 
 
I look forward to your prompt response on this matter.

 

Is this still a breach? I note that i did not include Section 22 in my email. If so, I will contact my local council first thing tomorrow and get this reported. Original email sent on 16th Oct, I chased HA again on 15th November. All I have had in response is a reference code stating my query has been passed on. 

eddddy

Section 21 is correct if you want a Summary of Accounts (So your email is correct.)

Section 22 would be if you want to see invoices, receipts etc.

Just to add - the timescale under section 21 is: Within 1 month of your request or within 6 months of the Service Charge year end - whichever is later.


So if the relevant Service Charge year ended less than 6 months ago, you have to wait to the end of 6 months

But if the Service Charge year ended more than 6 months ago, you only have to wait one month

henrygregory

eddddy said:

Section 21 is correct if you want a Summary of Accounts (So your email is correct.)

Section 22 would be if you want to see invoices, receipts etc.

Just to add - the timescale under section 21 is: Within 1 month of your request or within 6 months of the Service Charge year end - whichever is later.


So if the relevant Service Charge year ended less than 6 months ago, you have to wait to the end of 6 months

But if the Service Charge year ended more than 6 months ago, you only have to wait one month

eddddy said:

Section 21 is correct if you want a Summary of Accounts (So your email is correct.)

Section 22 would be if you want to see invoices, receipts etc.

Just to add - the timescale under section 21 is: Within 1 month of your request or within 6 months of the Service Charge year end - whichever is later.


So if the relevant Service Charge year ended less than 6 months ago, you have to wait to the end of 6 months

But if the Service Charge year ended more than 6 months ago, you only have to wait one month

Thanks,
The letter I had through in September 2024 was titled: ‘ Your actual service charges for 2023-24’.
I would assume this would cover April 2023 to April 2024.

I contacted the HA on 16th October 2024 and despite chasing, I have heard nothing. I had initially asked for just the Section 21 stuff and was then going to ask for the Section 22 stuff if the response was not detailed or didn’t make sense.

Do you think it would be worth me reporting this HA to my local council as it has failed to respond to my Sec 21 request in good time. If the accounting year ended in April 24 for which they are asking for money and I asked for clarification less than a month after their letter came in September, and it is now December, I don’t really feel they have made any effort to provide me with information as to why the charges are almost double.