Management company woes
Discussion
Hi all, just after a bit of advice on this one.
We live in a leasehold flat that is obviously run (badly, naturally) by a management company.
We pay the exorbitant service charge every month and we’ve just had their annual statement through, along with an invoice for £490 that they’re asking for as they’ve gone £13k over budget on maintenance.
I have a couple of issues with this. Firstly their excuses are that the flats are getting older and need more maintenance done. Shocking isn’t it? They should budget for this surely?
They also don’t do any actual maintenance on the properties, only bodge stuff when it breaks. We have some paving stones that keep coming loose and they just send someone to take them up, put sand underneath and then re-lay – amazingly this happens every 6 months.
They also haven’t cut the grass or the hedges outside I think this year, plus there are weeds growing at the edge of the road all around the estate.
We’re struggling to see how they can justify us paying more money when they don’t do their job properly to start with – do we have any rights here at all?
They’re also asking for it all in one go which to be honest I’d rather not pay – am I within my rights to ask for it to be split across my DD payments?
Sorry for the ramble, just quite annoyed that a company can be so useless yet want more money!
Any help appreciated.
Thanks
We live in a leasehold flat that is obviously run (badly, naturally) by a management company.
We pay the exorbitant service charge every month and we’ve just had their annual statement through, along with an invoice for £490 that they’re asking for as they’ve gone £13k over budget on maintenance.
I have a couple of issues with this. Firstly their excuses are that the flats are getting older and need more maintenance done. Shocking isn’t it? They should budget for this surely?
They also don’t do any actual maintenance on the properties, only bodge stuff when it breaks. We have some paving stones that keep coming loose and they just send someone to take them up, put sand underneath and then re-lay – amazingly this happens every 6 months.
They also haven’t cut the grass or the hedges outside I think this year, plus there are weeds growing at the edge of the road all around the estate.
We’re struggling to see how they can justify us paying more money when they don’t do their job properly to start with – do we have any rights here at all?
They’re also asking for it all in one go which to be honest I’d rather not pay – am I within my rights to ask for it to be split across my DD payments?
Sorry for the ramble, just quite annoyed that a company can be so useless yet want more money!
Any help appreciated.
Thanks
Firstly you need to understand the exact setup. We sell the freehold to the management company which is owned by the individual tenants. The management company doesn't do anything but employs a managing agent to "manage" the site...
At any point the management company could sack the managing agent and set someone else on or do it themselves.
If your setup is similar to above you control(with the other tenants) the management company and you can manage it how you want, with or without a management agent.
If however the freehold is owned by someone else that the tenants can't control they can appoint who ever to do the "managing" and you are slightly stuffed. There are laws to get them to perform and you can make representations to the freeholder/landlord to perform better. Unfortunately I don't know a lot about this though.
At any point the management company could sack the managing agent and set someone else on or do it themselves.
If your setup is similar to above you control(with the other tenants) the management company and you can manage it how you want, with or without a management agent.
If however the freehold is owned by someone else that the tenants can't control they can appoint who ever to do the "managing" and you are slightly stuffed. There are laws to get them to perform and you can make representations to the freeholder/landlord to perform better. Unfortunately I don't know a lot about this though.
thecremeegg said:
Hi all, just after a bit of advice on this one.
We live in a leasehold flat that is obviously run (badly, naturally) by a management company.
We pay the exorbitant service charge every month and we’ve just had their annual statement through, along with an invoice for £490 that they’re asking for as they’ve gone £13k over budget on maintenance.
I have a couple of issues with this. Firstly their excuses are that the flats are getting older and need more maintenance done. Shocking isn’t it? They should budget for this surely?
They also don’t do any actual maintenance on the properties, only bodge stuff when it breaks. We have some paving stones that keep coming loose and they just send someone to take them up, put sand underneath and then re-lay – amazingly this happens every 6 months.
They also haven’t cut the grass or the hedges outside I think this year, plus there are weeds growing at the edge of the road all around the estate.
We’re struggling to see how they can justify us paying more money when they don’t do their job properly to start with – do we have any rights here at all?
They’re also asking for it all in one go which to be honest I’d rather not pay – am I within my rights to ask for it to be split across my DD payments?
Sorry for the ramble, just quite annoyed that a company can be so useless yet want more money!
Any help appreciated.
Thanks
How many flats are looked after? from your figures is it about 27? We used to look after quite large blocks of flats.We live in a leasehold flat that is obviously run (badly, naturally) by a management company.
