One of main issues is the rising cost of the Service Charge Accounting being levied on the lessees. Whilst a few block management agents are properly regulated through bodies such as the RICS, (Royal Institute of Chartered Surveyors), there is increasing anxiety that the new government no longer supports enforcement.
The RICS Residential Code which its chartered members operate to sets the required standards of service and following the Secretary of States approval last year this Code was to become mandatory. However following a reversal of this policy it now appears that unless RICS qualified management agents are employed by landlords, professional standards could be set to decline.
If you are a leaseholder in a block of flats and are required to pay a service charge to the landlord or freeholder these costs can all too often appear expensive. So what can be done about it? By taking a series of careful steps it is possible to challenge the reasonableness of these charges. And it helps to know your rights.
Establish the Ground Rules Look out the property lease. Believe it or not it is not unusual for leaseholders to misplace these important documents. If necessary you should contact your solicitor to locate a copy or thereafter the Land Registry. The lease defines the boundaries of your flat (the demise) and the costs you are liable for under the landlord’s service charge costs. It is a good idea to retain copies of the service charge demands or applications you receive from your landlord or managing agent for future reference and checking. Also refer to the annual accounts provided which are required by statute to detail expenditure incurred from the service charge account. These should be prepared or audited by an independent accountant to show that the details are correct.
Carefully consider the documents Examine both the lease and the service charges information received over the years. These will contain both budget forecast or estimated costs and in the case of accounts the actual costs incurred. These costs will be apportioned amongst the flats according to the lease. Leases will vary with some dividing costs equally between your flat and others. In some cases larger flats pay a greater proportion and sometimes there are retail shops to be considered in the equation. Almost without exception, the property lease should explain in specific detail how much of these charges should be made against your flat.
After all, the lease is the basis upon which the landlord, or his agent, should calculate the correct service charges. Again, take time to look through the details. Recalculate the costs according to your understanding and compare your findings. Decide if the costs charged to you are consistent with what is set out in the lease. Review this Information in the light of Current Legislation The legal side of things can be difficult to get to grips with and much of the current and more relevant information is referred to in the Commonhold and Leasehold (Reform) Act 2002. In summary this sets out statutory requirements for service charges and related matters in respect of residential dwellings. Whilst the full details are too involved for this article. I have summarised a few of the main points below however readers should not act on this information without first consulting us or receiving specialist advice.
The landlord must undertake prescribed consultation procedures to be able to recover service charge monies under certain circumstances. Consultation measures are necessary for specific expenditure categories. Items affected include higher value services and costs above certain limits.
Costs incurred by a landlord must be charged within 18 months, or notified within that time. Resolving the Problem Having examined the information to hand, if you remain dissatisfied with the levels of charging then you should raise the matter in writing. Notify your landlord or block management agent as soon as possible, highlighting your concerns.
Often any discrepancies may be resolved at this stage by explanation or realisation that an error has been made. It is therefore important to act as quickly as possible as tensions and bad feeling can develop. These can have a negative effect if things are left to simmer for any length of time. If you remain dissatisfied with your response than you may wish to proceed with a formal dispute. Service charges disputes are now almost exclusively heard and settled by the Leasehold Valuation Tribunal (LVT).
It will take time to prepare your case and you should carefully consider your argument and the evidence you will need in support. You may wish to appoint a professional to review your case and assist you. However it is important to remember that other leaseholders will be affected too and you need not take on this burden alone. So if you are a long suffering leaseholder and you feel you are being overcharged or unfairly treated then why not consider asking your landlord to employ a professionally qualified managing agent.
If you insist that a firm is appointed which is Regulated by RICS (The Royal Institution of Chartered Surveyors) the service standards they must work to are set out in the RICS Service Charges Residential Management Code. This Code serves to protect clients from unscrupulous practices and in addition requires auditing and protection measures are put in place being subject to regular inspection by the institution.
Other options may also be open to disgruntled leaseholders including taking up their Right to Manage or indeed Enfranchisement where the freehold can be purchased by a majority of the lessees. However these alternatives are not always possible and can take time requiring the co-operation of others to initiate. Whatever solution is to be found, I trust that the above will serve as a useful point of reference to help those who may be subject to overcharging.
VFM block property management agents is an estate property management company providing residential property management services for blocks of flats, apartments and private estates. VFM are property management agents to landlords, developers, freeholders and leaseholders in residential blocks of flats and apartments. VFM’s property management service standards are Regulated by RICS.
For further advice regarding property estate management please contact VFM or visit their website. VFM’s property management services comply with the RICS Residential Service Charge Management Code giving many benefits and peace of mind to developers, freeholders and leaseholders throughout London and the South East. VFM’s block management London offices are located in Beckenham, London Borough of Bromley, near to Lewisham and Croydon on the Kent Surrey borders. Croydon tram link, Beckenham Junction and New Beckenham main line rail services offer easy and efficient transport links throughout Greater London including Bromley South, London Victoria, City, London Bridge, Waterloo East and Cannon Street.
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