Huge repairs bill

[MrT2014]

Hi All - hoping someone might be able to help out with some advice

I'm a leasehold owner-occupier in a 3 flat block where the freeholder is a private company. The building is in a pretty poor state of repair with re-pointing & chimney/brickwork repairs needed. We are looking at around £20,000 worth of repairs based on estimates from a builder. The building has been historically neglected by the other flat owners (I purchased my flat around two years ago) who used to have an informal arrangement to maintain the property prior to a property management company being appointed by the freeholder two years ago.
The property management company served a section 20 notice back in Oct 2012 which was supposed to kick off the process of getting repairs done. Since then nothing has happened (their surveyor has not even come round to view the house). The chimneys are in a very bad state and water is leaking through them and causing patches of damp in the alcoves my top floor flat.

I've tried a number of things to try and sort the situation out:

1. Asked the other leaseholders if they are willing to chip in and get the repairs done ourselves. This resulted in some positive noises at first but when it came to commit to paying for it there was foot dragging and withdrawl of effort/engagement from one of the leaseholders who has adopted a head in the sand approach.

2. Asked the property management company several times to crack on with major works but they have just stalled saying it is "in progress"

3. Written to the freeholder and reminded them of their obligations to repair the building - no response

4. Considered setting up a right to manage company. However, I decided that unless the other leaseholders are committed to maintaining the property & contributing to things like a sinking fund then it would just end up being a nightmare

I've now reached the point where it seems that costly legal action against the freeholder is the only option left. However, having spoken to a solicitor today I'm fearful of an expensive struggle to get anything done (they wanted approx £700 just to review the lease/letters I had sent to the freeholder + then send them a letter). I don't see why I out of all the leaseholders should bear all the potential legal costs. I'm even thinking of selling the flat as I can't see how the hell I can ever get the repairs done.

Does anyone have any other tactics to suggest?

Thanks in advance

[leaseholdanswers]

If RTM is out of the question bearing in mind with a lot to money to raise it means suing your neighbour, then the options are
-suing the freeholder for disrepair and asking the court to order him to repair
-apply for the appointment of a manager
http://www.justice.gov.uk/courts/pro...tocol/prot_hou
http://www.lease-advice.org/publicat...asp?item=18#14

[MrT2014]

Huge repairs bill

Hi All,

We have just been landed with a big estimate for repairs to our block. Repairs are needed but the size of the bill (in excess of £20K for each leaseholder) is unexpected and 3 x the cost of a quote I got from a friend who is good builder. I couldn't nominate my friend as a contractor as part of the section 20 process because he doesn't fit the management companies onerous (and likely rigged) selection process.

I appreciate that we can challenge this quote from the management company during the consultation period but I just wanted to find out what the legal situation is if I now managed to get each flat to chip in and get my friend to do the repairs quickly. This way we could bypass the need for the management company contractors as we would handle it informally ourselves. I would assume it will be at least 2-3 months before their contractors could start work so it would be enough time for us to do it ourselves.

If we go it alone could the management company argue that we were not allowed to get repairs done ourselves and sue us for the full amount they quoted? Could they get us to pay a proportion of the costs they have already incurred as part the tendering process and the section 20 notice? Does anyone know of any precedents detailed on this this forum or elsewhere?

In case you are thinking "why didn't you sort this out yourselves before?" - I've previously tried to rally the other flat owners to get the repairs done but to no avail. I have a feeling that the size of the potential bill might now shock them into action.

Thanks in advance

[Moderator2]

Two related threads have been merged.

[flatpackman]

Two related threads have been merged.

....not very well

I would ask for a detailed specification that was put out to tender.

Then have that same tender priced by your builder and send. to the managing agents asking them notwithstanding you are out if time what their comments are to the fact your builder can do the whole job on the same tender for around 1/3 of the price and that if they go ahead with the works that you will refer this to the LVT along with their response

[Moderator2]

....not very well

Please explain that comment.

[andydd]

You must do things by the lease, you'll run into problems if you ask the other LH to informally chip in, etc.

You can argue historic neglect, i.e it costs 20k now but iof it was looked after 5 years ago it would opf only cost 10k, but there may be an issue here in that you mention there was some sort of agreement that the LH's do the work, which could let the FH off the hook.

Alas using solicitors is pricey, its not too difficult to pursue a claim for damages yourself (I have), but it will involve a lot of work/research.

It does sound like there is going to be a large bill whatever course you take although possibly suing the FH for historic neglect and damages for breach of covenant may help bring the cost down, its worth investigating whether the MC conractor selection process is legal, Im aware that LA's must comply with various EU laws but not sure about smaller developments.

[MrT2014]

Thanks for the responses. I will definitely get a detailed breakdown of their costs versus the scope of work and compare to mine.

Andy - It'd be great to understand exactly what problems you think I might run into if I ask the other LH 's to chip in on an informal basis. I could handle organising this myself with my trusted builder mate. I get the impression that the other LH's would now be very motivated to stump up the cash to fix it ourselves in order to save a significant amount.
Do you think I would face legal problems with the management company if I did it myself and what exactly would be their grounds for complaint? The freeholder has taken ages to make any repairs & I am extremely doubtful that the management company will get over 20K out of the other LH's for the repairs in the near future.

[paulamis]

I have found it is not that they get expensive companies (although some of the insurance requirements tend to push it that way) but the spec they invent for the job. Look out for lots of lovely boilerplate crud about eggshell paint and stopping compound - even on UPVC!

