All freeholder parties registered at same address - is that allowed??

[Jessica494]

Hello!

I wonder if anyone knows the answer to this as I can't seem to find it on Google anywhere.

We have just had the latest service charge bill from our freeholder who we know to be a particularly bad one (94% "BAD" / 1* reviews on Trustpilot and absolutely renowned for scamming people), when we received the first one last year they assured us they would provide proof of receipts and all outgoings etc, instead of that they have provided us with a letter from a chartered accountant that says along the lines of "we certify that we have seen all receipts etc and that these are all very reasonable prices".

Having just searched for the company I have noticed that the freeholder, managing agent and accountant are all registered at the same address, is this allowed? It doesn't seem very impartial as they are all very clearly linked but I suppose being registered with the ICAEW means that they are considered honest? We are putting in a request to see the receipts and accounts and will be fascinated to see how they justify the costs (e.g. we checked the common parts meter and have only used 120kWh which should be about £16, they have charged £120). They have also charged 15% management fee but there is no mention of a management fee in our lease - is that allowed?

So my questions are whether they are allowed to use an accountant they have a clear affiliation with, and whether 15% management fee is allowed when there is no mention in our lease?

I don't know if it makes a difference but we are at the beginning of the enfranchisement process and just waiting for their initial response which is due mid-March.

Hope someone can help.

[Benzo]

It's allowed but it's not a great sign. I believe in all service charge invoicing they have to refer to the two as 'associated companies' but I don't think there's much else. We have an 'associated company' for a freeholder and managing agent, and they clearly work for each other's interests, not residents.

[eagle2]

It depends on the wording of your lease and whether or not an audit is required. If it is, a registered auditor is required and he must be independent, which means that he should not be employed by the freeholder or the managing agent. Sharing an address does not mean that he is not independent.

Otherwise any accountant holding a practicing certificate may issue a report of factual findings.

If the accountant is a member of the ICAEW, you have some comfort in the knowledge that you can complain to the ICAEW if the standard of the service is inadequate.

I am very surprised that the accountant has commented on the reasonableness of the prices. that is extremely unusual. The standard report would state only that a sample of the transactions has been seen and which is supported by receipts, other documentation or evidence.