Management fees, insurance and consultation

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    Management fees, insurance and consultation

    So - I see there are s20 Landlord and Tenant Act 1985 requirements for consulation with lessees on major works costing more than £250 per lessee and long-term agreements (>1year) costing more tham £100 per lessee.

    This has got me thinking.

    Some questions:

    1) Do a managing agent's fees fall under the consultaion requirements for long term agreemenst (I assume they don't for the major works as they are not works). Let's say the agent's fees are £2300 split equally between 8 flats and they act as agents for longer than 1 year (let's say almost 4 years). I think I saw there may be some exclusion for employment contracts but presumably if the agents are a Ltd company then its a contract to provide services. There may be an argument that the agents are not appointed for more than a year but for consectutive periods of excactly one year. I would hope this latter argument would be defective on the grounds that in effect they have operated continuously for over a year.

    2) Do building insurance premiums fall under the consultation requirements at all? Let's say the premium inc IPT is £2,300 split equaly between 8 flats.

    3) When do major works become separate works carrid out at more or less the same time? Basically what is to stop an agent simply artificially breaking down a major job into 2 small jobs so that each of the small jobs are below the threshold for consulation. Let's say they redecorate the communal hall and obtain a quote for recarpeting of £1950 and a quote for repainting for £1850 each split equaly between 8 flats and so each just under the £250 limit for each flat. I might think that regardless of how many tradesmen/companies are involved the works are the redecoration including carpeting and painting if they are undertaken at the same time (the intent is clearly to improve the communal areas) but what wouod be required to demonstarte they were two different works (eg: just two differnet invoices?)

    Thanks in anticipation of your thoughts on these...


    1. Seems there are several issues of concern about the way your managing agent company is handling the service charge account. You can write to your agent and request a copy of the service agreement .
    If you are a member of an existing leaseholders management company, you can call a meeting to discuss the matters. If not, the best way is to get the backing of 4 other flats and set up a RTM company ( and appoint your own managing agent ) to run the maintenance of the building.

    2. Which town/city is your block located ? and what size are the 8 flats ?
    You can write to managing agent /freeholder for summary of insured cover and get it with 21 days. The summary of insured cover will show the name of the policy holder, the insured value of building, the public liability cover , the employeee liability , excess for water damage and excess for subsidence, the annual premium , the broker's name and insurance company .

    I guess a block of 8 flats of average size should have an insured value of below 1.2 mil and if correct, the premium at roughly 20pence /thousand pounds cover may be overcharged. But a poor claims record for your block would increase the premium.


      Gordon, thanks for your reply.

      You are correct that we have had some issues with the landlord's managing agent and so in July this year 5 of the 8 leaseholders took over the management of the block via a RTM company.

      However we still need to resolve the service charge issues from the landlord's agent's time running things (August 2005, when the landlord bought the freehold, until July 2009). We have just applied to the LVT in this respect and so need to assemble our case and are trying to cover all issues.

      The insurance was definitely on the high side as our new premium since we took over is half the previous premium. To answer your question the block is in SW London and the flats are 75m2 each. We have also obtained other quotes to demonstrate this but we want to tackle everythimng that may be pertinent.

      Hence the queries about consulation on various issues which aren't readily apparent to me. I suspect that some of these may be a matter of opinion.



        I would suggest that you get the previous managing agent company to handover all the documents , bank statement , insurance policies etc for the past 3-4 years . The documents all belong to the leaseholders and have to be retained for 6 years.

        Then you compare the costs year by year for cleaning , gardening , insurance and painting , management fee to pick out which costs to focus on. Not much you can do about electricity costs but if the electric bill was charged at 17.5% vat , it may be a point to raise at LVT.

        With insurance premium you can write to the insurance broker and ask for a declaration of the amount of commission they took and what amount was paid to the landlord and managing agent. Send it by registered post with a copy to FSA. I think you could write to the other companies asking if any commission was demanded by the managing agent before placing the order.

        SW London - around Wimbledon ? Is it a luxury block recent build ? What is the insured building value on the insurance policy ?

        What is the name of the freehold company and managing agent company ? Is there any link between the 2 companies ? or you could send a pm .

        When flats were sublet or transferred , did the leaseholder get excessive demands for registration fee ?


          Thanks again Gordon,

          We have appointed our own firm of managing agents who I know have requested the information from the old ones but are struggling to get it. I will check on their progress.

          Will also write to broker as suggested.

          Will PM you with names - I'd rather not identify the case on here.




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