"All other expenses" clause

[andydd]

Hi again folks.

This horrible clause at the end of my lease is being used by my landlord to cover everything from Interest on arrears to Accountants Fees, Surveyors Fees, etc.

None of them items are specifically mentioned in the lease itself. Does anyone know of any revelant pieces of law or perhaps previous Lands Tribunal or LVT decisions that could help me ?

Andy

[sgclacy]

Interest on arrears. I think that would be reasonable unless you have a legitimate dispute about the amount in arrears. Why should the landlord be out of pocket due to late payment of correctly incurred service charges?

Accountancy fees, again if they have been incurred in preparing and or certifying the accounts this is surely reasonable?

Surveyors’ fees for perhaps Health and Safety Aspects, asbestos, checking adequacy of sum insured these would be reasonable expenses which should be recoverable.

If you wish to take this matter to the LVT you will need to expand your argument a bit further than simply describing such costs are "horrible" . I believe that "all other expenses" is designed to capture all reasonable expenses necessary in the management of the building and the costs you have described as "horrible" seem to be perfectly reasonable costs subject to the caveat about interest on arrears which should be levied on the lessee concerned but may, due to the wording in the lease, be a cost shared by all lessees.

[andydd]

Thanks for your input, many thanks... here are my thoughts.


Interest on arrears. I think that would be reasonable unless you have a legitimate dispute about the amount in arrears. Why should the landlord be out of pocket due to late payment of correctly incurred service charges?

Surely if the landlord didnt wish to be out of pocket he should of insured that the lease provided for proper compensation and contain such a clause and at what rate the interest would be charged at ? There clearly is no specific mention of 'interest' in the lease, the landlord has decided to use the rate of upto the bank of england rate PLUS upto 8%, thus clearly making a profit. I'm less concerned about this as numerous LVT decisions have shown that interest should not be charged unless it is specifically mentioned in the lease..in fact just found the following LVT decision ..."We disallowed these sums. It was held in Ltd v
Cohen (1986) 277 EG 745 that a landlord was not able to
pass on interest payments on money borrowed to finance the
provision of services, unless the lease contained “clear and
unambiguous" words to this effect. It was conceded that the
respective leases made no provision for bank charges or
interest."

Accountancy fees, again if they have been incurred in preparing and or certifying the accounts this is surely reasonable?

As there are only 2 flats there is no legal obligation to prepare certified accounts and they appear to be an unneccasary expense, there are only about 3 items on there so nothing complicated


If you wish to take this matter to the LVT you will need to expand your argument a bit further than simply describing such costs are "horrible" . I believe that "all other expenses" is designed to capture all reasonable expenses necessary in the management of the building and the costs you have described as "horrible" seem to be perfectly reasonable costs subject to the caveat about interest on arrears which should be levied on the lessee concerned but may, due to the wording in the lease, be a cost shared by all lessees.

I have been examining my lease and service charges for nearly a year now so I have prepared arguements and facts to back up my case. I did put these points to a CAB solicitor some time back and he did agree with me. I refered to the "all expenses clause" as horrible not the actual costs themselves. A quick search online will show that this catch all clause is quite a major topic of complaint amongst leaseholders.

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I'd welcome any other comments on this..both agreeing and disagreeing.

Andy

[sgclacy]

If the lease does not provide for interest then the landlord can as soon as the monies are deemed late can issue proceedings in the County Court and claim interest at the statutory rate of 8%

Whilst ground rent has to be more than 3 years late or £350 to enable the landlord to forfeit the lease. The landlord can issue proceeding for a money judgement as soon as the rent is late.

Issuing proceedings the moment it is late is not really a way for a landlord to build bridges and will of course create a more difficult culture to manage. But equally lessees who fail to pay must also realise that late payment of reasonable and correctly demanded charges breaks down goodwill, particularly in self managed blocks.

I still feel that "all other expenses" must be taken to mean just that subject to the requirement that they have been reasonably incurred in the management of the building.

The interest charge cannot, from what I can gleam from your post, be a charge that can be specifically charged to you, but the landlord who has to borrow due to non payment of service charges could I believe argue that the costs was reasonably incurred in the management of the block.

With regard to the audit of the block it would help the landlord appear reasonable if he produced the account with copies of the invoices and send them to the two lessees asking them if they are not satisfied with the account that the landlord will then have the accounts certified.

With regard to the surveyor fees there is a growing legislative requirement on Fire assessment surveys/health and safety which make no allowance for whether there are 2 flats or 200.

The clause is only horrible if the charges that seek to be introduced into the service charge account by it are unnecessary and or unreasonable. A lease that precludes a landlord from recovering charges that are necessary in the interest of good estate management must be seen as defective and ultimately have a adverse effect on the building.

[andydd]

Hi..thanks for that..


If the lease does not provide for interest then the landlord can as soon as the monies are deemed late can issue proceedings in the County Court and claim interest at the statutory rate of 8%

There has never been any proceedings in the County Court, I am well aware that is acceptable to add interest AT THAT STAGE but I am not at that stage but interest has been added anyway.

Whilst ground rent has to be more than 3 years late or £350 to enable the landlord to forfeit the lease. The landlord can issue proceeding for a money judgement as soon as the rent is late.

The Ground Rent is not in arrears.

Issuing proceedings the moment it is late is not really a way for a landlord to build bridges and will of course and will create a more difficult culture to manage. But equally lessees who fail to pay must also realise that late payment of reasonable and correctly demanded charges breaks down goodwill, particularly in self managed blocks.

Ok..it gets a bit confusing here as I have always been billed a year in advance however I have now become aware that the lease DOES NOT provide for payment in advance, it would now appear that the money is actually due at the end of their accounting period or when I am sent the final Income & Expenditure account or when costs have actually been incurred, BUT I have been threatened with a Section 146 notice in advance of all of these, the resulting charges ..admin, interest, etc are then added on and the problem has escalted. On the occasions this has happened the mortage company did step in and pay the amount owing.

With regard to the audit of the block it would help the landlord appear reasonable if he produced the account with copies of the invoices and send them to the two lessees asking them if they are not satisfied with the account that the landlord will then have the accounts certified.

I 'think' that this is in my favour..There is automatically a certified account every year which I believe is not reasonable and I bear in mind that the LVT would judge wether costs are 'reasonably incurred'.

The clause is only horrible if the charges that seek to be introduced into the service charge account by it are unnecessary and or unreasonable. A lease that precludes a landlord from recovering charges that are necessary in the interest of good estate management must be seen as defective and ultimately have a adverse effect on the building.

I think I've covered 'Interest' so Accountants is next and I do not believe that it IS reasonable and necessary it just provides some extra money for an accountant who is not suprisingly based in the same building as the landlord, incidently the managing agent is in effect the landlord in the guise of another company, everything connected with them appears less and less to be actually recovering costs and more a huge profit making exercise.





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The further I dig into this the more information I found out but I believe that it is in my favour...but of course i am open to all opinions.

Please ignore the surveyor part thats not relevant at the mo as I think thats only relevant if there are works taking place.

Andy