Eve

On 4/1/2021 at 8:54 AM, OxDoc said:

Hello, I'm a leaseholder in a block of 15 flats. The service charges we've been paying have been exceeding the freeholder's expenses by around £4,000/yr and this has been put into a major repairs fund, which is now worth around £30,000. Whilst I favour having a moderate reserve fund to ensure that urgent repairs can be carried out, I'm wondering why it needs to keep growing at this point, tying up leaseholders' funds. I've asked the freeholder several times if he has a plan for how large the reserve fund will be allowed to grow before the service charge is reduced or whether he foresees particular large repairs in future, and he just gives vague responses about there being a possibility of an expensive repair one day and doesn't seem to want to consider reducing the charge.

So I was wondering what are your opinions about how large a major repairs reserve could reasonably be for a block of this size? How much would the largest repair job that is needed one day be likely to cost (e.g. a roof replacement)? For some context, the block is only 17 years old I think, 3 stories high and the roof area covers about 5 flats (which I thought might be relevant since replacing the roof one day will be a major expense). Actual maintenance costs have been ~£3-4,000/yr. The lease doesn't seem to say anything about paying into a repairs/reserve/sinking fund, so I think I may be able to legally challenge the charge if it came to it, but would want to feel sure that the freeholder is actually being unreasonable.

The Lease is KING so read it.....if the lease does not require you to pay into a reserve and sinking fund then quote that clause back to the freeholder/mangeing agent. Also under L&T Acts in particular section 19 (1)any payment asked for in advance needs to be reasonable.

The lease will tell you when decorating works require doing normally every 3/ 5 years - have they done this? The reserve fund is not for emergencies it is for specific items of expenditure which will be in your lease..read the lease

On 1/10/2017 at 12:47 PM, Grampa said:

Be careful for what you wish for. If the freeholder is managing the block themselves they may not be charging a management fee. If they then decide its too much hassel they could instruct a management agent who is likely to charge between £150 - £500 PER UNIT/FLAT which will be added to the service charge.

This happened to a landlord of mine who was also a self managing freeholder. He got fed up with late payments arguments over every expense (which were reasonable) so he gave to me to manage for which I charge £300 per flat. So they shot themselves in the foot.  

It isn't standard practice to provide evidence/receipts unless formally requested. 

Well that is not correct as firstly it depends what the lease says as some leases require an accountant or surveyor to approve the accounts this is a condition precedent so its not that straightforward and yes freeholders have been prosecuted for not providing information ...make an application  to the FTT under section 27A L&T Acts and tell them FTT that you need disclosure of all the invoices and receipts to narrow the issues and section 19 whether costs are reasonable