Service charges

[Paulsen]

In my lease the Accounting Period is “the period of twelve months ending on the 23rd day of June each year”

The interim charge will be paid on the 24th June and 25th December in each year

Does this mean my year starts on the 24th of June with the budget for the year payable 24th of June and 25 of December?

Does the freeholder have to follow this or can they issue service charge demands at other times?

[fos333]

Hi,

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[Paulsen]

Thank you, it suggests that they should follow your lease and send a demand 21 days before it becomes payable.

As my lease states that the accounting period ends on the 23rd day of June would it mean that the year starts on the 24th of June with the first service charge being payable? so they would budget for the coming year and I will pay on the 24th of June and 25 of December?

I got a demand in April 2019 which stated service charge 25.12.18 to 24.12.19 as per attached yearly budget. Half budget payable December 2018 and June 2019.

Can they do this or should the yearly budget start 24th of June?

Only want to be completely clear on this as they are threatening legal actions.
Would the court care how they have issued the demands?

[AndrewDod]

Yes the FTT will care -- especially if there are other irregularities. They certainly cared in one of my cases and declared the service charge to be zero, in part because the year was wrongly specified.

[Paulsen]

Thank you AndrewDod,

The demands were issued in April 2019 one for 2018 and on for 2019, I was in credit but the demands only show balance payable with no credit. Are these demands valid if it doesn’t show my credit and balance payable after reducing my credit?

The 2019 demand is from 25.12.18 to 24.12.19 with a budget for the year, but as my lease states the accounting year is 24th of June to 23 June. Interim charges payable 24th June and 25 of December. Shouldn’t they have issued the demand in June with the budget for the year?

I know they can charge estimated cost for building works but the MA have estimated the cost themselves as we have no builders quotes, can they do that?

Should the demand have a date payable by? Mine only have date issued.

[AndrewDod]

Thank you AndrewDod,

The demands were issued in April 2019 one for 2018 and on for 2019, I was in credit but the demands only show balance payable with no credit. Are these demands valid if it doesn’t show my credit and balance payable after reducing my credit?

The 2019 demand is from 25.12.18 to 24.12.19 with a budget for the year, but as my lease states the accounting year is 24th of June to 23 June. Interim charges payable 24th June and 25 of December. Shouldn’t they have issued the demand in June with the budget for the year?

I know they can charge estimated cost for building works but the MA have estimated the cost themselves as we have no builders quotes, can they do that?

Should the demand have a date payable by? Mine only have date issued.

Why do you think you have a personal credit?

They should have issued demands as the lease says it should have been done.

Everything else depends on your lease including the payment date, and the ability to charge estimated costs in advance.

[Paulsen]

Because the builders estimate for major works was over estimated with £2500, so my service charge account should be in credit and it goes towards expenditure for the following year as my lease doesn’t have a sinking fund.

[Paulsen]

My interpretation of my lease in regards to service charges in the pictures above is that it doesn’t have a sinking fund. Am I correct?

[leaseholder64]

See https://en.wikipedia.org/wiki/Quarter_days for the significance of the dates.

The interim charges are at the discretion of the lessor, and it is those that will be demanded.

On balance I don't think you have a sinking/reserve fund, but the underspend is not necessarily known at the time the first payment on account is demanded. It is only when you receive your end of year certificate that you will know how much under or over the previous year was.

[Paulsen]

Thank you, I questioned it with LEASE and the advisor told me the same as you. Just wanted to double check as I read my lease out to her and it is always easier when you have it in front of you.