Issues with service charge for Building's Insurance - How best to I proceed?

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    Issues with service charge for Building's Insurance - How best to I proceed?

    I'd love help on what my rights are and how best to proceed with the below.

    Some background:
    -My management company emailed me on 18th December 2018 a scanned version of a service charge invoice for my share of the building's insurance. The scanned invoice has a date of 13th December.
    -I did not receive anything in the post.
    -The invoice states payment terms of 21 days.
    -Payment terms according to my lease are 21 days.
    -In the same email was attached a letter dated "December 2018" stating that the freeholder wanted payment by 27th December 2018, or to be informed by this date if payment will be made by 3rd January 2019, otherwise an interest charge as well as an additional admin charge of £25 + VAT will be incurred by myself.
    -I did not read this letter properly and did not pay within the requested deadline, nor indeed within the 21 payment terms per my lease. That is my mistake.
    -On 22nd January my management company emailed me a scanned copy of an updated invoice with the interest charge added, but not the admin charge. The scanned invoice is dated 15th January. They did not include a summary of my rights and obligations.
    -None of the above mentioned documentation includes the Freeholder's name or address. I emailed them advising that I'm not liable to pay the invoice (and certainly not the interest charge) until they have sent through an updated version including the Freeholder's details. I was emailed updated documents today (Wed 30th Jan), including the Freeholder's company name and company address.
    -The Freeholder has changed and they use a broker to purchase the building's insurance. The cost is 143% higher than that with the previous freeholder. Is this reasonable, or can I contest this? If I can contest, what do I do about the outstanding (and interest incurring) invoice?
    -The management company have included an admin fee of £90 including VAT on the invoice, which when I queried it, they said covers management of the account. Is that for the leaseholder to pay? There's nothing in my lease about management company admin charges. What are my rights here? Can I contest?

    Would love an expert's guidance on how best to proceed.

    Thanks so much.

    #2
    There are a number of different issues. The question of service of documents may be covered within the terms of your lease. Service is usually by post or delivery to the property address and sending by email without your permission is not normally permitted.

    As you state, the demand is invalid unless you receive details of the freeholder and the notice of tenants’ rights and obligations. It looks like you have not received a valid demand thus far so the 21 days for payment has not commenced.

    Interest may only be charged if a valid demand has been issued and you have failed to pay within the 21 days. A demand for interest must include a different notice relating to administration charges. So again, it looks like interest is not payable.

    If the lease does not permit administration charges then the management company is not permitted to charge you.

    The charge for insurance is more of a grey area. The freeholder can charge a reasonable sum and it is not obliged to accept the lowest quote. You can ask for a copy of the insurance schedule for the current year and the previous year which may shed some light on why the premium has increased. You can ask the freeholder to supply details of all quotes which it obtained, you can also ask it to supply details of commission and other benefits which it has received as a result of insuring the property. When you receive the schedule with details of the sum insured and the excess on the policy, you can seek your own quote to see if the charge is reasonable. You can then decide whether or not to challenge the charge.

    Comment


      #3
      PS I cannot say that I am an expert, I just have some practical experience

      Comment


        #4
        Thank you for your insight and experience. A couple of comments from me:


        There are a number of different issues. The question of service of documents may be covered within the terms of your lease. Service is usually by post or delivery to the property address and sending by email without your permission is not normally permitted.
        Leaseholder202: I prefer to receive things via email and had asked them to do so, so no issue on that front. The problem is that they email me things 5-7 days later than what's on the letters/notices.

        As you state, the demand is invalid unless you receive details of the freeholder and the notice of tenants’ rights and obligations. It looks like you have not received a valid demand thus far so the 21 days for payment has not commenced.

        Interest may only be charged if a valid demand has been issued and you have failed to pay within the 21 days. A demand for interest must include a different notice relating to administration charges. So again, it looks like interest is not payable.
        Leaseholder202:
        1) Thanks so much for confirming on both the points above. They have included the tenant's rights and obligations. But not the freeholder details. They are refusing to invalidate the notices as a result of this and expect me to pay the sum + interest incurred. What law can I quote to back up my position?
        My fear is if I pay only the sum of the building's insurance, they'll just keep charging me interest.

        Is the best option to pay the full amount and open a case with the Tribunal?
        2) When you say a different notice relating to admin charges, what specifically does that need to include? Do you mean that this should include the cost for the interest charge only, and not include the original charges? What law can I quote to back me up?


        If the lease does not permit administration charges then the management company is not permitted to charge you.
        Leaseholder202: It doesn't specifically say it doesn't permit admin charges, but there is nothing about admin charges (so far as I understand it). Does that mean I can dispute it?

