Service Charge

[Hotpend]

My lease states that the service charge year is 29th September to 28th September. Leaseholders are required to pay £350 on the 29th September. As soon as practicable after the 28th September the landlord or accountant or managing agents are required to ascertain the service charge and sign a certificate that details expenditure for the past service charge year. Leaseholders are entitled to a copy of the certificate free of charge on request.

The above procedure has never been carried out. A budget has been decided at the Management Company AGM in April, and leaseholders have been sent a bill to be paid in full on the 29th September. Having paid their bills in full, leaseholders have often been required to pay extra during the service charge year. One year we were presented with two such requests.

For the past two years I have paid the £350 interim payment on the 29th September and the remainder (as required by the budget set at the AGM) on the 28th September. This year I am going to withhold payment and request a certificate detailing expenditure. I will then pay my due proportion of expenditure as required. I will be the only rebel in the block but I want to know how the money is being spent before I pay my service charge.

I expect letters requesting payment of “arrears” and even threats to take me to court despite the fact I am acting within the terms of the lease. Any advice on future strategy would be appreciated.

[Jeannie D]

I understand only too well why you want to be sure you are receiving value for money but why are you receiving extra requests for payments during the service charge year? Is it for cyclical work such as repainting, or is it for repairs? What does your lease say?

[Hotpend]

Under the terms of the lease we are required to make the interim payment of £350 at the beginning of the service charge year. The lease requires that the amount we pay should cover anticipated expenditure plus an amount to cover unexpected events - a sinking fund. The landlord (i.e. the management company) can make a cash call during the year if there are unsufficient funds to meet some unexpected cost. At the end of the service charge year, the service charge should be determined as stated in my initial post.

We receive requests for extra money because of poor management. To me it is unacceptable to be asked to pay the full amount of what the Management Company calls the service charge at the beginning of the service charge year and never be told what has been paid out. I want the lease to be followed. I believe that by going along with this chaotic process of treating an estimated budget as the service charge, leaseholders are condoning and further encouraging irresponsible management.

[Jeannie D]

Have you looked at the website of the Leasehold Advisory Service as a starting point? Its FAQ section is quite extensive and might provide you with some guidance about how the options open to you to deal, within the law, with unreasonable service charges and poor management. Hope this helps.

[Hotpend]

Thank you for your replies JeannieD. The Leasehold Advisory Service is very good. I have contacted them before.

I am not saying that the service charge is unreasonable. The problem is that leaseholders are not told what the money has been spent on. At the annual AGM we are given an estimate of what may need to be spent but do not see details of actual payments. I am no longer prepared to accept the estimate of expenditure presented five months before the beginning of the service charge year as the service charge. I shall insist on the terms of the lease being followed. If the service charge is ascertained at the end of the service charge year as the lease requires I will be able to see what the money has been spent on. I can then decide whether or not it is reasonable. I will certainly not pay for anything that I am not obliged to pay for under the terms of the lease.

[New Homes Expert]

Service charges are a reason why I would NEVER buy LEASEHOLD.