Service charges

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Thursday 22 February 2007 3.38pm
There have been some very interesting postings on SE1 recently about how service charges are calculated and what to do if they are too high etc. I would be very interested to hear more on this from people living in apartments in the area.

Surely we cannot just blame the managing agents for large increases. Shouldn't the governing body and/or residents' association be to blame for not scrutinising charges and failing to hire competent managing agents and direct and manage them effectively?

I wonder too if the developers of some of these new developments are not carrying out shoddy work and selling part-finished buildings. They sell with a low(ish) service charge until their interest in the building is gone and leave owners to carry out "essential repairs and maitenance" which are really required to complete work the developer should have done in the first place.
Thursday 22 February 2007 4.19pm
Your first error Reg is in using the word "competent" next to the words "managing agents". I have had a lot of experience now with four different agents in one building, two were actually fraudulent (though only by taking them to expensive trials will that ever be proven, something they rely on not happening as flat owners are so lethargic), one was useless and the newest is trying to prove themselves competent, we'll see? Owning a share in the freehold is actually a negative in bringing these agents to book as the flat owners seldom agree on anything and they are in charge! Their official body (ARMA) is governed by owners of the actual agencies so don't expect any unbiased help there!
However you are right in that the developers almost always underestimate the costs for maintaining a building, no surprise there though really.
Thursday 22 February 2007 4.50pm
I understand the managing agent problem. We've gone through about 8 or 9 including the dreaded Equity. But a part of the reason they get away with low standards is, as you say, because owners often can't seem to work together to supervise them or fire them. We went through this for a bit but then a few people got angry, got organised and then got together. They combed through the accounts, checked invoices and suppliers etc and over time we really got on top of things. Things improved when we got a group of owners with qualifications in accounting, law, property management etc. They've really made a big difference in our building. They meet the new managing agents on site every month and tell them what to do for the next month. The managing agents also send management accounts and a property report on the infrastructure each month. Any of us can review these and follow what is happening to our building and where the service charge is going. I suspect we only get this level of service because of our management committee and that the agents don't put this level of service into other buildings where they are just left to do things as they please.
Thursday 22 February 2007 5.13pm
when we got a group of owners with qualifications in accounting, law, property management etc. They've really made a big difference in our building]
Ah, you are indeed lucky, this is unfortunately not the case in many buildings, most residents representative bodies give freely of their time but experienced "managing agents" can run rings around them. The problem is that the sanction of "we'll fire you" is only to be used at the last resort because it leads to months of arranging a new agent and a reputation for firing agents.
I implore those of you now complaining to your residents assoc, or freeholders complaining to their board, to take part in the running of your buildings, especially if you have any professional experience to offer. I find that many of the people who are on these boards and committees find themselves personally or jointly vilified by owners of flats who are too selfish and/or lazy to offer their time to serve.
Thursday 22 February 2007 5.40pm
Reg Lynch wrote:
Things improved when we got a group of owners with qualifications in accounting, law, property management etc. They've really made a big difference in our building.

Can we clone them for our building, please?
Thursday 22 February 2007 6.04pm
Well our building gets more miserable every day and my service charges this year are knocking 8,000. And I simply dont know what for.
Thursday 22 February 2007 6.22pm
I'm sorry Jackie, but "I simply don't know what for" really means that you either think your agents are lying to you, or you have not exercised your rights to examine all the bills that make up the service charge in detail. You have many rights as a tenant, simply typing "leaseholder help" into Google throws up dozens of ways you can get info, but they do mean you have to go and do some digging yourself. You may be shocked to see how expensive living in large blocks with security, porters etc really is, especially if you have a large property.
Thursday 22 February 2007 7.53pm
The large costs tend to be staff and insurance, don't they? These are in the first case beneficial and in the second unavoidable.

But other things that really boost service charges are, I know, completely unrewarding albeit essential things like lift servicing and repairs to communal parts one barely even knew existed. You don't see where the money is going, because it's going into things you don't see - I hope that isn't too tautologous.

Managing agents seem to me often simply to be very out of touch with what's going on in buildings, as well as incapable of negotiating effectively with contractors who provide services on-site. They rely on owners' inertia. They are often hard to turf out, too, as they in some cases have unbreakable links to the freeholders of the properties they run.

It's all pretty grim, and 8,000 beggars belief. From what I know, 5 per square foot is at current rates considered about top whack, except in a few very high-end developments around Park Lane.
Thursday 22 February 2007 8.39pm
An additional point is that housebuilders are unlikely to get away with genuinely "shoddy" work. There may be minor defects and teething problems, but anything substantial should be covered by an NHBC-type warranty, and the certificate of warranty will not be issued by the insurer unless they are satisfied that the quality of the work is satisfactory.
Friday 23 February 2007 10.46am
Unfortunately it is not the case that NHBC guarantees cover "anything substantial". They cover very little and only load bearing parts of the building. Faulty air con, heating, faults in gyms, saunas, pools and health clubs etc are not covered. Many of these only come to light after a few years and builders get away with a lot of poor work because, once again, owners don't get organised and pursue them.
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