We pay the exorbitant service charge every month and we’ve just had their annual statement through, along with an invoice for £490 that they’re asking for as they’ve gone £13k over budget on maintenance.
I have a couple of issues with this. Firstly their excuses are that the flats are getting older and need more maintenance done. Shocking isn’t it? They should budget for this surely?
They also don’t do any actual maintenance on the properties, only bodge stuff when it breaks. We have some paving stones that keep coming loose and they just send someone to take them up, put sand underneath and then re-lay – amazingly this happens every 6 months.
They also haven’t cut the grass or the hedges outside I think this year, plus there are weeds growing at the edge of the road all around the estate.
We’re struggling to see how they can justify us paying more money when they don’t do their job properly to start with – do we have any rights here at all?
They’re also asking for it all in one go which to be honest I’d rather not pay – am I within my rights to ask for it to be split across my DD payments?
Sorry for the ramble, just quite annoyed that a company can be so useless yet want more money!
Any help appreciated.
Thanks
As Hantsrat is correct - buy the freehold - you have that right as a group of leaseholder - run it yourself !
Also as Hantsrat said they may well be doing it as cheap and cheerful as they can to keep the costs as low as possible. Some companies are reactive in that they don't hold any or much money but keep the charges low whilst other will hold large sums built up over many years with charges higher.
Take it that the building insurance comes from this fee, as does accountants fee and paying the management company to collect and do the admin to deal with the maintenance/AGM/ & the statutory books?
We looked at apartments in the UK and the management fees seem insane, My wife complains about paying 200 quid a month for the place we live in in Poznan however this includes Hot water, Heat, 24 hour reception, Daily cleaning of all the common areas and to maintain the swimming pool. They do seem to bodge things a little bit as I guess they all do, (Garage floor is peeling 3 months after redoing the floor and Stevie wonder dropped round to paint the hallways last month)
From what I can tell Maintenance/Admin fees seem to increase year on year to compensate for the age of the building with the old communist ones charging far more than our building from 2008 - sort of makes sense.
From what I can tell Maintenance/Admin fees seem to increase year on year to compensate for the age of the building with the old communist ones charging far more than our building from 2008 - sort of makes sense.
Fish said:
At any point the management company could sack the managing agent and set someone else on or do it themselves.
.
.
just to highlight that the management company (ie we did) would always have a managing agents contract with the freeholder/freehold company which would normally run for a min of 2 years. We would then look to renew. So we could not just be given notice at any stage. And decent agent would have the same I would suggest..
.
HantsRat said:
You do realise if they do a proper job to repair everything rather than when things break it will cost you even more?
They should provide a detailed costs list detailing everything that's been spent.
If you're not happy, you can club together and start your own management company.
You mean if they correctly re-laid the path once so that it lasts 10 years, rather than paying someone a day every few months? Even it costs a bit more I'd take that as at least we'd have a useable path They should provide a detailed costs list detailing everything that's been spent.
If you're not happy, you can club together and start your own management company.
You say we can club together to start our own management company but it's not quite that simple is it?
The freehold is owned by some random guy and half the flats are rented so no idea who owns any of them. On top of that I'm sure we'd be looking at paying thousands each that we can't certainly afford
Someone asked how many flats? In our block there are about 25 odd yes, plus there's other blocks on the same estate, plus houses.
This is the reasoning they've given for the costs:
Management Company of uselesness said:
The Accounts reveal a deficit of £13,489 which represents 37% of the annual service charge. This deficit has been
apportioned to each unit in accordance with its percentage of the total service charge. The deficit has occurred in a
number of areas but primarily in the headings set out below.
General Repairs & Maintenance: Unfortunately, we are over budget for the general repairs across most of the
blocks at the development. As the blocks age, more repairs are needed to ensure the appearance of the
development is maintained. I can confirm that we have increased the general repairs cost headings across the
budget to allow for future expenditure.
Fire/Emergency Lighting: This cost heading is again over budget as there was a number of remedial works
needed for the emergency lighting after the maintenance visit had taken place. The remedial works are not included
in the annual maintenance contract.
Automation Opening Vent and Smoke Alarm Maintenance: This cost is also higher than the budget, the reason
being is after the annual testing was carried out on the equipment further remedial works were needed to one of the
systems to ensure it operates correctly. The original budget was set to include the annual contract and only a small
amount for remedial works.
We are pleased to advise that expenditure on most of the cost categories was either on, or within, budget.
Are we basically screwed?apportioned to each unit in accordance with its percentage of the total service charge. The deficit has occurred in a
number of areas but primarily in the headings set out below.
