Flat owner calls for more transparency in service charge statements

Economy
By Liam

Expensive service charges need ‘more transparency’ says flat owner comparing one-page UK statement to the lengthy details for an overseas flat

  • Flat owner calls for more transparency about ‘basic’ service charges
  • Glenn Seaton is being asked to pay £3,400 a year towards his service costs
  • Service charge summary on his UK flat is a single page rather than a full report

By Myra Butterworth

Updated:

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

Glenn Seaton has made a video showing the single A4 typed page that made up his service charge statement, saying there were no details on where the money was spent.

The images show the settlement and can be compared with a relatively long service charge settlement that he receives for his other flat in France.

He is currently renting 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’s very simple. There are things I don’t know.

‘And then there’s what is sent to me by registered mail in France. I’m being called to a meeting where all property owners can come together to discuss the budget and other matters.”

The explanation for his British flat is just an 'ordinary' single page

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 flat in the UK is just a ‘simple’ single page

He added, “Look at how incredibly detailed it is. Every single item is included and explained.

“It also includes the names of homeowners who are behind on their service costs, and it feeds into a detailed budget for the following year.

“And if maintenance is needed, they send us photos. Nothing to hide, everything can be justified there.’

Template email to managing agent

Service fees are a proven way for investors to make money, and it’s a largely unregulated industry.

But any charge must clearly be reasonable, and if you suspect it isn’t — and you’ve done your research — there are ways to effectively challenge any increases, explains Stephen Gold, a retired judge and author of “The Return or 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 request for this [x year]. It is our case that the items listed in the appendix to this letter should not be paid by us for the reasons set out in the same appendix.

We have calculated that our liability should be limited to the amount of £x rather than £y as claimed. We invite you to revise the claim to £x and communicate your decision within 28 days of the date of this letter.

If you are not prepared to accept £x, our intention is to apply to the First-Tier Property Chamber (Residetial Property) (or, in Wales, the Leasehold Valuation Tribunal) to have the claim under the Landlord and Tenant Act 1985.

If you file a claim with the district court before the application is filed, we will request that the court transfer the proceedings to the court, which we believe is to be expected.

We will apply to the tribunal and/or district court under section 20C of the 1985 Act for an order prohibiting the addition of the landlord’s costs and expenses for handling the dispute to future service charges.

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

He asked about the maintenance 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 accountant’s report to better understand where the money is being spent.

He said: ‘There should be more transparency in the service cost invoice.’

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

The flat owner has asked his management company for a copy of the audit and accountant's report to better understand what the money is being spent on

The flat owner has asked his management company for a copy of the audit and accountant’s report to better understand what the money is being spent on

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

Disgruntled tenants have three main options for dealing with poor property management.

1. One solution is to buy the property, but the owners of the flat cannot do this for various reasons, such as not having the required minimum number of tenants in the block to buy it.

2. A step back from buying the property is to do a Right To Manage application, where you register with the First Tier Tribunal (Property Chamber) to handle property management disputes.

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

In reality, you hire another property management company to do the job, giving you more control over how the block is managed. You will need to seek advice and speak to a lawyer.

3. Perhaps the easiest way to deal with bad property managers is to ask the court if the service charges are reasonable. You do not need a lawyer for this. If you file an application through the court, it must conduct an investigation.

It can lead to a significant reduction in your monthly property management costs and even get you money back. You can get free advice at www.lease-advice.org.

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