new Mgmt increase service charge

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    new Mgmt increase service charge

    Hello and thank-you in advance for taking the time to read my question.

    I am the landlord of a leasehold flat in a small block (6 flats in total). I have just received a letter from the new mgmt company with the 2020 service charge & reserve fund budget which has increased to almost double what I paid this year.

    There are expected small increases in insurance, cleaning, electricity etc. but some costs seem excessive or I think should be levied to our reserve fund which currently stands at approx £38k.

    I would be grateful for peoples advice and experince on challenging the costs with leasehold mgmt companies.

    #2
    We are 12 dwellings with a reserve fund almost half. Have some jobs been left ? There should be a reason for the sum asked. Request to see the proposed budget.

    Comment


      #3
      Whether they can be charged to the reserve fund depends on the exact wording of the lease with regard to the reserve fund.

      It also depends on how the reserve fund amount was calculated. If that has been done correctly, and the new items not accounted for, the service charge is going to have to be increased to make good the shortfall. Depending on when the already budgeted items become due for work, the shortfall may have to be made up very quickly.

      You basically need details of the budget for the use of the reserve fund, not just that for the current year's payment on account.

      Also, note that management companies don't normally change. If one exists at all, it is probably owned by the leaseholders. What I think you really mean is a new managing agent.

      Comment


        #4
        What does lease state as purpose of the reserve fund. It is normally not appropriate to use reserve funds in the way you suggest.

        To answer your final question - you have practically no rights as a lessee (and almost no protection against outright theft), and those rights you do have are either not worth the paper they are written on, or have been carefully designed to make then non-actionable. You can take the lessor to the FTT as I have successfully done on several occasions) but you need more reason than you have provided so far.

        Comment


          #5
          I've owned the property since 2001 and there have not been any upgrades to the block just one off repairs when required so it is looking a bit shabby. The reserve fund has accumulated over the years. Also, in 2015 I received a S20 major works notice (repair roof, windows, soffits etc) and an invoice for my contribution of £3.9k. There was an issue with the notice and the work has not been carried out and I have not paid my £3.9k contribution (I can give more details if this is helpful)

          I've received the 2020 budget and am comparing it to the yr end property certificate I receive. Obviously, there are some expected cost increases but some, in my opinion should be taken from the reserve fund. I've detailed the queries I have below:

          £1600 for Surveyor report & other Professional fees - mgmt have stated they want to do a block condition report - I have no idea how much a a Surveyor report would be but £1600 seems high. I will ask them for details of the other Professionals they anticipate but does anyone have experience of cost of a Surveyor reports.

          £1660 for cleaning & gardening - previously this was £593 & conducted by the same contractor. This year the cleaning (£660) stays with the contractor and the gardening (£1000) to be carried out by the mgmt company. The gardening and cleanliness could be better but nothing major. Considering proposing that the current contractor increase their visits or time.

          £550 for making trees safe - a few overgrown trees - I believe this should be taken from the reserve fund

          £2000 for internal and external repairs - I believe this should be taken from reserve fund

          £500 for rubbish clearance - the last property certificate expense for this was £72 so £500 just seems excessive

          £440 for H&S assessment & Interim fire risk assessment - this is double of this year's cost. A new company has been named but I can't find any info on them through Google. Considering asking why change to a new company at increased expense.

          Comment


            #6
            Leasholder64 - yes I meant managing agent

            I will get my Lease and have a proper look. As I recall the wording was all a bit vague.

            Comment


              #7
              I have looked at the Lease again. TBH I don't really understand it. The only point that specifically mentions a sinking fund states

              "For the provision of a sinking fund for the benefit of all occupiers of the Court but so that no part thereof shall be repayable to any Individual Lessee or tenant"

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