General Repairs & Maintenance: Unfortunately, we are over budget for the general repairs across most of the
blocks at the development. As the blocks age, more repairs are needed to ensure the appearance of the
development is maintained. I can confirm that we have increased the general repairs cost headings across the
budget to allow for future expenditure.
Fire/Emergency Lighting: This cost heading is again over budget as there was a number of remedial works
needed for the emergency lighting after the maintenance visit had taken place. The remedial works are not included
in the annual maintenance contract.
Automation Opening Vent and Smoke Alarm Maintenance: This cost is also higher than the budget, the reason
being is after the annual testing was carried out on the equipment further remedial works were needed to one of the
systems to ensure it operates correctly. The original budget was set to include the annual contract and only a small
amount for remedial works.
We are pleased to advise that expenditure on most of the cost categories was either on, or within, budget.
thecremeegg said:
We pay the exorbitant service charge every month and we’ve just had their annual statement through, along with an invoice for £490 that they’re asking for as they’ve gone £13k over budget on maintenance.
I have a couple of issues with this. Firstly their excuses are that the flats are getting older and need more maintenance done. Shocking isn’t it? They should budget for this surely?
It's called a "sinking fund". But where do you think the money in it comes from?I have a couple of issues with this. Firstly their excuses are that the flats are getting older and need more maintenance done. Shocking isn’t it? They should budget for this surely?
You should be getting a full set of accounts from the management company every year.
thecremeegg said:
You say we can club together to start our own management company but it's not quite that simple is it?
The freehold is owned by some random guy and half the flats are rented so no idea who owns any of them. On top of that I'm sure we'd be looking at paying thousands each that we can't certainly afford
Someone asked how many flats? In our block there are about 25 odd yes, plus there's other blocks on the same estate, plus houses.
You only need 13 flat owners in your block for RTM. Finding out the title to a property isn't hard. Land Registry Title search costs £3.The freehold is owned by some random guy and half the flats are rented so no idea who owns any of them. On top of that I'm sure we'd be looking at paying thousands each that we can't certainly afford
Someone asked how many flats? In our block there are about 25 odd yes, plus there's other blocks on the same estate, plus houses.
If the block is badly managed you could end up paying a great deal more than the cost of the RTM.
The major advantage is that it puts you in control. You decide on which management agent (if any) is appointed/sacked.
No dodgy deals with insurance/maintenance contracts/capital expenditure/etc etc.
That said, it does mean that you have a company to run and statutory obligations to deal with.
http://www.lease-advice.org/advice-guide/right-man...
When a 37% overspend occurs it is evidence of poor budgeting over several years and a lack of any financial reserves.
Service charges should be set at a level to allow for major works which are foreseeable over time.
Failure to do so inevitably means incumbent owners being hit with unmanageable bills.
£490 may seem a lot but it could be a whole lot worse - http://www.leaseholdknowledge.com/freeholder-sean-...
Red Devil said:
You only need 13 flat owners in your block for RTM. Finding out the title to a property isn't hard. Land Registry Title search costs £3.
If the block is badly managed you could end up paying a great deal more than the cost of the RTM.
The major advantage is that it puts you in control. You decide on which management agent (if any) is appointed/sacked.
No dodgy deals with insurance/maintenance contracts/capital expenditure/etc etc.
That said, it does mean that you have a company to run and statutory obligations to deal with.
http://www.lease-advice.org/advice-guide/right-man...
When a 37% overspend occurs it is evidence of poor budgeting over several years and a lack of any financial reserves.
Service charges should be set at a level to allow for major works which are foreseeable over time.
Failure to do so inevitably means incumbent owners being hit with unmanageable bills.
£490 may seem a lot but it could be a whole lot worse - http://www.leaseholdknowledge.com/freeholder-sean-...
Thanks for this, appreciated. Spoke with one neighbour yesterday who's obviously also aggrieved so we'll work our way round and see what people say. If the block is badly managed you could end up paying a great deal more than the cost of the RTM.
The major advantage is that it puts you in control. You decide on which management agent (if any) is appointed/sacked.
No dodgy deals with insurance/maintenance contracts/capital expenditure/etc etc.
That said, it does mean that you have a company to run and statutory obligations to deal with.
http://www.lease-advice.org/advice-guide/right-man...
When a 37% overspend occurs it is evidence of poor budgeting over several years and a lack of any financial reserves.
Service charges should be set at a level to allow for major works which are foreseeable over time.
