How to challenge unreasonable leasehold charges?

How to challenge unreasonable leasehold charges?

0:01 AM, 4th July 2024, About 2 weeks ago 10

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Hi there, bit of a steer if I may on my leasehold flat. Out of the blue our Freeholder appointed a new agent and we received the following whopping bill for the next 12 months:

General Building Repairs/Works £ 500.00
Accountancy Fees £ 168.00
Management Services £ 931.67
Bank Charges £ 30.00
Emergency out-of hours service £ 24.00
Health & Safety Assessments £ 60.00
Buildings Insurance £ 1,530.56
TOTAL £ 3,244.23

The property is two leaseholds in a Victorian terrace so this is split between two and for the last 14 years we’ve paid ground rent and building insurance each and every year with no issues.

The building insurance has increased by over 100%, and the dates are incorrect. They are demanding payment for a period that we have already partially covered last year, for both insurance and ground rent.

This feels super crooked to me with jumped up costs, there literally is zero to little costs managing this property. The communal area is just a front door and 2sqm entrance, the roof was replaced 14 years ago.

How can these been deemed as reasonable charges and what recourse do we have to fight? I guess not much I’ve contacted the other leaseholder who is equally in shock and we are looking to Right To Manage which will take time of course.

Any advice would be greatly appreciated.

Thanks,

Chris


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Judith Wordsworth

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9:45 AM, 4th July 2024, About 2 weeks ago

Read your Lease.
Are service/maintenance charges payable in arrears annually or in advance, on demand?

How about buying the freeholder with the other lessee?

Graham Bowcock

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10:31 AM, 4th July 2024, About 2 weeks ago

Our agency has given up managing very small blocks because they are not economiclaly viable.

It sounds like you've actually had a budget (so the money may not actually be spent). It doesn't sound unreasonable for a professional agent.

Half of the bill is insurance - which will be a matter of fact.

The agent has to provide service charge accounts in a prescribed format - hence the accounting charge.

Bank charges - these need to be paid to maintain a separate account for the property. Again, not unreasonable.

As for the other charges, these are for the agent's time; how would you expect the agent to be remunerated? A proper agent is highly (and expensively) regulated. The days of a local retiree looking after a property for an annual bottle of wine have long gone.

Nothng seems particularly out of order here.

NewYorkie

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12:36 PM, 4th July 2024, About 2 weeks ago

Reply to the comment left by Graham Bowcock at 04/07/2024 - 10:31
"Nothng seems particularly out of order here". There speaks a managing agent!

If the insurance has increased by 100%... for a 2 flat property, and the dates are wrong, that is 'particularly out of order!

I have been a Share of Freehold Co sec., been through 2 RTMs, and am currently director of one. Our insurance, on a block of 137, increased by 4.5% this year. If we can do it, so can they.

This is pure profiteering, and needs to be referred to the First Tier Tribunal. However, leaseholders pay their own costs, which MAs and freeholders know, and these will negate any potential savings.

I recommend you go RTM ASAP. You have 100% buy-in, and just need to get the process right. Use a specialist.

havens havens

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20:21 PM, 4th July 2024, About 2 weeks ago

Receiving that bill must have been a real shock. It's frustrating when charges skyrocket without clear justification, especially when your property has minimal communal areas and no recent significant maintenance needs.

The 100% increase in building insurance is especially concerning, not to mention the incorrect billing dates that overlap with previous payments. This does feel off, especially given your consistent payment history over the last 14 years.

Firstly, you’re right to feel something is amiss. The new agent should provide a clear and detailed breakdown of each cost, justifying the sudden hike. Since the other leaseholder is also in shock, it's good that you're both on the same page about possibly pursuing Right to Manage (RTM). While this process will take time, it can ultimately give you control over the management and hopefully reduce costs.

In the meantime, I’d recommend challenging the charges directly with the new agent. Explain your concerns about the drastic increases and incorrect billing periods, and request a meeting to discuss these issues. If the response is unsatisfactory, seeking advice from a property solicitor could help you determine if any legal steps can be taken.

It's crucial to act promptly, so getting all your documentation in order and coordinating with the other leaseholder will be key. This situation certainly warrants a thorough challenge to ensure you’re not unfairly burdened with unreasonable costs.

Fiona Burns-Brannan

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8:39 AM, 5th July 2024, About 2 weeks ago

Your can't have an RTM not enough leases. I would negotiate to buy the freehold direct with freeholder.

NewYorkie

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10:15 AM, 5th July 2024, About 2 weeks ago

Reply to the comment left by Fiona Burns-Brannan at 05/07/2024 - 08:39
I thought a block was at least 2 leasehold flats in a single building.

Kizzie

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10:39 AM, 5th July 2024, About 2 weeks ago

Reply to the comment left by NewYorkie at 05/07/2024 - 10:15
You have the legal right under landlord And tenant act section 21 to inspect the accounts. Notice to be served on the management co acting for the lessor landlord and the managing agent. Failure by the man co to provide accounts in accordance with your lease within 2 months is an offence and subject to penalty

NewYorkie

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10:49 AM, 5th July 2024, About 2 weeks ago

Reply to the comment left by Kizzie at 05/07/2024 - 10:39
Sorry, but what does this have to do with the minimum number of flats for RTM?

Joey Barton

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8:19 AM, 6th July 2024, About 2 weeks ago

Average service charge for a UK flat is between £1000 and £2000 a year but this average range can vary depending on factors like the age and size of the property. So at £1600 per year per unit you fall almost in the middle of the UK average. Looks like you're paying almost a third of your service charge just to the Agent which means that you could lower your bill substantially by going Right to Manage and self-managing it but it is a lot of stress and responsibility just to save £500/year.

chris@greenlight.co.uk

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17:08 PM, 9th July 2024, About 2 weeks ago

Reply to the comment left by Joey Barton at 06/07/2024 - 08:19
Thank you Joey and everyone above for taking the time to reply. It is appreciated.
RTM is the way... Any community recommendations for specialist support here?

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