Service Charge- covering Health & Safety Survey?

[Midnight Cowboy]

Hi all

Just a quick question. The freeholder's agent for a flat I own leasehold have sent out their annual service charge bill. They have included 2 new items, which I haven't seen before: a Health & Safety Survey, and an Insurance Revaluation. They say that the H&S survey has been done to be "in line with current legislation", but to be honest, I've not heard of this before.

Am I obliged to pay for this? Any thoughts welcomed.

[Poppy]

Read the lease. What does it say about the freeholder reclaiming professional costs through the service charge?

It is prudent for all property owners to have their buildings re-valued for insurance purposes every x years. This is to keep sums assured as accurate as possible.

Your landlord probably wanted to assess their exposure from a health and safety perspective. I do not know what legislation they are referring to. Maybe another member can offer an answer.

[James 2009]

http://www.landlordzone.co.uk/forums/showthread.php?t=17940&highlight=health

this thread had a few bits and pieces that are relevant

[Midnight Cowboy]

The lease says tenants are obliged to pay a share of the annual expenditure which is defined as "all costs, expenses and outgoings incurred by the landlord". So it looks like we don't have much choice but to pay. Seems a tad unfair to me, basically the landlord can spend however much he likes on whatever he fancies, and the tenant has no choice but to cough up. :mad:

[jeffrey]

The lease says tenants are obliged to pay a share of the annual expenditure which is defined as "all costs, expenses and outgoings incurred by the landlord". So it looks like we don't have much choice but to pay. Seems a tad unfair to me, basically the landlord can spend however much he likes on whatever he fancies, and the tenant has no choice but to cough up.
No, not 'everything'. L has to comply with:
a. the leases; and
b. sections 18-30 of LTA 1985.

[Midnight Cowboy]

Ok, I accept that there are limits! That was me griping, it just seems unfair. The landlord has the responsilibility of carrying out the H&S Survey and insurance reval, I feel that they should bear that cost as an expense of their investment, rather than dumping it on the tenants.

Moaning aside, that clause in the lease defining Annual Expenditure as "all costs, expenses and outgoings incurred by the landlord" is pretty all-encompassing. Sadly I feel that tenants would have a tough job arguing that the Health & Safety Survey and Insurance Revaluation didn't fall into that category.

[andydd]

Hi.

I was just about to start my own thread on a similar topic.

Firstly..I just read an LVT case where the costs for a Health & Safety report were disallowed...I cant remember much about the details however it's one of a batch of recent LVT cases to be posted on the Leasehold Advisory site.

http://www.lease-advice.org/lvtdecisions/tables.asp?table=2&page=42

Its either somewhere in there or

http://www.lease-advice.org/lvtdecisions/tables.asp?table=2&page=43

Now my main point, I too have been faced with increasing costs (Accountants, Mangement, Surveyors) all under the clause "All other expenses reasonably incured by the landlord", I'm a bit stuck as how to challenge this, the items mentioned are quite clearly NOT within the lease in specific terms.

I've heard the contra proferentem rule mentioned but am unsure as to its legal standing with regards to leases.

LVT cases seem to fall on both sides of the fence on this.

Andy

[Poppy]

I would like you to think about something for a second. If the building is under-insured and a claim is made, the insurer will probably reduce the sum claimed by the same percentage. This revaluation has provided your freeholder with an accurate rebuild value and he should now have that reflected in the insurance policy.

Another thing to think about, spare a thought for lessees whose freeholders do no maintenance at all, dissolved management companies, incompetent freeholders/management company directors.

[andydd]

No, not 'everything'. L has to comply with:
a. the leases; and
b. sections 18-30 of LTA 1985.

BUT the trouble seems to be that it is in the lease...many leases say something along the lines of 'all other expenses', there seems to be little to actually curtail what expenses are bundled into that handy catch all sentence...in effect it does appear to be 'everything' or 'anything' !

[Midnight Cowboy]

I would like you to think about something for a second. If the building is under-insured and a claim is made, the insurer will probably reduce the sum claimed by the same percentage. This revaluation has provided your freeholder with an accurate rebuild value and he should now have that reflected in the insurance policy.

Another thing to think about, spare a thought for lessees whose freeholders do no maintenance at all, dissolved management companies, incompetent freeholders/management company directors.

