Service charges -shady management company

[Beijing3773]

Hello everyone, I need your advice. 

 

A little background story - I bought a freehold house back in 2017. Even tho it is freehold, it is situated on private road and there are total of 36 houses there. There is a residential management company and the Director and Secretary is (let's call her Mrs K) Mrs K owns one of the house and apparently she has been there for 30+ years. Each house in this little community needs to pay service charge every month. At that time, my solicitor asked for the evidence that the Seller had settled all the charges and it was a small drama to get this info from Mrs K. She wasn't willing to give anything in writing.

 

Anyway after that I was left with a piece of scrap paper in the letter box by Mrs K, the info of the bank account handwritten on it. I have been paying to this bank account ever since 2017. Initially I requested Mrs K the receipt to make sure I am paying into the correct account but was ignored. I was a new resident to this little community so I didnt want to fall out with her, I didnt press any further.

 

While I was at work during the day Mrs K would regularly came into my garden and started sorting out the bin. Because I lived alone, my bin was never full and she would bring other people 's trash into my bin so that ppl with bigger trash have their bin managed.  (I know this from cctv images) she and I never met. And again I let her do what she wants as I dont want to upset the queen of the community.  (pushover, i know!)

 

In 2019, Mrs K knocked on my door and informed me that the charge was increased by 50%. I told her I will increase my payment if she can give me this notification in formal/writing. She looked upset and immediately left. So I mailed her - addressed her as the Director of G Ltd and formally requested the annual audited statements, the invoice or written notification of the increase in service charge etc, which to this date I have never received any of them. 

 

I asked around my neighbors and found out that I was the only one asked for the increase! I went to the bank and asked about the bank account I have been paying. The bank cannot give out the name of the account but they confirmed that it was not the company account! 

 

Anyway she didnt come to me again and whats with Covid and all, I forgot all about it. I keep paying the original 2017 amount. I eventually moved to different city and renting my house. Yesterday Mrs K went to my tenant and asked them to tell me that the service charge increase again (by 150% from original amount!). I asked around my neighbor  and they are not asked for the increase - neither in 2019 or now! They are still paying the original amount. They also confirmed that they never received annual audited statements. 

 

I am going to pay the increase starting from this month because I dont want to be in the wrong legally.  

 

But can any of you advised me how should I proceed from here? All I want to see is some sort of proof that everyone in the community is paying the same amount, also that I am paying into the company's not someone's personal account.  

 

Since she is not cooperating and refuses to do anything in writing, what are my rights here? Do I have the legal right to see the company bank statements? 

 

When I sell this house in the future, how do I prove that I have settled the monthly charges and not owe anything.  Can I use my bank statements as proof of payments ?

 

Thanks for giving time to read my long winded story and please help.

 

 

 

Edited September 8, 2021 by Beijing3773

[stu007]

Hi

 

You need to fully check your property Deeds about these Service Charges (I understand you were aware when purchasing the property but did the Solicitor eventually get this sorted?)

 

Now as for these Service Charges what Mrs K is doing by verbally informing of these increases is verbally only is a big NO NO for anyone in charge of this supposed Management Company as they are required to put these proposed increases in Service Charges in Writing .

 

You are fully entitled to a as for a full breakdown of all the Service Charges you have paid from purchasing the property to date from the Management Company and only deal with this in writing and not verbally with this Mrs K and if she tries to discuss verbally  you need to state you will only deal with this in writing.

 

You also want it in writing from the Management Company that the Account (give full details of the account Mrs K gave you to pay these Service Charges) are still the correct Account Details

 

Something does not sit right with me from what you have posted with this all been verbal, a hand written peice of paper with the bank details to pay the service charge that is a big red flag as it should have been put in writing by the management company, and these extortionate increases from 50% to 150% all verbally not in writing.

 

So what you need to put in writing to Management Company:

 

1. You require a full breakdown of your service charge account from when you purchased property to date.

 

2. You require full clarification from the Management Company of the Bank Account Details for these Service Charges to be paid into as you were only given a slip of paper by Mrs K with the following details (give details of bank account) which is not the required legal notice as this should have been put in writing by the Management Company.

