Extortionate Service Charge request and late notice

DownToContest900

DullGreyGuy said:

DownToContest900 said:

Even my solicitor scoffed when I mentioned the amount of £17k. No way the normal person has this laying around waiting for repairs without any due diligence or notice. Makes you sick  

Better than many, plenty of stories of leaseholders getting massive bills for significant repair work required on their buildings, worse are ex local authority as they dont have sink funds so you get cases like the guy getting a £146,257 for their one bed flat in a high rise tower block. 

Our last place, we rented, was on its way to massive bills hence the service charge (on a share of freehold) was £8,000 per year to build the sink fund. The quote for the scaffolding alone had been over £1m and that was 10 years ago. 

Crikey that makes me feel so bad for those that aren't in a position to question it.

DownToContest900

thegreenone said:

My late Mums flats (3 blocks) were scheduled for reroofing.  It was needed.  I think there was at least six months of discussions, meeting and quotes.  They were Share of Freehold.  Once agreed,  the residents had a year to pay the £10k per flat via Installments, if they preferred.


Do you think the 25 date should be 26?  But even so you should definitely have received a section 20 first.  Perhaps the previous owner received one but kept quiet to sell.  But that should've been in the management pack.

Thankfully at least although the cost is still significant, it sounded like they did the due process and everyone was 'happy' with the works costs and plan prior to any money being demanded. I know for certain we didnt receive a section20, nor was it in our paperwork. The conveyancer is very thorough and I have everything on file when we receive any comms from the management company. No emails, no letters, nada. A pity

saajan_12

DownToContest900 said:

In the first year we paid 3,000 as they had a ton of extra maintenance which the sink fund did not cover.

..

Last week we received a quote for the 25/26 charge -- £17,222.15 EACH. They want to replace EVERY roof on 4 blocks (36 flats). Apparently this will cost £534,000. They have set the payment due date of 26/06/25?!

While extra maintenance wouldn't usually come out of a sinking fund, replacing roofs at a cost of 5x the usual annual spend certainly sounds like a prime candidate for sinking fund. 
Do you know why this isn't being used, or is the 17k just the excess cost after clearing out the SF? When you say the sinking fund didn't cover it, do you mean there wasn't enough money or the charges weren't deemed in scope? 

DownToContest900 said:

Reasoning is - They surveyed the roofs. They need new roofs. Previous management company did not transfer any guarantee or warranty of previous works done (only 5 years ago) hence freeholder has given the go ahead for our management company to start gathering the funds. We absolutely cannot afford this.

From my understanding and deep hole of researching last week once we received this mental estimate was that the management company should have served a section 20 notice, indicating they were looking into doing the works... and then they should have ideally consulted every leaseholder about what needs doing, what it'll take and what it'll cost along with relevant quotes.

Several questions from this: 
- why weren't the guarantees transferred - that sounds like the freeholder's negligence and should be followed up with the original tradespeople and/or original management co. Changeover of managment co isn't a free ticket to charge leaseholders more. 
- How urgent really are the works - if they arose from a survey not a symptom, then what's the harm in waiting 3 months to go through the S20 process properly? 
- what caused the deterioration in just 5 years - if it wasn't caused by the original tradespeople then was there damage from an insured event? 

Maahes

DownToContest900 said:

DullGreyGuy said:

DownToContest900 said:

Even my solicitor scoffed when I mentioned the amount of £17k. No way the normal person has this laying around waiting for repairs without any due diligence or notice. Makes you sick  

Better than many, plenty of stories of leaseholders getting massive bills for significant repair work required on their buildings, worse are ex local authority as they dont have sink funds so you get cases like the guy getting a £146,257 for their one bed flat in a high rise tower block. 

Our last place, we rented, was on its way to massive bills hence the service charge (on a share of freehold) was £8,000 per year to build the sink fund. The quote for the scaffolding alone had been over £1m and that was 10 years ago. 

Crikey that makes me feel so bad for those that aren't in a position to question it.

He wanted to be a landlord Hope he's been paying tax on the rent now he's all over the Guardian.

DownToContest900

All great points again - 

I received a response from the management agent this evening

"Unfortunately you cannot insure against general wear and tear, as insurers specifically exclude against anything that is considered a 'gradually operating cause'. The cost is based on the most competitive estimate received by the surveyor, along with theirs and our fees. We have also have to allow for an increase in costs, given that we will not be able to instruct works until funds are received, at the end of this budget year (May26)" --- This is interesting. No where have we received a breakdown of what the management company or surveyor are taking as payment. They are also OVER charging to account for the money not coming in till next year and ONLY THEN will they instruct the work to take place??? This blows my mind. How can you request funds for a quote that will not be instructed till next year, which will be obsolete, so you will artificially INCREASE the amount asked to account for any hedging. Sounds so whack.


Sinking fund each year is 15k. We had 40 accrued back in 2022 and it was spent on maintenance and crap throughout the buildings. In 2023 we had 15 and the service charge went up to 3k (from 2) so the fund could be increased to 50k to anticipate roof works. This suggests they were preparing for the costs last year. How we have gone from 50 to soften the blow to actual 540 blows my mind.

Been speaking to my old neighbour this evening who has been here for 20 years. Apparently section 20 was served in June 24. This of course means they have had a year to obtain quotes and surveyor approvals etc however there were no follow ups from the Section 20. We did not receive a letter nor email with notice but this was around when the management company changed hands so can only assume admin error.

