Service Charges Never Been Calculated According to Lease Specifications

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    Thanks Eagle, that post broadly confirms what was, until recently, the unanimous opinion of the committee and all leaseholders present at the EGM.

    That, in the event there are no (or an insufficient number of) volunteers forthcoming to take over the management,

    1. If we wish to adopt the historically used (but wholly incorrect) 1/30 share and reserve system, we need a DoV before passing it over to a MA.

    2. If we wish to revert to the 1/18, and 1/12 shares (with no reserve) as detailed in the letter of the lease, then the DoV is not needed, and we can pass it straight over to the MA - who will (hopefully) take care of all the "divorce" issues.

    Both options carry the probability that some leaseholders may raise a FTT challenge to what they either should have paid, or to what they will now be expected to pay (as the case may be).


      The lease appears to be unworkable, there will always be cash flow problems if you operated strictly in accordance with it and reserve funds are advisable. So I recommend that you arrange a DoV anyway.

      The service charges must be reasonable and a leaseholder can always apply to the FTT to decide how much is actually payable, so I can only recommend that you charge the actual amounts for each block allocated 1/18 and 1/12.

      The fact that your leaseholders are unlikely to apply to the FTT should not influence your decision, which should be based only on what is reasonable. I don't see how you can argue that charging someone part of the costs for another block is reasonable even if you are able to argue that the amount may be similar in the long run. The risk you run is that a leaseholder will object when the costs for that block are high ignoring the fact that they may have been lower in other years.

      You cannot be criticised for putitng things right.


        I thought I'd add a little update - post AGM and official vote - for the benefit of all those kind people who took the time to give me their advice, and may be curious.

        Long story short, we don't have enough support for a DoV. More than 10% were opposed and, if you factor in the non-returned voting forms (on the basis that they have not actively consented to a variation), the "nays" are effectively as much as 40% of the flats.

        Of those that did respond, we had 4 or 5 (I forget the exact number) who chose to stick with the lease and, from what they said at the meeting, it's clear they now think the contingency funds can be passed around between the blocks. We didn't bother to argue with them, but they're in for a shock next year!

        There were also some naive souls who just couldn't understand why we couldn't just carry on running it the (incorrect) way it's been run in the past - even when the committee pointed out that it would be doing so knowing it was contrary to the lease; in effect, deliberately breaking the lease. They were quite happy for us to take all the risks involved on their behalf, so long as they didn't have to accept any!

        One good thing came from the AGM: We had 3 or 4 volunteers wishing to join the committee. Alas not enough to cancel the need for a Managing Agent (yet), but it's still a good start towards keeping our development self-managed in the future.

        Anyway, that's where we are at the moment, just in case any of you were wondering.

        I'd like to send massive thanks to all of those contributors who were kind enough to lead me patiently through the more confusing aspects of this situation.

        If there are any more interesting updates or questions that might arise I will return with the details. But, in the meantime...


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