        The charge for insurance is more of a grey area. The freeholder can charge a reasonable sum and it is not obliged to accept the lowest quote. You can ask for a copy of the insurance schedule for the current year and the previous year which may shed some light on why the premium has increased. You can ask the freeholder to supply details of all quotes which it obtained, you can also ask it to supply details of commission and other benefits which it has received as a result of insuring the property. When you receive the schedule with details of the sum insured and the excess on the policy, you can seek your own quote to see if the charge is reasonable. You can then decide whether or not to challenge the charge.
        Leaseholder202: Good to know, thank you. I'll ask for the above and see where that goes.

        All the above in mind, what is the best course of action for me to take? Getting information re: the building's insurance takes time, as will doing the appropriate searches, all the while the management company will be charging me interest. Do I pay the outstanding amount and then go to Tribunal once I'm armed with quotes?

        Thank you for your time and your help - I really appreciate it.

        Comment


          #5
          The notice referred to is the one contained in https://www.lease-advice.org/advice-...arges-england/

          It is always best to pay then challenge.

          You should only challenge the insurance with the tribunal if you are sure of winning and you should make sure that the alternative quote provides the same cover and is based on the same claims history.

          The management company is morally in the right, even if they may be legally in the wrong. Some people suggest that £15 might be a more reasonable true administration cost, but you say they haven't actually billed that. Especially as they have not charged an admin charge (not that that is high by common standards), I would suggest you pay under protest and leave it at that. You should pay under protest now, even if you do intend to challenge it.

          Remember that, if you had done the same directly with an insurer, you would now be uninsured, and that the management company is going to have to pay the premium on time,itself.

          Comment


            #6
            Thanks leaseholder64.

            The admin charge on the original invoice is for £90.

            They were meant to include a £30 charge on the updated notice but didn't, so I guess that's a saving there.

            Comment


              #7
              Why was there an admin charge on the first invoice? I don't understand that.

              Comment


                #8
                Originally posted by leaseholder202 View Post

                All the above in mind, what is the best course of action for me to take? Getting information re: the building's insurance takes time, as will doing the appropriate searches, all the while the management company will be charging me interest. Do I pay the outstanding amount and then go to Tribunal once I'm armed with quotes?[/COLOR]
                How many flats are involved?

                When you refer to the management company do you mean managing agent?

                Section 47 & 48 L&TA 1987 deal with freeholders details on demands.

                If you request details of the insurance then you should receive them within 21 days. The following link contains a template you can use;

                https://www.lease-advice.org/files/2...t-Act-1985.doc

                I would take the advice given and pay now and then dispute, if you actually mean managing agent then they will have a redress scheme you can go through.

                Comment


                  #9
                  If you are willing to accept demands by email, the date of the email is the date which matters not any earlier date mentioned on an invoice.

                  s47 LTA 1987 sets out the requirement to supply details of the landlord’s address and s48 LTA 1987 states that a demand is not payable until the details have been supplied.

                  There needs to be a specific clause within your lease stating that the management company is entitled to charge an administration charge otherwise it is not payable. Nothing other than the legal position counts. I would definitely not make “payments under protest” if they are not legally payable.

                  I do not agree with others who say that you should pay all monies and then challenge. I take the view that you should pay reasonable sums which you are satisfied are payable and estimate them if you cannot be sure. If there is a charge which you specifically dispute, I would say so and invite the freeholder or management company to apply to the Tribunal. That way, the burden of proof lies with them and not with you.

                  When making a partial payment, I would always pay by cheque and send a covering letter stating what precisely you are paying and repeat the information on the reverse of the cheque. You should state that the cheque may not be accepted for any other purpose. I would retain a copy of the letter and the cheque and obtain a certificate of posting from the Post Office. That will protect you from the freeholder or managing agent allocating payments against disputed charges.

                  If you are requesting information, I find it better to withhold some monies until the information has been received. You are more likely to receive the information, if there is an incentive for them to supply it to you.

                  Comment


                    #10
                    If you are unsure about administration charges being permitted, you can ask the management company to refer you to the clause within the lease which entitles them to charge you.

                    Comment


                      #11
                      With regards to the payment of insurance, I think that you are entitled to an explanation why the premium has increased by 143%. Does that include an administration charge? I would be inclined to pay the last year's premium until you receive an explanation or documents.

                      Comment


                        #12
                        Originally posted by josepha333 View Post

                        if you actually mean managing agent then they will have a redress scheme you can go through.
                        The redress scheme is a long winded process, you need to raise a formal complaint with the manager and then allow 8 weeks for a reply before your complaint will be considered.

                        Comment

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