Flat owner calls for more transparency in service charge statements

A flat owner has called for more transparency in service charge statements for leaseholders after being given a ‘basic’ single-page version by his management company.

Glenn Seaton has created a video showing the single typed page of A4 that constituted his service charge statement, saying it lacked details about where the money was being spent.

The footage showed the statement and compared it to a relatively lengthy service charge statement that he is received for his other flat in France.

He currently rents out the flat in Britain, while living in his property in France.

He said: ‘I wanted to show the difference between service charge statements in the UK and what is done in France.

‘The UK version shows me how much I have to pay, which is £3,400 a year. It is very basic. There is stuff that I don’t know about.

‘And then there is what I am sent in France by recorded delivery. I am called to a meeting where all property owners can get together and discuss the budget and other issues.’

The service charge statement for his flat in French is a full report with an invitation to a residents meeting and photos while the statement for his UK flat is just a ‘basic’ single page

He added: ‘Look how amazingly detailed it is. Every single item is included and explained.

‘It also includes the names of homeowners who are behind in their service charge, and it carries through to a detailed budget for the following year.

‘And when there is some maintenance required, they send us photographs. Nothing to hide, everything is accountable there.’

Template email to managing agent

Service charges are a proven way for investors to make money, and it is a largely unregulated sector.

But any charges must clearly be reasonable, and if you suspect they are not – and have done your research – there are ways to effectively challenge any increases, explains Stephen Gold, a retired judge and author of ‘The Return of Breaking Law’.

He suggests that a letter to the landlord or managing agent should be your starter, and has provided the following template:

We refer to your service charge demand for [x year]. It is our case that the items particularised in the schedule to this letter are not payable by us for the reasons explained in the same schedule.

We have calculated that our liability should be limited to the sum of £x instead of £y as claimed. We invite you to revise the demand to £x and to notify your decision on this within 28 days of the date of this letter.

If you are not prepared to accept £x, it is our intention to make an application to the First-Tier Property Chamber (Residential Property) (or, in Wales, the Leasehold Valuation Tribunal) to reduce the demand under the Landlord and Tenant Act 1985.

Should you make a claim to the county court before the application is issued, we will request the court to transfer the proceedings to the tribunal which we are advised it can be expected to do.

We will apply to the tribunal and/or county court under section 20C of the 1985 Act for an order that prohibits landlord costs and expenses of dealing with the dispute being added to a future service charge.

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Mr Seaton wrote to his management company at the start of this month and had still not heard from them more than a week later when he raised the issue with us.

He asked about the entry maintenances cost of £38,902, along with general repairs and maintenance of £20,000.

He asked the management company if he could have a copy of the audit and accountancy report to better understand where the money is being spent.

He said: ‘There needs to be better transparency in the service charge invoice.’

Mr Seaton’s block is managed by Remus. The company was contacted about the issues raised by Mr Seaton but it declined to comment.

The flat owner has asked his management company for a copy of the audit and accountancy report to better understand where the money is being spent

What are your options if you’re not getting value for money from your property manager?

Disgruntled leaseholders have three main options to address poor property management.

1. One solution is to buy the freehold, but the flat owners may not be able to do this for a variety of reasons, such as not having the required minimum number of leaseholders in the block to buy it.

2. A step down from buying the freehold is doing a Right To Manage application where you apply to the First Tier Tribunal (Property Chamber) to deal with disputes regarding property management.

The tribunal is part of the courts system and is a leaseholder-friendly route for those who cannot afford to pay lawyers. It means you acquire the right to manage the block and need to set up your own company to oversee it.

In reality, you’ll employ another property management company to do the work, which will give you more control over how the block is managed. You will need to seek advice and speak to a solicitor.

3. Perhaps the simplest way to deal with poor property managers is to ask the tribunal to decide whether the service charges are reasonable. For this, you will not need a solicitor. If you apply via the tribunal, it must investigate.

It can result in your monthly property management charges being significantly reduced and you can even end up with money being paid back. You can get free advice at www.lease-advice.org.

This post first appeared on Dailymail.co.uk