Then there is the amount of money set aside for contingencies - this may be written into the quote so the contractor has full knowledge of the amount he can go over with no problem whatsoever - but don't think that puts a stop on going over further.

I thought you get a spec as part of the consultation, how else could you comment on it?

[andydd]

MrT2014,

The problems may be that the 'building' belongs to the freeholder, you as leaseholders just rent it, the lease and to an extent common law will no doubt oblige the freeholder to repair it (and no doubt recover the cost from the leaseholders), you cant decide amongst yourselves to repair it (there have been cases where the LH have been done for tresspass in such situations). You MUST do things by the lease (although it is true that it is possible (and the RICS Code mentions it) for LH's to come to an agreement with the FH to take over maintenance for common areas such as gardening, etc..

Now it maybe possible if disrepair has reached such a state that you do indeed do the works yourself or employ someone else but this is a tricky legal area, the best routes are as suggested by LHA, sue for breach of covenant, get order for specific performance or force take over/appointment of new manager or if you really want to do it yourselves, apply to form an RTM.

[leaseholdanswers]

Its a common delusion in small blocks that "we are able to DIY". Unless you seize control then you cant as explained as it is not yours to touch, and while there is some law on self help, in general things have to be pretty calamitous before that right extends to you.

You are also falling into that trap of " comparing mine to theirs" and while it appears common sense it is far from that.

The way to proceed is, with your builder's help, and you might have to pay a him a fee to do so rather than just the hope of getting the work, is prepare a schedule of works on the block, taking care to define the scope eg to repaint the windows, what does that mean how much rubbing down or burn off, what parts of the window to paint, how many coats and what quality of paint, DIY value or made of the tears of patagonian rain forest pygmies and so on for scaffold brick work repairs etc.

On that basis you have a schedule to present to the agent of what you would like to be done subject of course to pricing and the second notice, notice of estimates and the condition that as a nominated contractor your chap gets to quote. I would insist that these are on a sealed bid basis to ensure all is fair to be opened when one of you is present- it will take all of a few minutes.

it will also form the basis of any action you might take to under #2.

if of course the others are supportive of doing the work then you can say to the agent get your finger out send this to your surveyor and set up a meeting with them. that way its is truly in progress.

I hope that you can see that is a very different approach to yours it is not as yours is a you versus us process but a constructive and collaborative one. Even if it fails it shows to a tribunal or court that having been eminently sensible about it you are the party to be treated seriously and that the agent was an arse for ignoring you.

[MrT2014]

Thank you Andy, Leaseholdanswers, Paulamis - sage advice and hugely appreciated.

Having now received the tender doc and details of the estimates from the management company I can indeed see a whole raft of detail inc paint types and materials they asked the contractors to use (including stuff like andean alpaca fur paintbrushes)

As we now have 40 days to respond to their estimates, I guess my only option is to cost it out in more detail using my builder and painter based on the requirements in the tender and then try and reason with them to reduce the existing estimates and scope of work.

Just a couple more questions for anyone who has time to answer:

1) Which bits in the managing agents estimates are worth the effort challenging - should I focus on the materials used, the requirement to clean up before/after working, the day rate put forward, the contingency etc. As I look at the tender doc each point they make seems legit but it all adds up to hugely inflate the bill. Is there anything a tribunal might usually look at and say they are taking the p**s on?.
2) Is it worth challenging the 10% surveyor fee (in this case it comes to over £6,000) given the high cost of the works. I think the surveyor only turned up for 2-3 hours so it seems excessive.

Thanks again

[paulamis]

Like I said it is the spec that ramps it up, and everything on it makes some kind of sense, in one century or another, and they certainly make sense to the kind of people sitting on tribunals.

Is the surveyor fee £600 or £6000? If it is £6K, then it is probably a project management fee. I wonder if you are getting charged a project admin fee by the agent too?

I think RICs said %age fees were bad, but if the fee is replaced by a scale of charges that add up to the same that does not help. If the agent claims to be signed up to RICs you can download the code and see what he should be doing.

Your lease may have a limit of 10 or 15% on top of the actual costs for management, but if they sub out the project management is that included? (On mine the limit is 15%, on the latest S20, all the fixed admin fess came to 14.9%!).

You might want to look into what kind of warranty they intend to get on the works, I had a 20K roof replacement that came with absolutely no warranty whatsoever, MA said I should have asked in consultation.

[leaseholdanswers]

Yes that is the question of whether the material and plant that they are using are reasonable, though I am sure I have never seen andean alpaca brushes 

Well its all of it as above as long as you can demonstrate a reasonable alternative cost. That in turn needs an understanding as its you that needs to persuade the tribunal not for them to analyse and make your argument for you.

For example you saw the surveyor for 2-3 hours. Who wrote the specification prepared it and tenders it, reports to the client and in turn does the contract administration and valuation and dealing with the works of site, and ultimately the defects liability inspection? All those take support staff and premises costs and yes even a little bit of profit too.

[leaseholdanswers]

So the point is to argue that they don't make sense! if they do then ......

% fees applies to management fees as opposed to these sorts of works where the old scale of fees was withdrawn yonks ago, and replaced with either a fixed rate hourly rate or percentage.

Where leases specify a % fee for management that does not mean that the professional fees for contract administration of major works are capped at the rate or even if it applies. it depends on the wording of the lease and ultimately while it is not subject to consultation it is not a qualifying work, it must still be reasonable. In these sorts of projects 10% is pretty much the norm.

As to the roof issue it would be expected that materials if not labour should be covered by a warranty and it is iit an issue that does not go away merely because no observation was made.