Over £4000 due to Guinness immediately?

Lorian

How does it over running by 9k leave your share to be 4k.

mathilde

They clearly failed to increase our service charges amounts enough back in 2023, when they were planning the works.

Or possibly they got less from the Sinking Fund than they originally planned. I've asked for an explanation on that point.

I've calmed down now and I'll wait to see what they come back with. I've raised complaints and contacted the Housing Ombudsman. 

Brie

mathilde said:

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.

And so they should give you a minimum of 2 years to pay your portion.

Is the share of the £9k divided fairly over the flats?  I know sometimes there are all sorts of ways to divvy these things up.

Jude57

mathilde said:

They clearly failed to increase our service charges amounts enough back in 2023, when they were planning the works.

Or possibly they got less from the Sinking Fund than they originally planned. I've asked for an explanation on that point.

I've calmed down now and I'll wait to see what they come back with. I've raised complaints and contacted the Housing Ombudsman. 

Just so you're aware and have realistic expectations, the Housing Ombudsman (like all such organisations) won't consider your complaint until you've exhausted the Housing Association's own complaints process. They have to be given the opportunity to correct any errors or omissions and to make good any faults before the Ombudsman will look into it. 

Like others, I don't understand how you are liable for almost half of the costs when there are three other flats in the block. Surely the cost should be shared between the four flats? I'd also be interested to know why there was no contractual obligations for the contractor to be penalised for the costs exceeding what was agreed between the parties. It's standard in construction contracts for the contractor to have to bear the burden of additional costs if those are incurred by no fault of the Housing Association. If the contractor under-estimated the costs, that shouldn't be your problem to resolve or pay for.

mathilde

The total amount due, from all the flats, is £129,000. So just over £4000 per unit.

That's what was left over after they paid the Sinking Fund toward the works.

So as far as I can see, the freeholder thought that there'd be more available from the sinking fund. Otherwise they should have raised our service charges back in 2023.

mathilde

So it's not actually that the project went over budget, they just should have raised the service charges earlier.

Sorry if it's confusing. I'm trying to work this out while doing my own job. 

RHemmings

I'm not a lawyer and this is not legal advice.

I believe that a 'drastic' (quoted from the OP) change in the cost of major works for which a S20 has been issued may invalidate the S20 itself. I've poked around online, and I haven't found a conclusive source on this. Most discussions online (e.g. case studies, lawyers opinions) discuss when the works are delayed. 

If the S20 consultation could be invalidated, then Guiness could only recover a maximum of £250 per leaseholder. 

I'm not suggesting that this is definitely or even likely the case here. But, I'm suggesting it might be worth obtaining proper advice on whether the S20 consultation might be invalid due to a 'drastic' cost increase. 

pinkshoes

mathilde said:

The total amount due, from all the flats, is £129,000. So just over £4000 per unit.

That's what was left over after they paid the Sinking Fund toward the works.

So as far as I can see, the freeholder thought that there'd be more available from the sinking fund. Otherwise they should have raised our service charges back in 2023.

So the quote for the total works was much MORE than the above, but they miscalculated how much the service charge needed to be raised, so have just realised they're now £129k short, which is about £4k per unit?!?

That doesn't sound right.

I'd be looking through copies of the S20 consultation and check it was done properly. Plenty of documents online showing the procedure, and if it hasn't been done properly, they can't ask you for more than £250. 

I'm pretty sure they can't just demand £4k immediately. 

HampshireH

RHemmings said:

I'm not a lawyer and this is not legal advice.

I believe that a 'drastic' (quoted from the OP) change in the cost of major works for which a S20 has been issued may invalidate the S20 itself. I've poked around online, and I haven't found a conclusive source on this. Most discussions online (e.g. case studies, lawyers opinions) discuss when the works are delayed. 

If the S20 consultation could be invalidated, then Guiness could only recover a maximum of £250 per leaseholder. 

I'm not suggesting that this is definitely or even likely the case here. But, I'm suggesting it might be worth obtaining proper advice on whether the S20 consultation might be invalid due to a 'drastic' cost increase. 

Section 20 is a notice of estimates based on tendered quotes they shouldn't be too far off but It likely wouldn't be realistic to stop major world halfway through to rescope without incurring significantly more costs to leaseholders.

The s.20 notices will also depend on how the contractor was procured either on a QLTA or bespoke works

Realistically there should have been a contingency built it which would have been part of the consultation and avoided this scenario.

There isn't a hard and fast rule on how much over the estimate can be recouped by freeholders as far as I know.

The OP as always has a right to challenge through the FTT. There isn't a requirement to go through the complaints process with the HA first through it is recommended to do so as may save going down the FTT route 

mathilde

I've finished work now and fished out the consultation.

The total overall amount for the works was correctly stated, but then they said, in essence, 'We're going to pay it from the sinking fund, and then raise your service charges to pay for the rest'. They didn't specify how much would come from the sinking fund.

Evidently they forecast that the service charge we'd all have to pay for line line item of Major Works for 2023-24 would be £0. 

The sinking fund only paid some of the costs, so there was a leftover amount of £129,000 to be paid from services charges.

So they were wrong to estimate £0 for 23-24. The service charge for that line item should have been £129,000 for all the residents. £4000 per unit.

We just found all this out today. Random letter. Oopsie, pay us £4000 right now!

Had they raised the service charge correctly back in 2023, it would have been £166 per month increase and all paid off by now. Totally reasonable.