Good point, but it does seem daft to spend a lot of money on getting valuation for insurance purposes; it's not rocket science to estimate a rebuild cost. I'm a freeholder on another block, we had a rough of idea of the rebuild cost, and added on £100k just to be on the safe side. It only added £40 to the premium. Better than paying someone £300 to make up their own figure!

[Poppy]

Well, I disagree and probably every surveyor would too.

I am a freeholder. I am not a surveyor. To avoid miscalculation and lessees challenging my estimate, I will always employ a professional.

You are a freeholder elsewhere, I am surprised that you are raising the issue. How do you deal with lessees questioning service charges?

[Longshot]

Good point, but it does seem daft to spend a lot of money on getting valuation for insurance purposes; it's not rocket science to estimate a rebuild cost. I'm a freeholder on another block, we had a rough of idea of the rebuild cost, and added on £100k just to be on the safe side. It only added £40 to the premium. Better than paying someone £300 to make up their own figure!


When you say you had a "rough idea of the rebuild cost", how did you get that?

Not being awkward but there's all manner of nasty surprises that can inflate rebuild costs.

Given insurance companies' habit of trying to minimise any claim, I'd say £300 every few years is worth the comfort.

[Midnight Cowboy]

Well, I disagree and probably every surveyor would too.

I am a freeholder. I am not a surveyor. To avoid miscalculation and lessees challenging my estimate, I will always employ a professional.

You are a freeholder elsewhere, I am surprised that you are raising the issue. How do you deal with lessees questioning service charges?

To be fair, I only recently became a freeholder, as myself and other leaseholders in a block bought its freehold. I suppose I'm in an uncommon position, freeholder on one flat, leaseholder on the other, so I can see both sides of the argument.

As a FH, No-one has questioned charges yet, so I'll cross that bridge when I get to it! I do understand that FHs need to cover themselves, but I think LHs would be more likely to question a fee for insurance valuation than a small amount either way on the premium itself.

And finally... I am sure that every surveyor would disagree - after all, that's how they make their living! :D

[Midnight Cowboy]

When you say you had a "rough idea of the rebuild cost", how did you get that?

Not being awkward but there's all manner of nasty surprises that can inflate rebuild costs.

Given insurance companies' habit of trying to minimise any claim, I'd say £300 every few years is worth the comfort.

I'm quite suprised, I expected the consensus not to be in favour of costs like insurance valuation. Maybe if this thread was in the Residential Lettings forum the feeling would differ. We've set our cover level quite high, above that of previous policies and in line with our broker's recommendations based upon the size of the building.

I can't help thinking that a surveyor, who is after all only providing an estimate, would be so careful not to underestimate that whatever figure he came out with, he'd add 10% just to be safe!

[Poppy]

I'm quite suprised, I expected the consensus not to be in favour of costs like insurance valuation.
You'd possibly get such a reaction from a lessee who knows little or nothing about freeholder's responsibilities, certainly not a responding surveyor, solicitor, managing agent, responsible freeholder.

You need to start thinking with a freeholder mind over and above your lessee mind. I hope that you and your fellow freeholders will continue to do your utmost to effectively manage your building. :)

[Midnight Cowboy]

You'd possibly get such a reaction from a lessee who knows little or nothing about freeholder's responsibilities, certainly not a responding surveyor, solicitor, managing agent, responsible freeholder.

You need to start thinking with a freeholder mind over and above your lessee mind. I hope that you and your fellow freeholders will continue to do your utmost to effectively manage your building.

Ha ha, ok, advice accepted. :D It will be interesting to see the reaction of the others if I suggest HSE survey & insurance valuation, seeing as they are all newly-crowned freeholders too. (ie. it may make sense, but they will be paying it too). As a freeholder, I suppose it is nice that you can cover your back, as it were, for free, because you can pass the cost on to your leaseholders. As a leaseholder though, it does seem a trifle unfair that landlords can do this - but I can't blame anyone but myself for signing the lease in the first place! Seriously though: I won't buy leasehold again, little did I know what a can of worms had I signed up for..

[Gordon999]

Local Councils seem to be keen on HSE surveys especially in older buildings to identify health hazards like asbestos , fire risk items left under stairways like leftover painting material and cleaning fluids , blocked drains, rats appearing in building common areas etc., non-closing fire doors . The directors of the management company would face prosecution for any such offences.

In our block , we had to fix ( keep closed - fire door) labels on fire doors and post a notice in case of fire arising in building , on where residents must wait for head count .