Management Fees

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    Management Fees

    Hi

    I'm a leaseholder in a block of flats and our freehold was recently sold to another company (after being offered first to all the leaseholders). This new company has recently sent out their first invoice for service charges. The service charges are broken down into 2 components. A management fee and the actual costs of the services themselves. By and large the service charges are exactly what they were before (they have just continued using the same services/charges as the previous freeholder - insurance, etc.). However their Management Fee is significantly higher than the previous freeholder - it's effectively a 1000% increase.

    We've spoken to them about this increase and their justification is that it's their standard charge and is because of new legislation adding more onerous conditions they have to meet. They couldn't/didn't explain why the previous freeholder was able to charge a lot less (and presumably also needed to meet these new conditions).

    Do we have any recourse to get these management fees reduced? What is considered fair management fees (We have a fairly low maintenance building)?

    Thanks

    #2
    As a starting point, say £ 120 per year per flat.

    if the previous freeholder did it "in house" without a Managing agent,
    then 1000% increase could be right.

    I know I only break even at £ 120 per flat per year.

    R.a.M.

    Comment


      #3
      My biggest client's man fees are set at £150-£170 per unit

      Comment


        #4
        LVT's have the power to decide if a management fee is 'reasonable' or not, this would depend on the amount of work done, the property and the local area, my local LVT often concludes that a managemnet fee of £150-200 is reasonable, above that they may concklude it should be reduced.

        Have a look through previous LVT decisions and especially ones involving your MA, your locality, similar properties, etc. > http://www.lease-advice.org/lvtdecis...es.asp?table=2

        I would of thought a 1000% increase would be a bit much !

        There may be 'new' conditions to meet regarding haelth & safety, etc..especially in a large block but most of this cost would normally be seperated out and shown in the service charge (i.e £1000 Asbestos survey) and not added to the management fee.

        Andy
        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


          #5
          Fair point by andydd - does the lease even allow for the fees to be recovered?? This could have been missed if the previous agent's dealt with in house.

          Comment


            #6
            Originally posted by dant View Post
            Fair point by andydd - does the lease even allow for the fees to be recovered?? This could have been missed if the previous agent's dealt with in house.
            the other issue is if the contract is for more than 12 months then it may be subject to consultation.

            AS TO FEES OUR AVERAGE IS 350 A UNIT AND THE LOWEST 300.....
            Based on the information posted, I offer my thoughts.Any action you then take is your liability. While commending individual effort, there is no substitute for a thorough review of documents and facts by paid for professional advisers.

            Comment

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