Failure to do so inevitably means incumbent owners being hit with unmanageable bills.
£490 may seem a lot but it could be a whole lot worse - http://www.leaseholdknowledge.com/freeholder-sean-...
The service charge is £130 a month so hardly an insignificant sum!
Whatever you end up doing, make sure your management company, or, the mangement company you setup creates a sinking fund, and maintains it.
Being asked to pay £490 odd quid each for over budget work is not that much in reality.
I live in a block of flats in a listed country house, and we all pay a monthly fee. Mine is the highest at £175 as we have the largest sq footage.
About half the money goes on insurance, water rates/water waste and maintenance (building, gardening etc). The rest goes into a sink fund. This puts a pool of around £40k available at all times to get major work done without asking everyone to stump up a large sum.
Recently we've spent £12k on a new drive way /road (big house !), £10k on water supply issues, and £25k on roof work. None of this required residents to fork any extra out. The fund is currently at around £25k and will recover to £40k soon enough.
Having a good managment company, and a good sink fund, adds value to yoru property and makes it infinitely easier to sell.
Don't go the other way. My friend lived in a similar building and they all paid the bare minimum to cover insurance and site power a month, around £35. The roof was found to need £120k repairs, and all 12 tennants have to cough up £10k - on the spot. It's in the lease and there is no gettign away from it.
Finally, if you do set up your own management company, be prepared to make it work. It's a pain (noone is ever happy with what you do), requires loads of admin, and if you all fall out, no one can sell their flats (happened to the house I'm in before I purchased, many years ago)
Being asked to pay £490 odd quid each for over budget work is not that much in reality.
I live in a block of flats in a listed country house, and we all pay a monthly fee. Mine is the highest at £175 as we have the largest sq footage.
About half the money goes on insurance, water rates/water waste and maintenance (building, gardening etc). The rest goes into a sink fund. This puts a pool of around £40k available at all times to get major work done without asking everyone to stump up a large sum.
Recently we've spent £12k on a new drive way /road (big house !), £10k on water supply issues, and £25k on roof work. None of this required residents to fork any extra out. The fund is currently at around £25k and will recover to £40k soon enough.
Having a good managment company, and a good sink fund, adds value to yoru property and makes it infinitely easier to sell.
Don't go the other way. My friend lived in a similar building and they all paid the bare minimum to cover insurance and site power a month, around £35. The roof was found to need £120k repairs, and all 12 tennants have to cough up £10k - on the spot. It's in the lease and there is no gettign away from it.
Finally, if you do set up your own management company, be prepared to make it work. It's a pain (noone is ever happy with what you do), requires loads of admin, and if you all fall out, no one can sell their flats (happened to the house I'm in before I purchased, many years ago)
RogerDodger said:
Whatever you end up doing, make sure your management company, or, the mangement company you setup creates a sinking fund, and maintains it.
Being asked to pay £490 odd quid each for over budget work is not that much in reality.
I live in a block of flats in a listed country house, and we all pay a monthly fee. Mine is the highest at £175 as we have the largest sq footage.
About half the money goes on insurance, water rates/water waste and maintenance (building, gardening etc). The rest goes into a sink fund. This puts a pool of around £40k available at all times to get major work done without asking everyone to stump up a large sum.
Recently we've spent £12k on a new drive way /road (big house !), £10k on water supply issues, and £25k on roof work. None of this required residents to fork any extra out. The fund is currently at around £25k and will recover to £40k soon enough.
Having a good managment company, and a good sink fund, adds value to yoru property and makes it infinitely easier to sell.
Don't go the other way. My friend lived in a similar building and they all paid the bare minimum to cover insurance and site power a month, around £35. The roof was found to need £120k repairs, and all 12 tennants have to cough up £10k - on the spot. It's in the lease and there is no gettign away from it.
Finally, if you do set up your own management company, be prepared to make it work. It's a pain (noone is ever happy with what you do), requires loads of admin, and if you all fall out, no one can sell their flats (happened to the house I'm in before I purchased, many years ago)
The problem with a sinking fund is what happens when you sell... You've effectively funded someone else's repairs. Not saying your wrong - just sometimes controversial....Being asked to pay £490 odd quid each for over budget work is not that much in reality.
I live in a block of flats in a listed country house, and we all pay a monthly fee. Mine is the highest at £175 as we have the largest sq footage.
About half the money goes on insurance, water rates/water waste and maintenance (building, gardening etc). The rest goes into a sink fund. This puts a pool of around £40k available at all times to get major work done without asking everyone to stump up a large sum.
