Over £4000 due to Guinness immediately?

mathilde

Good afternoon everyone.

I'm sitting here in disbelief. I own my flat, and Guinness is the freeholder. I pay a service charge each month.

We had Major Works to the building last year, and accordingly the service charge was raised for a while.  I remember getting statements about it, all seemed in order.

Then this afternoon I got a letter from them that they'd underestimated the amount of my service charge for last year. The itemised statement showed that they'd drastically underestimated the Major Works. So they say they underestimated my service charge of last year by £4000, and so they undercharged me, and I now need to pay that £4000 balance immediately. With no notice.

I rang (spent an hour on hold) and the man in the accounts team said yes, it is payable immediately, but they had discretion to make a payment plan, like half today and then monthly installments. I said I needed time to consider.  

I have no problem paying for the works but thought it was common practice to increase the service charge? Rather than treat it as a debt?

I know by law I can ask for receipts, and I've done so. I've also made a formal complaint and asked for their Stage 1 response.

Has anyone dealt with this? I want more info before I agree to pay a random £4000, but equally don't want them to hand it over to a debt collector while I get more info.

Mark_d

Where the monthly service charge for the year has been less than the costs, I think it's normal for this to be charged all in one go.

mathilde

I appreciate the response, but im still in disbelief.  I dont have £4000 in easy access savings. This is normal to receive no notice for a debt of £4000 to be paid immediately?

mathilde

Is it not normal to just raise the service charge?

itsthelittlethings

If it’s major works they should have issued you a section 20 (?) notice of how much it would be etc. They have definitely screwed up somewhere along the line.

mathilde

Yes, they sent notice when they were planning the works, saying that our service charges were going up to pay for it, nd accordingly everyone's monthly charge went up by £20.

Now they're saying that they underestimated.

I'll see what they send me. If nothing else I'll tell them I can pay £50 extra per month and no more. I'm not draining my savings account for their mistake.

Olenna

I would personally:

1. Confirm if the amount is due.
2. Assuming that you're satisfied that it's due then look for a instalment plan along the same duration as their error (seemingly 10-12 months) 
3. Make a contingency pot for future costs or look for a freehold/share of freehold or commonhold property.

DullGreyGuy

Was there a Section 20 consultation on the major works?

What was the value of the estimates? What was the value of final invoices?

How much was in the sinking fund before this year? How much is there in it now?

Service charges are often charged in advance based on an estimate and then trued up at the end of the year. How often service charges are billed and what happens if there is a large mid year change can impact how likely a shortfall. 

Brie

Shouldn't they have to reissue the section 20 (or whatever) notice with a revised amount for the works?  

In any case I agree that as it's their error they need to give you time to pay and I would expect that to be at least as long as the time since the first notice was received.  So minimum 1 year at the very least.  

silvercar

I’d speak to your neighbours, clearly not everyone even has £4,000 in savings, let alone available immediately. Also, if they didn’t go through the correct procedures on consulting and notification originally they may not be able to call in the payment.

mathilde

Update: they sent me a copy of the invoice from their contractor. The project went over budget by £9000 (for the whole building, not per unit).

So it's their mistake, they should have started recouping through service charge increases over two years ago.