 

3. You require full clarification why the Service Charge increase were only verbally notified from a 50% increase to a 150% increase by Mrs K which in not Legal as these increases must be notified in writing and you require full clarification why these increase were not giving in writing as legally required with an appeal process.

 

4. You require a copy of the Management Companies Service Charge Policy.

 

Who is this supposed Management Company please name them as we can do some digging on them

 

Make sure and keep everything in writing and get free proof of posting from the post office, you need to keep a good paper trail of everything even if she refuses to respond in writing you have the proof.

 

Couple of link of interest>

 

Freeholders' estate and service charges

COMMONSLIBRARY.PARLIAMENT.UK

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Information on the position of freehold home owners who pay a service charge for the upkeep of communal areas on their estates.

 

Statutory rules for service charges - Shelter England

ENGLAND.SHELTER.ORG.UK

---

Several statutes prevent landlords from making late demands and control the level of service charges to keep them reasonable.

 

Service charges and other issues - The Leasehold Advisory Service

WWW.LEASE-ADVICE.ORG

---

Service charges, administration charges, ground rent, recognised tenants associations and forfeiture.

 

[unclebulgaria67]

Is this a UK housing related problem ?

 

If it is a UK issue, then do not pay service charges increase without obtaining proof in writing from the management company.

 

 

[Beijing3773]

On 09/09/2021 at 12:25, unclebulgaria67 said:

Is this a UK housing related problem ?

 

If it is a UK issue, then do not pay service charges increase without obtaining proof in writing from the management company.

 

 

Yes Uncle Bulgaria, this is happening right here in London.

[unclebulgaria67]

just ask for proof as detailed in previous replies and don't pay increase until you have verified. keep communications in writing.

[Beijing3773]

On 09/09/2021 at 08:19, stu007 said:

Hi

 

You need to fully check your property Deeds about these Service Charges (I understand you were aware when purchasing the property but did the Solicitor eventually get this sorted?)

 

Now as for these Service Charges what Mrs K is doing by verbally informing of these increases is verbally only is a big NO NO for anyone in charge of this supposed Management Company as they are required to put these proposed increases in Service Charges in Writing .

 

You are fully entitled to a as for a full breakdown of all the Service Charges you have paid from purchasing the property to date from the Management Company and only deal with this in writing and not verbally with this Mrs K and if she tries to discuss verbally  you need to state you will only deal with this in writing.

 

You also want it in writing from the Management Company that the Account (give full details of the account Mrs K gave you to pay these Service Charges) are still the correct Account Details

 

Something does not sit right with me from what you have posted with this all been verbal, a hand written peice of paper with the bank details to pay the service charge that is a big red flag as it should have been put in writing by the management company, and these extortionate increases from 50% to 150% all verbally not in writing.

 

So what you need to put in writing to Management Company:

 

1. You require a full breakdown of your service charge account from when you purchased property to date.

 

2. You require full clarification from the Management Company of the Bank Account Details for these Service Charges to be paid into as you were only given a slip of paper by Mrs K with the following details (give details of bank account) which is not the required legal notice as this should have been put in writing by the Management Company.

 

3. You require full clarification why the Service Charge increase were only verbally notified from a 50% increase to a 150% increase by Mrs K which in not Legal as these increases must be notified in writing and you require full clarification why these increase were not giving in writing as legally required with an appeal process.

 

4. You require a copy of the Management Companies Service Charge Policy.

 

Who is this supposed Management Company please name them as we can do some digging on them

 

Make sure and keep everything in writing and get free proof of posting from the post office, you need to keep a good paper trail of everything even if she refuses to respond in writing you have the proof.

 

Couple of link of interest>

 

Freeholders' estate and service charges

COMMONSLIBRARY.PARLIAMENT.UK

---

Information on the position of freehold home owners who pay a service charge for the upkeep of communal areas on their estates.

 

Statutory rules for service charges - Shelter England

ENGLAND.SHELTER.ORG.UK

---

Several statutes prevent landlords from making late demands and control the level of service charges to keep them reasonable.