Recently we've spent £12k on a new drive way /road (big house !), £10k on water supply issues, and £25k on roof work. None of this required residents to fork any extra out. The fund is currently at around £25k and will recover to £40k soon enough.
Having a good managment company, and a good sink fund, adds value to yoru property and makes it infinitely easier to sell.
Don't go the other way. My friend lived in a similar building and they all paid the bare minimum to cover insurance and site power a month, around £35. The roof was found to need £120k repairs, and all 12 tennants have to cough up £10k - on the spot. It's in the lease and there is no gettign away from it.
Finally, if you do set up your own management company, be prepared to make it work. It's a pain (noone is ever happy with what you do), requires loads of admin, and if you all fall out, no one can sell their flats (happened to the house I'm in before I purchased, many years ago)
And as for no-one is ever happy - now that's the truth!
Sell it, buy something freehold asap, on a serious note the whole lease hold/maintenance needs a massive shake up, these leases now sell between company's for big bucks, on paper they should be close to worthless (as once they where) 99 year lease with a small ground rent should have minimal value, add in the fact you can scalp the lease holder for "maintenance" and suddenly they become valuable, hmmmmm!
I think you can force the free holder for a "right to manage" without buying the freehold,but they will fight this, and normally the leaseholders have to pay both sides legal costs.
Bottom line is either keep bending over and keep get shafted or sign up for a load of hassle and grief.
Why i will NEVER buy another leasehold property
I think you can force the free holder for a "right to manage" without buying the freehold,but they will fight this, and normally the leaseholders have to pay both sides legal costs.
Bottom line is either keep bending over and keep get shafted or sign up for a load of hassle and grief.
Why i will NEVER buy another leasehold property
matjk said:
Sell it, buy something freehold asap, on a serious note the whole lease hold/maintenance needs a massive shake up, these leases now sell between company's for big bucks, on paper they should be close to worthless (as once they where) 99 year lease with a small ground rent should have minimal value, add in the fact you can scalp the lease holder for "maintenance" and suddenly they become valuable, hmmmmm!
I think you can force the free holder for a "right to manage" without buying the freehold,but they will fight this, and normally the leaseholders have to pay both sides legal costs.
Bottom line is either keep bending over and keep get shafted or sign up for a load of hassle and grief.
Why i will NEVER buy another leasehold property
Leasehold works for flats, despite some (including mine being Commonhold), else the building would fall into disrepair very quickly.I think you can force the free holder for a "right to manage" without buying the freehold,but they will fight this, and normally the leaseholders have to pay both sides legal costs.
Bottom line is either keep bending over and keep get shafted or sign up for a load of hassle and grief.
Why i will NEVER buy another leasehold property
The current values on ground rent interests are nothing to do with management, a separate process which can be changed relatively easily, but entirely due to the current low interest rate environment.
matjk said:
Sell it, buy something freehold asap, on a serious note the whole lease hold/maintenance needs a massive shake up, these leases now sell between company's for big bucks, on paper they should be close to worthless (as once they where) 99 year lease with a small ground rent should have minimal value, add in the fact you can scalp the lease holder for "maintenance" and suddenly they become valuable, hmmmmm!
I think you can force the free holder for a "right to manage" without buying the freehold,but they will fight this, and normally the leaseholders have to pay both sides legal costs.
Bottom line is either keep bending over and keep get shafted or sign up for a load of hassle and grief.
Why i will NEVER buy another leasehold property
Good luck buying a freehold flat. Unmortgageable, unsellable and will quickly fall into disrepair, with no way to fix other than from your own pocket. I think you can force the free holder for a "right to manage" without buying the freehold,but they will fight this, and normally the leaseholders have to pay both sides legal costs.
Bottom line is either keep bending over and keep get shafted or sign up for a load of hassle and grief.
Why i will NEVER buy another leasehold property
Leasehold isn't the nightmare that many make it out to be. It's a prerequisite for any flats or communal buildings. It's the only way to ensure that every flat owner pays their fair share of the costs need to keep the block and land in good condition. Buying the freehold between all flat owners and then awarding yourselves a mega lease is all well and good, but you still need to set up and run a company to organise the work and charge accordingly, plus providing accounts and so on.
With houses, it's fine as long as the terms around annual cost aren't too onerous, the stories of nightmare costs for adding conservatories etc are very rare. I own a load of leasehold houses and all I need to do is pay the ground rent each year (all under £100). The freeholder has zero interest in anything else, despite what many on here will claim.
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