1.Service Management Company - 2. Insurance

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    1.Service Management Company - 2. Insurance

    First question, please be kind

    Should a Section 20 Notice be issued to all Leaseholders for:-

    1.Service Management Fees - We are charged over £250 per flat?
    2.Building Insurance - We are charged over £250 per flat?

    Thank You

    Not Happy!!

    #2
    I may get questioned about my reply.

    Service management fees and insurance are not "Major Works", for which S20 is designed for.

    The management fees are always the same, ( subject to price increases ) so you know there is ALWAYS going to be a management fee of approx £ x per year.
    The insurance fees are always the same, ( subject to price increases ) so you know there is ALWAYS going to be a management fee of approx £ x per year.

    And everyone knows this, and know it's every year, regardless.

    Me, I just state the insurance for next year wil be £ x, and is the same or £50 extra to last years.
    Management fees next year will be £ .. etc.

    However, you may wish to have an S20, but I don't bother for those two things, but I do inform the leaseholders of the prices.

    Comment


      #3
      Ram is correct they are not qualifying works or services but they may be long term contracts if either realte to a period of more than 12 months and any lessee pays £100 or more in one accounting year.
      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


        #4
        Originally posted by leaseholdanswers View Post
        Ram is correct they are not qualifying works or services but they may be long term contracts if either realte to a period of more than 12 months and any lessee pays £100 or more in one accounting year.
        Dear nothappy.

        The problem with an S20 for management fees and insurance is as follows.

        There is no way I can obtain the next years cost of insurance until one month before the insurance is due.
        I have been told the price is quoted near the end of the contract to take into account any claims on the insurance that may be lodged , or just about to be claimed, and the economic indices for the industry ( I can understand that as I used to do that )

        So if I put in an S20 30 days before the insurance is due, we will have NO insurance in 30 days time, as it takes 3 months to finalise the S20 route.

        Therefore I will refuse to issue an S20 for insurance ( or management fees )
        Also, quotes are normaly valid for 30 days ( I am used to these terms in business )

        Neither will I apply for Dispensation ( S20Z ) as that will take a minimum of 6 weeks.

        If you ask for any quote, then tell them you wont be instigating that quote for 12 months, they will tell you to come in 11 months and 20 days time for a new quote.
        Same with 6 months time, and 3 months time.

        Therefore S20's cannot in practice be used for insurance quotes.

        As I stated, these costs are continuing costs, EVERY year and everyone knows the price will be roughly the same as before, and will NOT be additional costs to the previous year.

        P.S.
        If you are doing a new contract for management ( you want to change your agent ) then you have time to do an S20, maybe.

        Again, if you get a quote ( insurance ) if you can get one for 3 months hence, the likelyhood is in those 3 months, going the S20 route the price could go up.
        You then have to stop the "getting insurance", stop the "works", E.G. don't pay for the insurance, issue another S20 for the increase, and wait another 3 months on the S20 route, all while having no insurance ! !! !
        As I stated, these costs are continuing costs, EVERY year and everyone knows the price will be roughly the same as before, and will NOT be additional full costs to the previous year.

        S20's for insurance, don't bother.
        Last edited by ram; 24-02-2015, 22:17 PM. Reason: P.S. ADDED

        Comment


          #5
          Hi and thank you for your answers. So the service management company are not legally bound
          to issue a Section 20 notice, in those 2 instances.

          Lets take it a stage further
          The freeholder bought the freehold off of one of the service management companies partners,
          about 20 years ago. That same Service Management Company ( SMC ) has looked after the estate ( 200 Flats )
          for about 20 years. Their fee for managing the estate, give or take a few pounds is £50K. The gardening and
          cleaning has been subcontracted out to the same sole trader for the last 20 years to the same sole trader.
          His fees for last year were:- Cleaner 4 days a week, £18,600 per year. The cleaner spends 2 days a week
          cleaning and the other 2 days, cutting the grass ( I thought that cutting the grass was gardening ).
          Gardener 3 days a week, £29,340. As far as I know the subcontractor has never had a contract.
          For the last 2 years, I have ask to see a copy of his contract and as of today I have seen nothing.
          This obviously exceeds the £100 for what I call, long term contract.
          It has never been put out to tender.

          I could go on and on and on!!!

          Thank You.

          Not Happy

          Comment


            #6
            Originally posted by not happy View Post
            Hi and thank you for your answers. So the service management company are not legally bound to issue a Section 20 notice, in those 2 instances.
            S20's can be a grey area to the uninitiated.
            But what I said was
            Therefore I will refuse to issue an S20 for insurance
            +
            Therefore S20's cannot in practice be used for insurance quotes


            You need S20s for your current setup as you explained above.
            But you have not said how many flats there are, and how big the garden is.

            It looks as though there is one person there 5 days a week gardening and cleaning.

            You only need 1 person per week for all that.
            We have a gardener every 2 weeks for 2 hours. and the garden is massive.

            But you are entitled to have an S20 for the things you listed, as it's out of control ! !! !

            Give some info on size of place.
            including -- e.g. the garden is twice the base size of the flats.
            20 flats all on one floor, / 20 over 3 floors./ 20 over 20 floors

            Comment


              #7
              Well cleaning and gardening are not qualifying works either and they will argue that the contract is year to year or month to month.

              S19 does however protect you ikn that costs in general must be reasonable in terms of procurement and cost, and you may therefore have an argument that they are not. I would still try the LTA pitch 20 years is a long time!
              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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