Managing Agent not consulting or advising Leaseholders

Luckyspal

Background

I am a Leaseholder in one of two blocks of flats, the Managing Agent, who is notorious for failing to act in the best interests of the Leaseholders, or to keep Leaseholders or their Recognised Tenants Association timeously informed of management events, or their actions.

The Agent is currently overseeing a project to replace windows and cladding for the 2 blocks. Phase 1 scope of works was for Block 1. In this the Agent’s Surveyor, Designers, Contract Administrator and Main Contractor brought the works in much later than scheduled, well over budget, and this “team” failed to follow their own contract terms and conditions.

Current Situation

For funding of Phase 2 of the project the Agent requested Leaseholders to pay the full project funding by 1st July 2025. Most Leaseholders complied. Some Leaseholders however were unable meet the deadline and the Agent agreed that in such cases Leaseholders should contact him to arrange for a deferment of payment and an arrangement to pay in stages. At no time was this arrangement, or any associated cost implications of any deferment, disclosed to all Leaseholders.

Latest information from the Agent suggests that the Preferred Phase 2 tender contract price has increased by nearly 14%. Although not fully explained by the Agent, it appears obvious that the increase is due to escalation, in the period that contract award was delayed whilst full funding was awaited.

Whilst I have sympathy for Leaseholders who could not afford to meet the payment deadline, I think that the Agent had a duty of care to all Leaseholders to warn of possible cost penalties they could incur and seek their agreement before acting.

My Questions

Has the Agent exceeded his remit in the above deferment scheme and failed in his duty of care?

Should the Agent have investigated other means of funding the payment deferment scheme, e.g. short-term loan, before acting?

If the Agent failed in the above what actions are possible?

I would be grateful for any information or direction from Forum members.

TroubledTarts

Have you considered other factors that have made everything more expensive now as well. That 14% could be to do with materials and the cost of the US Iran conflict.

Contact the management company for a reason and challenge once you know the full facts.

eddddy

In legal terms, the charges you're being asked to pay would count as 'Service Charges'.

I guess the short answer is that if you believe that the Service Charges you are being ask to pay are not reasonable (either for the reasons you mention, or for any other reason) - you can challenge them at a tribunal.

But did the Managing Agent do section 20 consultations (assuming leaseholders are contributing more than £250 each)?

Are you being asked to pay more than the amounts stated in the quotes provided in section 20 consultation?

Those leaseholders who failed to pay their Service Charges on time would be breaching their leases. Normally, leases and the law would allow the Managing Agent to charge any extra costs resulting from the breach to those leaseholders.

i.e. If the cost has gone up because some leaseholders failed to pay, those leaseholders should be liable for the extra cost.

But it depends on what exactly the Section 20 quotes said, and maybe the wording of your leases, and possibly other factors as well.

Luckyspal

https://forums.moneysavingexpert.com/discussion/comment/81990126#Comment_81990126

Thanks for the response. The Tender submission deadline was 16 May 2025, well before the conflict. In fact, the Tender submission deadline was 4 days earlier than the deadline for Leaseholders' responses to stage 1. The tender documents also stipulated that the Tender price be fixed for 3 months (16 Aug 2025)

I have contacted the Managing Agent but as usual his tactics in such matters is to ignore the issue.

Luckyspal

https://forums.moneysavingexpert.com/discussion/comment/81990189#Comment_81990189

https://forums.moneysavingexpert.com/discussion/comment/81990189#Comment_81990189

Thanks for the response. I will deal with your points in the order made:

The Agent has used the term “Cyclical Maintenance” for the overall project costs and the increase I attribute to escalation.

Have[EP1] you any knowledge of such a challenge through the Tribunal or any Case Law that might be relevant? As you are probably aware, the majority of Leaseholders, being mostly elderly, are reluctant to invest any monies for legal assistance, etc.

Yes, the Managing Agent did go through section 20 consultations and leaseholders are contributing in excess of £9,000 each. Yes, we are being asked to pay more than the amounts stated in the quotes provided in section 20 consultation. The additional payment demanded was way in excess of £1,000/apartment, although the specific reason for the additional costs have never been detailed.

Is it possible that the Agent’s action in deferring certain Leaseholders’ payments by delaying the Main Contract award was outside of the Phase 2 project scope and, if so, he should have initiated another Section 20?

You stated that, “those leaseholders who failed to pay their Service Charges on time would be breaching their leases. Normally, leases and the law would allow the Managing Agent to charge any extra costs resulting from the breach to those leaseholders. i.e. If the cost has gone up because some leaseholders failed to pay, those leaseholders should be liable for the extra cost”.

Did the Managing Agent have a duty to make clear to all Leaseholders:

• the possible consequences of deferring the Phase 2 Main Contract award?
• That leaseholders who took advantage of his offer for them to defer payments were breaching their leases and that they would be liable for extra costs?

[EP1]

eddddy

Luckyspal said

The Tender submission deadline was 16 May 2025, well before the conflict. In fact, the Tender submission deadline was 4 days earlier than the deadline for Leaseholders' responses to stage 1. The tender documents also stipulated that the Tender price be fixed for 3 months (16 Aug 2025)

So it sounds like you're saying…

• There was a section 20 consultation

• The final cost to leaseholders was greater than the cost quoted in the section 20 consultation

There are many cases like that at tribunal. The tribunal makes a decision based on the specific facts of each case. For example…

• Were unforeseeable problems found after the work started?
• Was the cost a firm quote or an estimate?
• Was the cost increase the result of incompetence by the management company?
• Should another section 20 consultation have been done to deal with the additional cost?

In simple terms, at tribunal…

• You (the leaseholder) would say "I believe that the Service Charge is not reasonable because…"
• The management company would say "We believe that the Service Charge is reasonable because…"

And the tribunal would decide.

Luckyspal said

Did the Managing Agent have a duty to make clear to all Leaseholders:

the possible consequences of deferring the Phase 2 Main Contract award?

That leaseholders who took advantage of his offer for them to defer payments were breaching their leases and that they would be liable for extra costs?

Not really.

But a tribunal might say that a reasonable Managing Agent should have warned the non-paying leaseholders that they would face increased costs.

Taking a step back, I guess you could say that the Managing Agent has a duty to make sure that your Service Charge bill is reasonable (and a similar duty to other leaseholders). So they should take reasonable steps to ensure that's the case.