Surveyor's fees prior to decoration works being done.

[Sydaton]

Looking at the service charge accounts for our long leasehold flat, I see that there is a £3000 charge for "obtaining tenders, analysis and report issuing" relating to decoration work. This is stated as being calculated at 60% for an interim payment of the total to be charged which will be calculated as 10% plus VAT of the lowest tender figure. So effectively 12% of the cost of the works.

Bearing in mind that there is a managing agent also being paid to arrange the yearly maintenance, does anyone have any thoughts on the reasonableness of the managing agent instructing an additional surveyor (in a sister company), in light of the fact that the invoice is dated 30 September 2021 and no works have actually happened yet?

[Lawcruncher]

Totally unreasonable. You do not need a surveyor to tell you if a property needs painting. The managing agent should be the one who puts out tenders. They are paid to manage.

[fos333]

Hi,

What is the set up and how many flats are involved?

Without the above it is rather difficult to know if this is reasonable or not.

Many managing agents charge 10% or more for conducting section 20 consultation and would depend on the management agreement.

The following may be of help;

https://www.servicechargedisputeguid...on-20-notices/

[Lawcruncher]

Why should a charge be made for conducting a section 20 consultation? It is part of management. It seems that agents want a retainer for doing nothing much and then to be paid for actually doing some work.

[fos333]

Lawcruncher I'm not saying they should or shouldn't but more information is required from OP to determine whether this is reasonable or not.

Other factors to consider would be how much is the management fee per flat? And as stated in #3 what is in the management agreement?

[Sydaton]

Thanks for your input and sorry for the delayed responses:

There are 11 flats and the managing agent charges approx. £3600 per year to manage the block. I'm not party to the managing agents management agreement.

The managing agent doesn't appear to have charged anything extra to issue the Section 20 but the issue is the 60% of the 10% of the lowest tender charged so far for, "obtaining tenders, analysis and report issuing". I would mention again - at the risk of overemphasising - that no works have actually been carried out 9 months after the invoice was raised.

[fos333]

Is there a management company involved of which you are a member?

Or just 2 parties to the lease, the leaseholders and the freeholder (who has appointed a managing agent).

Did you receive S20 consultation notices?

https://www.lease-advice.org/faq/wha...r-major-works/

From your 1st post it would appear the cost is shown on your service charge accounts? It would also appear to be a large cost to the 11 leaseholders if the quoted £3,000 is 12% of the total cost.

The works can't be started until the funds are available, maybe the reason for the delay?

[Tipper]

Often the managing agent just manages day to day site needs and finance but excludes 'projects' such external redecoration, roof replacement or other non-routine activities which are considered extra work. I would consider it fair to charge for all these 'project' actions.

Does rather depend on the managing agent's agreement/contract of course.

[Sydaton]

Thanks again for your inputs. In response,

There are just 2 parties to the lease, the leaseholders and the freehold company which has appointed a managing agent.

Yes, S20 consultation notices were received although they only refer to the works as opposed to the cost of "obtaining tenders, analysis and report issuing".

The cost is shown in the Service Charge accounts but shown as deducted from the reserve fund.

It's not been stated yet but I can see that the quotes for the works are maybe 40% higher than the amount held in the reserve fund.

[Sydaton]

I've now heard from the managing agent that the freeholders decided - presumably because they don't have enough funds in reserve - that they will only carry out a limited range of works. The lowest quote for the reduced scope of works is c. £6300.

This means that the freeholder paid £3000 in surveyor fees of which only £630 (10% of £6300) related to work that will actually be done.

So the question remains, is it legitimate for the leaseholders to have to pay for the whole £3000?

[fos333]

I would certainly be asking the managing agent if the cost of "obtaining tenders, analysis and report issuing" is going to be re-evaluated now that the total cost of the planned range of works has been considerably reduced.

An additional cost should be expected for the statutory consultation. Our current managing agent charges £10 per unit (39), however, also charges an additional amount for project management (to be agreed with client per project).

We have also been charged for S20 consultation in the past when carrying out internal and external decoration when the cost has been met from the reserve fund.

Do you have support from the other leaseholders?

[Sydaton]

Do you have support from the other leaseholders?

It depends if the fault lies with the Managing Agent or if you fault lies with the freeholder.

I would have the support of 20% of the leaseholders but the remainder of them are shareholders in the freehold company so if it's a claim against the freeholder then not likely to have their support (although I think only one of the shareholders makes the decisions).

[fos333]

You only have a contract with the freeholder so it would be a claim of the cost being unreasonable against the freeholder (in this case a limited company).

I can't see those leaseholders, who are also shareholders of the freehold company, wanting to pay costs that have not been correctly incurred any more than you do.

Are they all directors of the company? You can ask either the directors of the company or the managing agent to provide you with a breakdown of the £3,000 that is shown on your latest service charge accounts.

You can also ask the managing agent to provide you with a basic summary of their terms and duties, including all fees as per RICS Code of Practice 3rd Edition, pg 12 para 3.2;

https://www.rics.org/globalassets/ri...ition-rics.pdf

[Sydaton]

Are they all directors of the company? You can ask either the directors of the company or the managing agent to provide you with a breakdown of the £3,000 that is shown on your latest service charge accounts.
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Thanks again for your input - in answer to your question, "are they all directors?" - there are 4 current directors but 2 of them are from one single flat and 2 from another single flat.

[Sydaton]

Are they all directors of the company? You can ask either the directors of the company or the managing agent to provide you with a breakdown of the £3,000 that is shown on your latest service charge accounts.
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As part of my examination, I now discover that not only was a surveyor instructed at 10% of tender value but the managing agent also charges 10% too! (Oh and circa £750 for issuing the Section 20 notices

Has anyone else experienced this?