 

Service charges and other issues - The Leasehold Advisory Service

WWW.LEASE-ADVICE.ORG

---

Service charges, administration charges, ground rent, recognised tenants associations and forfeiture

 

First of all, THANK YOU so much Stu007 for such great advice!! Really appreciate it. Sorry for the late reply. I am going to write a letter to Mrs K's company based on the facts you suggested. In the meantime I have a couple of updates:

 

1. I managed to download the annual financial statements of Management company from Companies House. I showed them to my colleague in the Finance Department and she said the accounts are wrong!! As I mentioned there are 36 houses in the community and the service charge is flat rate for all houses. For example let's say each house pay GBP 1000 per annum  x 36 houses = Turnover should be GBP 36k. However every year the Turnover was like GBP 26k. This mean there must be some outstanding service charge owed by one or more of my neighbours but this difference GBP 10k was not shown under "Debtors" in the balance sheet. The accounts are prepared by the same Charted Accountancy Firm for like 30+ years but the debtors is always zero and never moves. And Turnover is always low. I told my colleague I want to report this to some authority but she said it would not go anywhere. As the service charge company they do not need to pay taxes, HMRC would not care. I will be just a nuisance.

 

2.  As you suggested, in the past few days I dug through the purchase deeds. I must admit when I see legal words my brain stops working so I didn't pay much attention to this service charge related thingy when I bought the house. I found there was NO paragraph related to this service charge in the deeds. However amongst the thousands of communication emails between seller and buyer solicitors, I found that the Management company has 36 shareholders for 36 houses. My previous seller has misplaced his share certificate so my solicitor was asking for it. I do not know how they solved it, the purchase went through eventually. Now I checked this on Companies House. Every year (after I bought the house in 2017) Mrs K filed with Co House that my previous seller is still the shareholder. I was never issued with a new share certificate nor she didn't update my name with Co House. I am going to ask for a share certificate in the letter to Mrs K. I do hope she will comply because I dont know which Authority to go to if she keeps ignore me.

 

Thanks again for reading my rant, I will keep you updated, I guess this can go on for months!

 

[Beijing3773]

7 minutes ago, unclebulgaria67 said:

just ask for proof as detailed in previous replies and don't pay increase until you have verified. keep communications in writing.

Yes Sir I will do that. Thanks so much for your advice.

[stu007]

I have to agree DO NOT pay any Service Charge increase asked for verbally as it must Legally be given to you in writing with and appeal/challenge process if you disagree with that increase. If Mrs K does it again verbally just inform her that you have taken legal advice and any increase must be put in writing and until you get this in writing as legally required you will only pay what you are presently paying.

 

Please Name the Company or better post the Companies House link here

 

I would also send the Company a Subject Access Request (SAR) which they have 30 Calendar days to respond and that time limit only starts once they have acknowledged receipt and do not ask for further ID to prove your identity. Make sure and use this simple phrase 'ALL DATA'  that cover whatever format they hold that data in whether ir be email, writing, recorded calls etc.

 

Right of access

ICO.ORG.UK

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Individuals have the right to access their personal data. This is commonly referred to as subject access.

 

Couple of other links:

 

https://www.tpos.co.uk/

 

Home Page

WWW.THEPRS.CO.UK

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The Property Redress Scheme is a government approved consumer redress scheme for estate, lettings and property agents.

 

When to contact the redress scheme - The Leasehold Advisory Service

WWW.LEASE-ADVICE.ORG

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Introduction From 1 October 2014, anyone engaged in property management work in England became required by law to belong to […]

 

Solve a residential property dispute - GOV.UK

WWW.GOV.UK

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Apply to the tribunal about a rent increase decision, changes to a lease or a decision about a council house, park home or caravan, in England

 

First-tier Tribunal (Property Chamber) - GOV.UK

WWW.GOV.UK

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We’re aware of people receiving fraudulent calls from telephone numbers mimicking genuine court or tribunal numbers. This is a scam. The callers...