A few problems with my FH!

[NickSH]

Hi,

I bought the freehold of my flat around a year ago, I'm 24 and it's my first property. Since then I've had several problems with my freeholder which are starting to come to a head and If anyone has any advice I would be very thankful. The first problem is that when I moved in the FH carried out work modifying a small bin storage area to the front of my flat (on the land that is specifically included in my lease). She didn't tell anyone that she was going to modify the store and has done it, I believe, outside the terms of the lease. I've been to a solicitor (30 minutes free advice) and they agreed that it wasn't in the lease and I shouldn't pay for it. My share of the work is £80 - not a lot I know but for me its about the principle of doing things right.

For a little while after I refused the pay, the FH was in contact. She was very rude, threatening (with eviction) and I found it quite intimidating. I asked on many occasions for her to show me where within the lease it covered the work on the bin store, her only reply has been "it is up to you to prove it is not in there, not to me to say it is". I have tried to prove that it isn't but she doesn't accept my proof as legitimate. This quietened down over the course of the year until a few weeks ago when she asked for the yearly insurance payment. I sent a cheque for this amount and she returned it saying that she wont accept anything other then the full amount owed (ie the insurance and the bin storage (plus 20% interest on the 'debt')).

Around a week ago I received our annual bill for the maintenance charge. Everything is ok other then a management charge. The service charge is £1800, split between four flats. The management charge is £1170. She has charged us for 9 hours at £90 an hour plus a 20% fee of the service charge. I've looked in the lease and can't see a reference to a management charge anywhere, yet alone a set rate of £90 an hour plus 20%.

The final thing Is I've asked for copies of the receipts etc for the work carried out and she won't send or email me copies and is insisting I book an appointment to go and view them.

Also throughout all of this she says she won't take me to a LVT as she doesn't want the other leaseholders to pay as its not fair on them..

So...
1. Should I take her to an LVT to try and sort it out? I don't have lots of money and don't want a hefty legal bill, I'd also quite like to sell within the next couple of years so not keen on having it on record..
2. Is she allowed to charge a management charge of basically whatever she fancies without it being in the lease?
3. If so, is that management charge reasonable?
4. Is it reasonable that she won't send me copies of the receipts etc and want's me to book an appointment to view them?

Sorry for all the text, I've had a browse through the forum and people seem to really know there stuff on here so thought it might be the best place to come, apologies if not. If the charges are fair and within the lease I am more then happy to pay for them, I'm not trying to back out of paying anything that's fair.

Thank you in advance!
Nick

[JK0]

Is this your freeholder: http://www.landlordzone.co.uk/forums...holders-consen or are you phrasing the same question from the lessee's perspective?

[andydd]

Bit confusing.

You state you have bought the freeholder but then say you have issues with your freeholder ??!!

I assume you havnt bought the freehold and that you are just a leaseholder ?

You say the FH did some work on a store on your property, is this item specifically demised to you under the lease ?, if so then its yours to repair and the resultant cost, so its not upto the FH to repair and recover the cost, I suggest you check the lease and make sure this is correct.

In any event she cant evict or the proper term is forfeit for amounts undfer £350 anyway although it would be almost impossible to forfeit for this alone anyway.

Was this £80 amount not included within the service charge ?, was it billed to you directly ?, if so this appear wrong.

Does she bill for the insurance seperately too ? Again this is a bit odd, one would of thought it would be part of the service charge ?

Not accepting payment is a bit odd but Ive seen other Fhs do it but only normally relating to ground rent, it may be possible to charge interest on late payments BUT only if the lease allows, I suspect it prob doesnt?, and if it did I doubt it would be at 20%, esp considering interest rates are far lower !

It is unusual to charge a management fee based on hourly rates, this makes little sense, esp at £90 an hour, management is normally considered a 365 days a year not a few hours at £90, and this would be an extortionate rate for someone who prob isnt qualified.

Management fees would normally be charged on a flat rate per year basis in the region of £150-£250 so yours would appear to be somewhat high.

You can request to see a breakdown or summary of te service charge under S21 of landlord & Tenant Act 1985, she is referring to S22 which does allow you to visit and see receipts so would appear correct BUT you prob dont really need to see receipts, would just a breakdown/summary suffice ?

You cant forcve her to take you to an LVT (Its called First Tier Tribunal - FTT now)

1. Upto you, if you used a solicitor it could be pricey but its reasonable easy to do it yourself.

2. If lease has no mention of management fee then no, this cost cant be recovered, double check the lease its unusual for a lease not to have this.

3. Id say no, esp as the management seems a bit poor.

4. Yes its reasonable, she has to send you summary if asked but NOT receipts, S22 says she has to arrange for you to visit. So shes 100% correct in this.

Have you been sent valid demands for ground rent (complying with S166 of Commonhold and Leasehold Reform Act 2002) and valid service charge demands with correct Service Charges - Summary of Rights. ?