Another development - People have been ballparking 4-5 years but the roof was in fact worked on in 2014! This changes the argument somewhat? I'm unsure on what a reasonable lifetime would be for flat asphalt roofs.

I have dropped a note into every flat with my name and number hoping some fellow leaseholders come forward and can help enlighten on the subject. Really hoping more than me and 1 neighbour are up for contesting this.

I apologise if any of this is bloated but I love to share the details

RHemmings

DullGreyGuy said:

DownToContest900 said:

Even my solicitor scoffed when I mentioned the amount of £17k. No way the normal person has this laying around waiting for repairs without any due diligence or notice. Makes you sick  

Better than many, plenty of stories of leaseholders getting massive bills for significant repair work required on their buildings, worse are ex local authority as they dont have sink funds so you get cases like the guy getting a £146,257 for their one bed flat in a high rise tower block. 

Our last place, we rented, was on its way to massive bills hence the service charge (on a share of freehold) was £8,000 per year to build the sink fund. The quote for the scaffolding alone had been over £1m and that was 10 years ago. 

From the article: 

"Southwark is also offering to buy back properties of both residents and landlords at full market value." 

That option looks generous to me.

eddddy

DownToContest900 said:

The cost is based on the most competitive estimate received by the surveyor, along with theirs and our fees. We have also have to allow for an increase in costs, given that we will not be able to instruct works until funds are received, at the end of this budget year (May26)" --- This is interesting. No where have we received a breakdown of what the management company or surveyor are taking as payment. They are also OVER charging to account for the money not coming in till next year and ONLY THEN will they instruct the work to take place??? This blows my mind. How can you request funds for a quote that will not be instructed till next year, which will be obsolete, so you will artificially INCREASE the amount asked to account for any hedging. Sounds so whack.

This sounds like it could be similar to a tribunal case I came across - which unfortunately the leaseholders lost.

Mapping that tribunal decision onto your situation, it might be like this:

• Many leases say that the management company / freeholder can collect an estimated service charge at the start of the year. But the estimate must be reasonable. The estimate can be made and demanded before a section 20 consultation takes place.

• It sounds like the estimated service charge of £17k is based on quotes received by a surveyor - so it might be considered reasonable

• However, before the work can be done, there must be a section 20 consultation.

• It may be that when the section 20 consultation is eventually done, it results in much lower quotes than initially estimated, so the estimated service charge was too high (by say £2k or £4k or £6k or whatever). So you will be left with a £2k or £4k or £6k surplus which will be carried forward towards your service charge in the following year.

But that doesn't stop you challenging the surveyor's fee or the management company's fee if you believe they are not reasonable.

And it doesn't stop you challenging the cost of replacing the roof, for example, if you think the roof doesn't need replacing and/or it can be repaired more cheaply.

(But it sounds like a surveyor has said it needs replacing. So you'd probably need to find an equally qualified, or better qualified surveyor who says it doesn't need replacing - and let them argue it out at a tribunal.)

DownToContest900

eddddy said:

DownToContest900 said:

The cost is based on the most competitive estimate received by the surveyor, along with theirs and our fees. We have also have to allow for an increase in costs, given that we will not be able to instruct works until funds are received, at the end of this budget year (May26)" --- This is interesting. No where have we received a breakdown of what the management company or surveyor are taking as payment. They are also OVER charging to account for the money not coming in till next year and ONLY THEN will they instruct the work to take place??? This blows my mind. How can you request funds for a quote that will not be instructed till next year, which will be obsolete, so you will artificially INCREASE the amount asked to account for any hedging. Sounds so whack.

This sounds like it could be similar to a tribunal case I came across - which unfortunately the leaseholders lost.

Mapping that tribunal decision onto your situation, it might be like this:

• Many leases say that the management company / freeholder can collect an estimated service charge at the start of the year. But the estimate must be reasonable. The estimate can be made and demanded before a section 20 consultation takes place.

• It sounds like the estimated service charge of £17k is based on quotes received by a surveyor - so it might be considered reasonable

• However, before the work can be done, there must be a section 20 consultation.

• It may be that when the section 20 consultation is eventually done, it results in much lower quotes than initially estimated, so the estimated service charge was too high (by say £2k or £4k or £6k or whatever). So you will be left with a £2k or £4k or £6k surplus which will be carried forward towards your service charge in the following year.

But that doesn't stop you challenging the surveyor's fee or the management company's fee if you believe they are not reasonable.

And it doesn't stop you challenging the cost of replacing the roof, for example, if you think the roof doesn't need replacing and/or it can be repaired more cheaply.

(But it sounds like a surveyor has said it needs replacing. So you'd probably need to find an equally qualified, or better qualified surveyor who says it doesn't need replacing - and let them argue it out at a tribunal.)

You could be right in suggesting that this is all above board and a qualified/vetted surveyor picked the best quote qith warranted fixes. Its just infuriating that we received no warning of this huge cost coming and its being demanded prior to any work even being done, with a padded buffer to allow for delays. We all paid 1k extra last year to go towards this roof and there's no proof whatsoever that it was used for the proposed works...

I have yet to get response on what the surveyor and management company fees are but we wont be paying anything until its clearer