Management Company - Service charge

[KennyH]

We have a management company that seems to be taking the p**s when it comes to our service charge. We do not have a residents association so I'm wondering how we can challenge the charge.

Some of the fees for the 124 apartment block as as follow.

Management Fees £28,980
Heating and Lighting Communal areas £24,300 (no rads in communal areas)
Accountancy Fees £3,250 (why do we pay their accoutancy fees?)
Cleaning £20,000 (for communal areas / lifts - 1 day a week!!)
Postage £800
Reserves £20,000

The total fees come to £148,609.45.

We also then have car parking fees on top of that which include car parking duties (£1000) and car parking attendants ((£98,000). Total car park fees come to £96,812.64.

Whenever i need to contact the management company they tell me i should contact th eparking attendants and they will contact the management company.

We're trying to sell the property but as soon as people hear the service charge they are put off. How can we try reduce the amounts / challenge the management company?

Thanks.

[PaulF]

It is possible but quite difficult to change the management company but you would need a consensus from all the 124 owners. They are however obliged to give you a breakdown of how their costs are calculated, and what maintenance issues are involved.

I calculate the service charge for each flat to be just under £2,000 per annum which if in London or a major city would not be beyond comprehension. You say you are based in Coventry which is only 15 miles from where I live and it does seem a lot.

Accountants fees have to be paid by the MC for audit purposes and they are allowed to pass this on to you all.

Reserves are like a "Sinking Fund" which is retained against possible unforseen expenditure.

[KennyH]

It is possible but quite difficult to change the management company but you would need a consensus from all the 124 owners. They are however obliged to give you a breakdown of how their costs are calculated, and what maintenance issues are involved.

I calculate the service charge for each flat to be just under £2,000 per annum which if in London or a major city would not be beyond comprehension. You say you are based in Coventry which is only 15 miles from where I live and it does seem a lot.

Accountants fees have to be paid by the MC for audit purposes and they are allowed to pass this on to you all.

Reserves are like a "Sinking Fund" which is retained against possible unforseen expenditure.

The flat is in Leicester.

The service charge is approx £1600 per annum plus £1200 for car parking.

The management fee alone rose from £23,000 in 2011 to £28,980 in 2012 and overall the total fees rose by £7,000 and this was without the Buildings Insurance. In 2011 the management company paid the buildings insurance (£30,000) as there was no landlord but we now have a landlord so pay ground rent to him, so the management company are not paying the £30,000 insurance yet the overall amount rose by £7,000.

The flats are a mix of home ownesrs and rental so forming a residents association would be quite difficult.

[andydd]

Is this an RTM company ?

If there is a freeholder then it is upto him to choose the management company, i dont believe you as leaseholders have a say.

Without knowing what you pay as individuals it is hard to say whether the amounts are excessive, but bear in mind that a freeholder/management company can only recover actual expoenditure and even then an LVT can decide on its reasonableness.

Some examples are, management fee, this often is in the range £150 - £250 (each) but may be more depending on circumstances.

I dont really understand the bit about insurance and no landlord ??, Ground Rent shouldnt come into it, that is a pure profit element for the LL.

As for accountants fees, they may be payable if the lease allows, otherwise s21 of landlord & tenant act 1985 requires them to be audited if there are more than 4 flats and you request a summary of expenditure.

It may be useful to use your right under S22 of LTA to inspect the LL's invoices, etc.

All othe costs can be challanged at an LVT who would look at (for example) how much cleaning is done and at what hourly rate.

Andy