Management Company Overcharging?

by Readers Question

11:23 AM, 11th May 2020
About 4 months ago

Management Company Overcharging?

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Management Company Overcharging?

Hi All, I paid £972 for my flat’s annual service charge for 2019 in full last year (as stated in my invoice. This year, the service charge went up to £1300, which I already paid 50%.

Now, I just received another invoice of £880 from the managing agent stating it is the service charge balance for 2019 in addition to the £972 already paid. ie, They claimed that last year’s charge was under budget and I should pay £880. (Service charge Reconciliation)

Can they do this?

What can I do to challenge this?

Jay

Notes: Leasehold Advisory Service >> https://www.lease-advice.org/faq/i-have-received-a-service-charge-demand-and-i-think-it-is-too-high-what-should-i-do/

service charge is not payable unless it is reasonable but it is risky to withhold payment because this is likely to be a breach of your lease. It may be better to contact your landlord and express your concerns about the charge. You can try and resolve the situation amicably, perhaps through mediation. If this fails and you have evidence to challenge the charges, the matter can be determined by the First-tier Tribunal (Property Chamber).

The lease should set out how your service charge will be calculated. Often it is a percentage or proportion of the total costs of repair, maintenance, management and insurance of the building. The amount you pay will normally vary but a few leases provide for a fixed service charge



Comments

Neil Patterson

11:26 AM, 11th May 2020
About 4 months ago

Hi Jay,

If you following the links through above you can challenge Service charges and or consider getting all the leaseholders together and instigating a Right to Manage (RTM)

Jim Fox

10:00 AM, 12th May 2020
About 4 months ago

It sounds to me like your service charge is estimated for the following 12 month period, and paid in advance (possibly in 2 half yearly amounts).
If however, during the service charge year, the maintenance costs of the property exceed the budget (perhaps due to unforeseen expenditure) then a service charge deficit payment would arise, payable after the year end, when all costs are known.
I know that this may sound unreasonable, however budgeting for 12 months maintenance costs is not a precise science, and unforeseen costs often do arise such as major roof leaks, underground service pipes breaking etc

terry sullivan

11:25 AM, 12th May 2020
About 4 months ago

who is the management company?

terry sullivan

11:26 AM, 12th May 2020
About 4 months ago

leasehold must be abolished and rtm implemented

Dylan Morris

11:47 AM, 12th May 2020
About 4 months ago

Ask the management company to provide details of the deficit and how it has occurred. Be a good idea to see the year’s accounts, or if not available some draft figures. You will then be able to identify exactly why you are being asked to pay more. Could be a genuine and valid reason, or perhaps not. Until you get to the bottom of why extra expenditure has occurred you really can’t make any judgement about the situation.

Tim Rogers

12:09 PM, 12th May 2020
About 4 months ago

Should, by any chance, the management company have the initials FC, then your only long term solution is to force the purchase of the freehold. It took us almost 2 years to achieve, this with many legal letters to and fro concerning their supposed overlooked costs etc.

Said letters and pressure continued for almost 9 months after the sale date, stopping eventually on threat of being sued for harassment. With everything done and dusted, life is so much easier, less stressed and a lot cheaper.
As for costs, the capital outlay is immediately reflected in an increase in property value and then some. So all in all it's the only way to go if you can.

Richard Adams

12:29 PM, 12th May 2020
About 4 months ago

The £880 charged clearly relates to an overspend on previous year's budget like others have posted. I am a director along with others of a Management Company. We are all owners on the site in question. We appoint a Managing Agent to handle all the day to day cleaning etc and they also propose budgets. The board then approves or not. We also sign off previous year's accounts and if an overspend has occurred despite us monitoring spending throughout the year we ask questions vigorously as to why. Where this has been due to lack of control or incompetence we seek financial redress if necessary through a reduction in the management fee. Were Jay an owner on our development he would NOT have experienced what he has posted about here.

terry sullivan

12:32 PM, 12th May 2020
About 4 months ago

FP are as bad

Jaye

18:20 PM, 12th May 2020
About 4 months ago

Thanks for your response and feedback. The management company is R.I.B. They have been good up until a takeover last year. I asked for budget expenditure for the past 3 years and they sent lots of paperwork- mainly duplicates, outdated and some unrelated to the flat. Also, when I spoke to the accounts dept, I recall the lady mentioning that some flats were charged differently and according to their square footage, which was quite confusing - All the 6 flats in the block are the same size.

Jaye

18:21 PM, 12th May 2020
About 4 months ago

Reply to the comment left by terry sullivan at 12/05/2020 - 11:25
The company is R.I.B.

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