11 Leaseholders in service charge arrears?

by Readers Question

9:58 AM, 21st August 2020
About a month ago

11 Leaseholders in service charge arrears?

Make Text Bigger
11 Leaseholders in service charge arrears?

I wonder if I could possibly get some advice, I own a leasehold flat that is part of a block of 155 luxury flats that has a swimming pool at the top as well as a gym, sauna, Jacuzzi and concierge on the entrance.

My purchases the property back in 2003, this was one of the most luxuries flats in Harrow to live.

The block was managed extremely poorly whereby the underground car park, communal area, external building etc., needed major attention due to negligence and a lack of maintenance, the swimming pool, Jacuzzi and sauna has been closed and off limits for over 9 years, and it’s was hit-and-miss if the lifts were working, enough was enough, in the end and the Leaseholders got together and applied for RTM which took over 4 years as the freeholder constantly appealed, they didn’t want to relinquish this, as they had some affiliation with the management company at the time.

Over the years about 11 of the Leaseholders decided not to pay the service charge which I completely understand their point of view, i.e. wasn’t getting the service back in return,

Problem that we have now, the management company appointed by the RTM board of directors are still trying to fight arrears on a few leaseholders which is caused a problem for myself as and others, the property is still in need of major repairs even 3 years after RTM took over due to the arrears. Still there’s not enough money to complete the work that’s required and on top of this, the reserve fund has gone up as well as the building insurance,

It was an absolute nightmare to try and find an insurance company that would take on the building due to the condition, eventually they found a company but they insisted on a £100,000 excess, last year there was a fire that damage 4 flats, so a claimed was necessary causing further expenses to the Leaseholders

I’ve been told by the management company they can only go so far with the non-payers of services charges legally and it’s up to the freeholder to take the final legally steps which they aren’t interested in, as there’s no financial gain for them

I’ve sent numerous emails to the RTM board expressing my concerns as the building is in such a derelict and unsafe state, as something must be done with an action plan taken, but this is just falls on deaf ears as no one responds back

I’ve also spoke to the management company and said I’m extremely disappointed with the condition of the building and deterioration which has also lead to the value dropping significantly compared to properties across the same road by up to £100,000

I am paying the service charge, but we don’t have a working swimming pool, sauna, steam room and Jacuzzi etc., the buildings is in such a derelict state I said if this cannot be controlled and the building brought up to the standards and safety needed, I will find myself in awkward position, I may have to move out of the property as it’s unfit to live in and therefore why should I pay a service charge with an increased reserve fund for something I’m not getting, as I said before RTM took over this 3 years ago and unfortunately the building is still in such a bad state

I’ve explained this to the management company, they understood all my concerns, I even said I’m willing to pay a percentage of the service cost, which they said they couldn’t do, I understand their predicament, they’re short of money due to the Leaseholders that refused to pay the service charge, besides I didn’t want to add to their problems, but if I’m not getting the service that I’m paying for and I might have to move out as well as the property is devalued, consequently can’t sell. What do I do?

1) How can you force the freeholder to take action against the non-payers so the build can be put back to its normal state and be a pleasure to live in once again?

2) Should I pay service charged knowing that I’m not receiving a quality service back?

3) Is it reasonable to request a percentage of the service charge off, as I’m not getting full service in return?

4) What are my options and what would you do in my position

Thank you all in advance

Scott



Comments

Anthony Johns

11:35 AM, 21st August 2020
About a month ago

Exercise your right to purchase the freehold. tonyjohns@enterprise.net

Art Dobson

11:37 AM, 21st August 2020
About a month ago

Sounds like you're stuck with a lemon, I'd look at passing the property on, if its got service charge from 90% of tenants and not making improvements, chances are they won't even if they have 100% compliance. Exit now before the market changes and you are down even more money.
Sad but, that's one of those situations which has no good outcome.

Ian Cognito

11:56 AM, 21st August 2020
About a month ago

The service charge should cover costs and may contribute to a sinking fund. You cannot withhold a percentage, however, you have a right to see how your money is being spent. That includes sight of the actual contractors' invoices.

Gracie

12:40 PM, 21st August 2020
About a month ago

If you're on Facebook then look for the National Leasehold Campaign group, there are a lot of leaseholders going through all sorts of issues and you may be able to get some good advice from someone in a similar situation.

BernieW

14:26 PM, 21st August 2020
About a month ago

The answers to your questions are:
1) You could take the freeholder to Court in connection with his/her/its breach of the terms of the lease. However, the freeholder will claim they can't do anything about the breach as the RTMCo took over the management functions of the leases. That doesn't excuse the lack of Court action to recover arrears - but there is probably a clause in your lease which states the freeholder only has to enforce the terms of the lease against another leaseholder if you cover all the costs - which I guess you don't want to do.
2) Yes. You don't want to breach the terms of your lease by not paying what you are legally obliged to pay. Two wrongs do not make a right.
3) No. But if the charges are "unreasonable" then you can apply to the First-tier Tribunal to get a determination as to what is reasonable, and then only pay that amount.
4) I would get the RTMCo and their agents to do their job. There are other ways to get arrears in, if the freeholder won't threaten forfeiture. In addition to that, I'd consider approaching the First-tier Tribunal for the Appointment of a Manager ... a 'court appointed' manager who will run the building professionally and objectively, under a management order issued by the Tribunal.

Happy to discuss. Bernie Wales

ScottE

9:45 AM, 22nd August 2020
About a month ago

Thank you all for your valid advise, i did suggest to the management company to exercise our rights to purchase the freehold, or force the freeholder to action forfeiture on the debts accounts in court, but they said this would be very expensive to the leaseholds and the freeholders had very deep pockets, don't wont to sell for 2 reason, 1) Already distressed market and the property is below market value due to it's condition 2) I have a fantastic Interest rate and would never get the same or even close again.
I Think i'll approach the First-tier Tribunal for appointing a Manager to run the building professionally.. does anyone know the procedures and is it costly to me?

Again, thank you all.

Anthony Johns

10:01 AM, 22nd August 2020
About a month ago

To have an assessment of how to force purchase of the freehold you should contact Clive Levontine at Mills & Reeve LLP. He has done two for me - both with similar problems to yours - one of 74 flats and one of 76 flats. Every one very happy now we have complete control.
Alternatively go to a specialist lawyer to retrieve the arrears from your co lessees. They have to pay all the costs! Otherwise stuck with an un-salable flat. TJ

ScottE

16:04 PM, 22nd August 2020
About a month ago

Thank you so much for your advise, i'll contact Clive Levontine at Mills & Reeve LLP next week.

Anthony Johns

10:01 AM, 23rd August 2020
About 4 weeks ago

Clive Levontine Partner
for Mills & Reeve LLP
Tel: +44 (0) 20 7648 5260 (Ext 6360)
Mob: +(44)(0)7710902983
Fax: +44 (0) 20 7648 9221
Twitter: @MillsandReeve
Clive.Levontine@mills-reeve.com
http://www.mills-reeve.com
24 King William Street
London EC4R 9AT

ScottE

10:20 AM, 24th August 2020
About 4 weeks ago

Many thanks for the details.

1 2

Leave Comments

Please Log-In OR Become a member to reply to comments or subscribe to new comment notifications.

Forgotten your password?

OR

BECOME A MEMBER

Meet Mark Smith (Barrister-At-Law) Landlord tax planning strategies - PIN

The Landlords Union

Become a Member, it's FREE

Our mission is to facilitate the sharing of best practice amongst UK landlords, tenants and letting agents

Learn More