Can Managing Agent Increase Charges by over 50%?

Codswallop

We purchased our flat a few years ago. The managing agents charge a six monthly fee for the upkeep of the block etc. All fine and well. In December we received a letter informing us that due to water damage in many of the flats, the fees have increased by 50% :eek: due to the insurance premiums increasing in response to this.

Does anyone know if it is acceptable for them to increase their charges by such an enormous sum? Isn't the fact that the water damage has occured something that they should be taking up with the original builders?

If there are any readers out there with experience of this or anyone with legal/property expertise in these matters, I'd be very grateful for your advice.
Thanks!

DGJsaver

http://forums.moneysavingexpert.com/showthread.html?t=684441


The charge just before we moved in went up similar...£25 to £50 , printing money , scumbags....
allegedly something to do with a crumbling wall in the car park..the managment company are also a letting agent , says it all...

martinman3

I assume that this is the end of year statement of account.
The total demanded will be the service charge which will be broken into buildings insurance, contribution towards current/future work and managing agents fee. Which part has increased by 50% ?

Managing agents would probably charge administration fees when dealing with insurance claims but this should be shown as a separate charge.
Increasing the annual management fee just because the insurance premium has increased is not a good enough reason and should be challenged.
You should ask to see the alternative insurance quotes they had to obtain.;)

Managing agents would always be inclined to make claims on the buildings insurance as a) they don't pay the premiums, you do and b) they can charge a fee for dealing with it.
Leaseholders would be shocked to know much the cost of a simple water leak escalates to once everyone has taken their cut :eek: .

Codswallop

Yes it is the end of year accounts and they are indeed broken down into the sections you refer to in addition to landscaping, staff costs etc.

I think you're right, it does need to be challenged. It is no small amount either, I'm talking about an increase from around £700 to well over a thousand. This includes access to a gym and it is in London so all that has to be factored in but none of that warrants the large jump in costs. To be honest, I feel depressed by the situation, it's the last straw and although we'll probably have no choice but to pay it, we'll have to sell up in a property market that's on the decline. Sigh.
Thanks for your help anyway.

EdInvestor

Codswallop wrote: »

In December we received a letter informing us that due to water damage in many of the flats, the fees have increased by 50% :eek: due to the insurance premiums increasing in response to this.

Ask for more information about the terms of the insurance cover.Normally what happens if there are a lot of claims for water damage (very common!) is that the insurance company increases the 'excess charge' to something like 4-500 pounds.There may also be an increase in premiums as well, but it shouldn't be that much.

However the freeholder may deem it sensible to start a sinking type fund to cover costs of fixing water damage which aren't now covered by the buildings insurance because of the excess charge.If that's what is happening it might not be unreasonable, though a 50% rise sounds like a lot..

Codswallop

Thank you very much for that information. I am going to query it all. There is no residents' association either so there is little people power to roar back at the sheer impudence of these large increases! Most of the people living here are tenants and therefore their charges are incorporated into their rental costs. It's not easy to find other people who are owner occupiers in the block so dropping notes into others' letterboxes wouldn't do much good.

What I can't understand is that the block is only about 4-5 years old. Why isn't all the water damage attributable to the original house builders (very well known company) Isn't there a guarantee that the managing agents can still draw upon to cover all this? Why do we have to bare the brunt of it all?
Thanks for your help.