Reserve Fund charge for wooden cladding replacement

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    Reserve Fund charge for wooden cladding replacement

    Hi, sorry if this has been covered elsewhere but didn't find anything when searching.

    I lease a top floor, one bedroom flat in a 3 storey purpose built block. I've just received a bill of £636 for the 'Reserve Fund' for this block. In early March I received a letter from the management fund stating that the block had failed to gain an EWS 1 form as there was wooden cladding on the building and the balconies had wooden decking.
    I've e-mailed the management company asking if the £636 reserve fund charge is linked to replacing the cladding and decking but not yet had a reply.

    I understand management companies can pretty much do what they want, but tthe amount of wooden cladding is minimal and it can't be a suprise to anybody that wodden cladding and decking is flammable! If it is such a worry now how did the block pass it's intial fire safety checks?

    I accept that the £636 is a trivial sum compared to the thousands some face but can't easily accept that leaseholders should pay for errors that were made in the initial construction of the building. Do I just have to stump up or is there any alternative action?

    Thanks in advance.

    #2
    Just pay up buddy. Builders get off scot free after the construction insurance runs out.

    Comment


      #3
      I would check your lease carefully because it is unusual for it to allow reserve fund contributions to be charged separately. Also check that the management company is responsible for replacing the cladding and the decking. The balconies are often the responsibility of the leaseholders. You may wish to request a copy of the last fire risk assessment. You should have received a s20 notice advising you of the proposed works.

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        #4
        DP64,

        If your total cost for replacement cladding / balconies is £636 I woud bite their hand off and pay up.

        Any hint of flammable materials on a building and you'll likely never be able to sell the flat to a mortgage buyer, and the premiums for block buildings insurance will sky rocket, by an inordinate amount which will be passed to you via the Service Charge. It is in your interests to get this rectified. If you need any advice please DM me but yes, if you want the building to be compliant, get it done. I haven't even mentionned what would happen if the fire service demand you get a waking watch in - £10k a month.

        Your final point about leaseholders paying for errors in initial construction, completely agree with, millions of leaseholders around the UK are currrently lobbying the governemnt as this is a political issue. But remember your management company won't have had anything to do with it either.

        How did it pass initial safety checks? Do some research into this...., poor regulation and building control.

        Comment


          #5
          I am assuming that the £636 is not a proportion of the actual cost of the works, it is simply an additional contribution towards the reserve fund. The Management Company should explain what is the total cost of the works and confirm that it intends to charge that cost to the reserve fund. It should also explain why the additional reserve fund contribution is required.

          Comment


            #6
            Thanks for the quick replys.
            The lease states:
            The Lessor shall as far as it considers practicable equalise the amount from year to year ot its costs and expenses by creating reserve funds and in subsequent years levy such sums as it considers reasonable by way of provision for depreciation future expenses liabilities and payments whether cdertain or contingent and whether obligatory or discretionary.

            My take on that is they can pretty much charge what they want?

            I did receive a statement of service charges in March of this year. Included was a section intitaled 'Reserve Fund Details'
            The planned work listed was some internal and external decorations totaling £17,200 and 'Other Major Building Works' with an estimated cost of £85,600. I assume this to be ther cladding work. I've e-mailed asking for clarification but this management company very rarely reply to any e-mails. They seem to prefer communication by phone, starnge they don't want to put much in writing!

            The 'Other Building Work' is listed to be completed by 31 March 2022 with £42,800 being raised this year. I'd guess from this I'll get another bill for reserve fund contributions in 6 months time and/or this time next year. Again I've e-mailed asking for details and had no reply.

            What I'd like to know id how much this will cost me in total but they seem reluctant to tell me. Is this normal??
            The reviews for this management company are all shockingly bad, all one star rating and complaints about appaling service and rip off charges.
            This was my first flat purchase and I wish I'd researched ethe management company as much as the location and property!

            Thanks again.

            Comment


              #7
              The wording of the lease leaves a lot to be desired. Is "reserve fund" not defined anywhere within the lease? Does the lease state anything about the reserve fund monies needing to be kept apart from other monies?
              You are right to request further information from the management company or its agent, They should reply to emails but if you can obtain information by phone, you can always confirm the conversation in a subsequent email.
              Unfortunately, large sums of money prove to be too tempting for unscrupulous agents so you are absolutely right to be concerned and request further information.

              Comment


                #8
                Gave up waiting for an e-mail and phoned the management company. Their plan is to raise the cash to replace the cladding over 2 years, half this year and half next year. However the guy at the management company said they are still waiting for formal quotes for the work, so the money they ask for next year may be more or less (unlikely!) than the £636 from this year.
                Wouldn't mind so much if all this had neen explained clearly in writing!
                Checking through the lease again I can't find any other references to the reserve fund. The lease is 27 pages loing though and written in full blown legalise.
                On the annual statement of service charges the reserve fund contribution monies are listed seperatly so I'd guess that would cover keeping those funds seperate from other service charge monies.
                Thanks again for the advice.

                Comment


                  #9
                  You are correct, explanations should be given to leaseholders as a matter of routine, but they seldom are. If you look at the service charge accounts, the balance sheet and the notes to the accounts should state whether or not there is more than one bank account in existence and the notes should state the actual title of the bank account(s).

                  I am happy to take a look at your lease if you wish to send it to me in a private message,

                  Comment


                    #10
                    Thanks eagle2, sent you a PM

                    Comment


                      #11
                      Originally posted by JK0 View Post
                      Just pay up buddy. Builders get off scot free after the construction insurance runs out.
                      Not a helpful answer, as others have mentioned, it seems odd a lease would require reserve funds for only specific items, if at all.
                      Advice given is based on my experience representing myself as a leaseholder both in the County Court and at Leasehold Valuation Tribunals.

                      I do not accept any liability to you in relation to the advice given.

                      It is always recommended you seek further advice from a solicitor or legal expert.

                      Always read your lease first, it is the legally binding contract between leaseholder and freeholder.

                      Comment


                        #12
                        thanks DP for posting this , i saw a third floor flat with minimal wooden cladding and wondered if it would make a good investment . it seemed to ` stick ` on the market and this maybe explains why . many flats here have wooden balconies but not been able to suss out if folks having trouble getting mortgages

                        Comment


                          #13
                          Your block no longer comes under the EWS1 ruling as it is under the height requirement recently announced. However, £636 seems quite cheap for cladding replacement so I would check what it is for.

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