Have a look at Lease site for help > http://www.lease-advice.org/

[NickSH]

Hi,

Yes, sorry - I meant to put leasehold not freehold. I'll change this. The land that the bin store is on is demised to me within the lease but there is no mention of the actual bin store.

The service charge is done as a varying charge at the end of the year based on the work that's been carried out throughout the year. The £80 was part of 2015's service charge and has come up again for 2016. The insurance is billed prior to the service charge and then again at the service charge if it has not already been paid.

There's no mention of interest within the lease, certainly not a value of any kind.

That's what I thought, £90 Hr is a salary well above £100k a year which seems excessive for managing a block of 4 flats! I've searched through the lease for a mention of a management fee and can't find one anywhere, I will have another look tonight.

Ah ok, thank you - yes a breakdown/summary will suffice. I have been sent the valid demands and I will attempt to pay again using a cheque and recorded delivery, If she refuses to accept this (ground rent) my lease states she can enter the property after two weeks if ground rent isn't paid.. Will this stand even though I've made an attempt to pay?

Thank you so much for your help!

[andydd]

Don't worry about the re enter bit the law has various changes over the years that over rule this.

Have you been trying to pay ground rent but it's been returned ?

What did they say ? Ground rent is completely seperate to service charges and you can't combine the two.

I'll add more later

[NickSH]

Ok, and yeah I've tried to pay with cheque and she's sent it back saying she wont accept anything other then the 'full payment'..

Thank you!

[scot22]

Nothing to add but agreement with everything that andydd has posted.

[siva]

In any event she cant evict or the proper term is forfeit for amounts undfer £350 anyway although it would be almost impossible to forfeit for this alone anyway.

Andy, I'm wondering about legal costs. Sometimes the only way a LL can recover their legal costs is if they take the forfeiture route. If I remember correctly the arrears have to be greater than £350 like you mention here. Am I right in thinking the arrears (service charges) have to be confirmed by the LTT too?

Am I right in thinking a leaseholder can avoid the risk of having to pay the freeholders legal costs (forfeiture route) by sending a cheque to cover all valid service charges? Or alternatively sending a cheque to reduce the arrears to less than £350? Even if the cheque is returned?

[siva]

1. Should I take her to an LVT to try and sort it out? I don't have lots of money and don't want a hefty legal bill, I'd also quite like to sell within the next couple of years so not keen on having it on record..

If you don't want to pay you really should sort this out one way or other before you try and sell because the buyer will almost certainly only buy if the alleged arrears are paid. The solicitor should ask the freeholder about arrears as part of the conveyancing process.

[andydd]

It's unusual to return a service charge cheque or was this just ground rent ?

Unless the lease allows legal costs they are often only recoverable via the forfeit route but the FH has to genuinely follow this, there are quite s few higher court cases about this but they are somewhat contradictory.

For the OP I'd suggest writing asking where in the lease it allows management costs, interest, etc

If it were me I'd send cheque for amount I thought was reasonable and let them chase for rest but if they return it there are only 2 options.

Pay amount you think is owing and let them chase you for rest or pay full amount and apply to court/FTT to decide on reasonableness.

Might need careful manovering to keep you always in the right and avoid being liable for extra costs.

[siva]

Might need careful manovering to keep you always in the right and avoid being liable for extra costs.

Yes, I can't remember a full SC check being returned or this being discussed in terms of whether it establishes a breach.

It seems crazy to think the freeholder can use this as a way of recovering their legal costs. I've just checked the LAS site and the determination by the LTT is that the charges are reasonable and payable so I'm not sure they would even consider the returned cheque.

Perhaps the only way to go about this is to pay what the Freeholder asks and then dispute at the LTT. I know that is what the LAS were recommending way back when I was looking for help - they didn't say why though.

Another way might be to dispute any 'forfeiture' legal charge as an unreasonable Administration charge.

[andydd]

Well we don't know if the FH will try and recover legal costs or if they'd try and use the forfeit/s146 clause.

Perhaps the OP can let us know if it's the gr of sc cheques that have been returned ? Or both ? They should be billed and accounted for seperately as they are two different entities.

[NickSH]

All the cheques that I have sent (Insurance, SC and GR) have been returned. I'm really not keen on paying for what's asked then disputing as several people have warned me how difficult it can be to actually get money back. I also feel that it's not the right thing to do - where does it stop? If she built a £5k shed on my driveway should I pay for it and then dispute?

[siva]

So you're disputing the £80 charged for the work carried out on the bin storage and the £292.50 management fees. You've sent cheques for everything except the £80. They have all been returned. Do you have proof of all this in writing?

You are saying that the lease doesn't allow for management charges. What does the lease say in regard to what can be charged to the leaseholders? What does it say in regard to the freeholder's legal costs?

[andydd]

Ok that's clearer. So what have you refused to pay and thus they are returning cheques ?, the interest ?

Write to FH and ask where it allows manage fee and interest, beyond that not sure what more you can do, I would of thought any legal action would fail, if you are correct the manage fee and interest are not payable and you've tried to pay the rest !