Managing Agents overcharging for nothing?

Managing Agents overcharging for nothing?

16:25 PM, 21st April 2021, About 2 months ago 16

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I own two flats in a small block of four flats. There is a Managing Agent for the Freeholder. They don’t do anything, there is no cleaning of the communal areas, no window cleaning, no gardens to maintain etc.

However, last year they suddenly started to charge ‘Service Charges’ of over £500 per flat. We questioned it, and they said that ‘if there are no maintenance costs over the year, we will give it back.’

The Buildings Insurance Premium is also very high – £2,200 for the building. I manage 3 other Freeholds of a similar size and, shopping around, the insurance cover is less than half that.

Anyway, I paid for it reluctantly last year. I have just got this year’s accounts, and they are asking for similar amounts. I asked to see the Expenditure Account to show what they had spent the money on, but they said their accountant had not yet prepared it. I do not want to pay again and add to the communal pot year-on-year when I can’t see how it will be spent, or how it was used last year.

Also, can I contest the cost of the insurance?

Can I delay payment until I have sight of the accounts?

Helen



Comments

by Puzzler

23:51 PM, 21st April 2021, About 2 months ago

You can't contest the insurance but you are entitled to see it

https://www.lease-advice.org/faq/what-can-i-do-if-my-landlord-fails-to-provide-information-about-the-insurance-cover-in-accordance-with-the-landlord-and-tenant-act-1985/

You are also entitled to know what the service charge has been spent on (it's your money) especially if it isn't obvious. As to what you have to pay, what does your lease say?

£2200 seems extortionate for insuring four flats, are they in London or high end?

by Roberts Rentals

8:25 AM, 22nd April 2021, About 2 months ago

Insurance - I pay £1,980 for 7 properties along the south coast,( house's and flats) so your flat seem very high.

by TheBiggerPicture

8:29 AM, 22nd April 2021, About 2 months ago

We took our, managing agents to tribunal.(free to do and free advice line)
It looked like they were going to lose, they were surprised at their obligations.
The adjudicator sent us out to try and find agreement, so we informally agreed improvements, but they never followed through.
So tribunal good, but get them to make agreement set in stone
You can also force them to give up management with agreement of other leaseholders

by Helen

12:08 PM, 22nd April 2021, About 2 months ago

Reply to the comment left by Roberts Rentals at 22/04/2021 - 08:25
The flats are in London, on the edge of a high end little suburb. The combined value of the flats at current market value is around £1,300,000 and they have the buildings sum insured at £900,000. My other flats are of a similar value but the BSI is much lower as the rebuilding cost is less than the market value. They use the same insurer every year so haven't shopped around. Why should they? They aren't paying for it! It seems I can't insist that they do.
Their annual management fee is £1400, £350 per flat, for doing nothing.
There is a fire alarm system and I have asked for service logs which they haven't provided. I heard it should be checked every 6 months.
We would like the communal areas decorated, which would absorb some of the accumulated service charges but I am afraid they will use a decorator who charges an inordinate amount. Can I insist on seeing 3 estimates?

by Jontyv

20:54 PM, 22nd April 2021, About 2 months ago

Reply to the comment left by at 22/04/2021 - 12:08
I bought several apartments on 4 developments around 15 years ago. We had problems with managing agents on all - one was charging £100 per month to change a lighbulb (which didn't actually get changed. The developments were going downhill and there were loads of disgruntled leaseholders. I checked my lease and there was a residents management company. I checked at Companies House and found that the managing agents should have stepped down and allowed leaseholders to become directors of the management company and they should have been holding AGMs. I found that leaseholders representing 5% of the membership of the company could force an Extraordinary General Meeting. It took time but we got our meeting, elected our own Directors and forced the Managing Agent to resign as director and then we ousted them as Agents and after a short period of managing ourselves we appointed our own choice of new Managing Agent. This only works if you are entitled to be a member of a management company. If not its possible you may be able to go for a "Right to Manage". Other points are that if any service costs an amount where any leaseholders would have to pay over £250 then the managing agent must go through a consultation process and show leaseholders 3 quotes and leaseholders may also nominate their own choice of contractor. Similarly any ongoing contract which would cost any leaseholder over £100 must also go through this process. I hope some of this may be of use.

by Tim Rogers

7:35 AM, 23rd April 2021, About 2 months ago

The only long term solution is to force the sale for the freehold.
I've been involved in doing this twice now, you need 50% of the lease holders to force it, make sure you have your own valuation survey done, be prepared for every underhand trick to be employed to delay and put you off.
The nice part is that your solicitors are dealing with the freeholder not their management agents. The bad part is the agents have to supply details and always find yet another cost. The Golden rule is to get it in writing that all costs etc end as of the sale date.
Neglected to do that the first time and was still getting petty invoices 5 years on. Despite phone calls and letters they kept coming. Finally had enough and started the initial process for a counter action for harassment, (possible fraud), that seems to have finally silenced the management company.

by Gracie

14:11 PM, 24th April 2021, About 2 months ago

This is the exact bull* that leaseholders are up in arms about, stinkingly overcharging and doing little to no work, adding their% commision to overpriced jobs to maximise their income desite the fact that they already charge a set "managing" fee. This is why there is such an outcry, then you get comments from the narrow minded brigade about leaseholders not understanding / expecting something for nothing, etc when it's plain & simiple that there is a screaming need for managing agents to be regulated, for charges to be limited (both in value and in what they should be allowed to charge) and the process to get copy receipts, to challange, to take to FTT all need to be much simpler & fairer. FTT resolves some issues but not enough & the process to get there has some gaps. LEASE, their advice can also be hit & miss & even solicitors etc know how to play them, I was in a meeting with a solicitor bragging about how easy it is for freeholders & Sols to sway the system, pretty shoddy state of affairs.

by Helen

14:15 PM, 24th April 2021, About 2 months ago

Thank you your comments have all been very helpful. Would you recommend that I refuse to pay the service charges (but I will reluctantly pay the insurance, ground rent and their management fees) until I have had sight of the accounts for last year so I can see how last year's money was spent?

by Gracie

14:27 PM, 24th April 2021, About 2 months ago

Reply to the comment left by at 24/04/2021 - 14:15
No don't not pay because you likely then risk forfeiture (check your lease). You have to just cough up & pursue them through an FTT. They can do what they want, you can't.
Check the steps on https://www.lease-advice.org/ and also join en-gb.facebook.com/groups/nationalleaseholdcampaign/ for loads of advice from many who are suffering the same annoying injustices.

by Ian Cognito

15:28 PM, 24th April 2021, About 2 months ago

Hi Helen

You say that you got this years accounts. What do you mean by "accounts"?

There needs to be a budget on which the service charge is based. The budget should be produced before the service charge invoices go out.

If, within the budget, some of the estimated costs appear slightly high, I would contact the agent and ask them to comment, but not delay payment of the invoice.

If, however, some of the costs are out of all proportion to what I know they should be, I would contact the agent, ask them to justify their figure, offer an alternative figure and advise them that I would be withholding payment unless the service charge is reduced.

If things were to drag on, I might eventually pay a proportion of the service charge based on what I consider to be fair and reasonable.

PLEASE NOTE THAT THIS IS NOT ADVICE AND IS NOT BASED ON LAW; I am merely sharing my thoughts on what I might do in your situation.

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