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Management Companies and your experiences with them...

The Miz

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So we have been in our Flat now little over a year, and with Flat ownership comes a Ground Rent and ofcourse Leasehold.


Now we paid a sum up to the end of the last year in bulk before we moved in, and the management company sent a letter saying they would contact us soon to meet in person and to lay out exactly what they will do for us. 2011 came and we ddin't hear from them.


Until now.


They wrote to our old address a few days ago, which was weird. Thankfully we got the letter today from a Friend and basically they want the previous four months in bulk, and then the monthly payments every month from then on.

Sure we can afford to pay them this lump sum, but is this the norm at the start of a financial year? I ask this as I am new to this.


Then there is the issue of what the management company are doing. As it is a new build, the company that build the property are still on site and doing all of the maintanence still.


Educate a newbie. Cheers.

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This isn't the norm, usually you should receive a budget around early December, in time for the new service charge year (assuming the service charge period is Jan-Dec, which I am assuming it is from reading the above). The budget would normally be accompanied by the invoice (service charge demand), along with a copy of a 'section 153 notice'- which is a summary of rights and obligations. This demand sometimes might be sent separately to the budget, depending on the said managing agents' procedure. Sending this early Dec will give you plenty of time to arrange payment in time for the due date- 1st Jan.


99% of the time service charge is due in full, in advance. It depends on what the lease stipulates. Same applies with the payment terms- a lot of leases state service charge is due either annually, half-yearly or quarterly- with the odd one monthly. The reason it is due in advance is because the service charge is based on the aforementioned budget, therefore is an estimated charge, as of course you don't know exactly what the expenditure will be for the forthcoming year. As a result, once the current service charge period has passed (i.e. after December), the managing agent will arrange for the accounts to be prepared for that year based on expenditure VS charges raised. If there has been an overspend, a deficit charge will be apportioned between all leaseholders using the same apportionments used when calculating the service charge. If there was an underspend however, then the surplus will either be credited to each leaseholder in the same manner or the amount will be rolled over to reduce the next years' service charge- dependent again on what the lease states. So be prepared for any deficit charges in future, which are generally expected, as it's impossible to hit the nail right on the head when preparing a budget.


With regards to your agents sending you an invoice a few months late, unfortunately this can happen- and it is usually due to the client (whom the managing agent are acting on behalf of) taking a while to agree the budget proposed to them by the managing agent. The Property Manager (who works for the managing agent) will prepare the budget and it will need to be approved by the client. The delay could even be the property manager, taking a while to put the budget together. Either way, as the charge was technically due 1st Jan, they are within their right to demand four months worth straight away. In fact, they would be able to demand the entire amount- if the lease states service charge is payable annually in advance.


My advice would be to check your lease. See what it states with regards to payment of service charges. If it is annually, then you are fortunate that they are offering monthly instalments- as a lot of managing agents do not offer this- as they tend to collect service charges in accordance with the lease to ensure funds are available to carry out services throughout the year. You should've received a budget though (giving a breakdown of where the service charge will be spent throughout the year i.e. what work will be done). If the developer are still carrying out services, then the budget will lay out exactly what the managing agents are doing. It could include a number of things, such as building insurance, public liability insurance, administration and accounts fees (for back office processes- sending invoices, chasing debtors, monitoring payment plans etc). If you are however charged for maintenance within the budget and the managing agent aren't carrying out the said maintenance (as the developer still are), this will be reflected once the accounts are prepared as the expenditure will be low, as a result you will likely have a surplus credit added to your account (or the surplus is rolled over to the next available year, thus reducing the budgeted amount).


Who are the managing agents out of interest? Understand if you don't want to say. Anything else, ask away, I know a fair amount on this subject...

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