Extortionate service charge demands for major works

[Rogan]

We are being charged rip off prices for roofing, (£65000 plus vat) digital ariel, (£4200 plus vat) and painting (£9000) on our leasehold flat which we let. All these prices would be divided by 6. It is in a block of 6 flats, the freeholder is a housing association who aquired it from the council recently.
We don't see why it should cost this much, or why it needs doing now.
We can't go for RTM or buy the freehold as only 3 out of the 6 flats are leasehold, the other 3 are tenants of the housing ass.
We did not nominate any builders when the letter came as at the time we didn't know where to start with finding builders who had experience of similar projects of 1000 properties, or who were on Constructionline, and who had the right insurance, references etc.
We were trying to deal with running our own business, illness, and a big debt problem, and had a baby to look after at the same time. We were already struggling to cope, and you only get 30 days to nominate a builder anyway. It just got swept under a pile as it was too difficult for us to deal with. Also we thought it might be futile to even try as we have seen on TV how builders talk to each other about this type of contract and fix the quotes accordingly.
We've only just changed the flat to an interest only mortgage so we can use the extra money to pay off other debts. We've no idea how we'll be able to pay, and are worried sick. We've got hardly any equity in the flat anyway.
Not sure if we would get anywhere with the LVT?
We don't know what to do next, we have been told to write in with our observations, but don't really know what to say other than these prices are too high, and we can't afford to pay.
We have contacted the other 2 leaseholders in the block.
If anyone can help, we'd be so grateful, we feel like they've got us over a barrel. We now wish we'd joined forces with the other leaseholders and got quotes, but at the time, it was just too much to cope with, and 30 days is nothing when you're up to your eyes in a backlog already. We still don't know if we'd have even got anywhere with the big building firms in any case.
Thanks.

[surreygirl]

You can contact the LVT they will help you that is what they are there for. Get the lease out and have it ready when you call. I have found them very helpful in the past.

[sgclacy]

It may be worth getting a surveyor to advise you as to whether the works need doing. If it needs doing then the works must go ahead provided the price is reasonable otherwise the freeholder could be sued by other lessees for damages

To demonstrate that a price is a rip off you firstly need to understand the nature of the works required and the price of the materials and the amount of time it would take. To demonstrate that it is a “rip off” you need to get alternative quotes from reputable companies and then put this to the freeholder. Without a proper comparison exercise it would be difficult for either the court/lvt to take your accusation seriously.

If you do put forward a contractor to give an estimate it is important that you put it forward in the first stage of consultation. When the freeholder goes through the second stage of consultation ie advising you of the results of the tendering process it is too late to put forward a cheaper quote then. Apparently it would put the freeholder in breach of the Competition Act if he was to accept a tender from a contractor who quoted when he knew what the other tender figures are. If you do obtain a cheaper quote once you know the results of the other tenders you can still use it to help demonstrate whether the figure the landlord proposes to use is reasonable.

My advise would be to engage in the consultation process and put forward contractors who you feel are able to handle a job of this size and ask that the freeholder gets an estimate from them. If it is too late to do this then you need to obtain a report from a surveyor stating that the works don’t need doing this would be very powerful tool to stop the works going ahead.

[Poppy]

£65,000 plus VAT for a new roof! What are they covering it in, gold leaf? I must say that scaffolding ain't cheap for what it is, but that surely can't cost more than £5,000 (complete guess, feel free to ignore).

Oh boy, what can I say? I know it's a bit late, but do your very ultimate best to come up with a cheaper, alternative contractor for this work. It's in your interests to put your mind to this task. Do it today.

To start you off, why not contact a few councils and ask them for the names of contractors. Hopefully because they work with the council, they'll fit the selection criteria and have the necessary insurance and references.

You'll also need to obtain the specification of the proposed works from the housing association.

Get cracking, time is of the essence. Can't stress this enough.

[paulamis]

For the roof, I got a mates-rates estimate for a new roof on a 3 story terrace, 7500 inc scaffolding. But I have not had to do it yet so it could come out more...

Does that all include a large manage fee?

[Poppy]

I don't think the freeholding housing association will accept mates-rates.

[mind the gap]

I agree with Poppy that £65 grand sounds extortionate for are-roofing a block of 6 flats, although £5000 is perhaps on the low sound. The scaffolding hire is probably one of the costliest factors.

Even so, quite a large roof on our school was replaced with real slates last year by local authority contractors, and it only cost £15, 000.

[thevaliant]

You don't mention it, but has the freeholder complied with the S20 requirements?

If not, let them do the work, then hand over £250 and tell them to go swing for the rest.

[Poppy]

Good question. I'm looking forward to Rogan's response.


Picked out from Rogan's post:


We did not nominate any builders when the letter came ...

... and you only get 30 days to nominate a builder anyway ...

... we have been told to write in with our observations ...That language suggests to me that s20 notice and procedures are being followed by the housing association.

[sgclacy]

Ask your lanlord for a copy of the specification of the works and the tender document and tenders and ask a Chatered surveyor /quantity surveyor to comment. If he concludes that the figures are unrealiztic then put the freeholder on notice that if they proceed with the works then you will challenge the cost and invite them to restart the consulation process.

[Rogan]

Thanks for all the help we have received here. We have written to the landlord asking for a copy of the specifiation of works, and tender documents.
We have also mentioned the difficulties we have experienced with the consultation process, mainly that 30 days doesn't give you very long to sort things out, and that we are not really in any position to make spend decisions as there are not enough leaseholders to get the RTM.
We have said we would not be able to take on any extra borrowing to fund the work, and have asked for details of how necessary and urgent the work is. We have pointed out that this has come whilst banks aren't lending etc.
We remember that when the stock transfer consultation was going on, a cap on capital works in the first 5 years was mentioned, but we can't find any details of that now.
We will consider consulting a surveyor in due course, and are trying to get the other 2 leaseholders motivated to help.
We are working on getting alternative quotes for the work.
We think the landlord probably did abide by the S20 rules ok.
Once again, thank you for your invaluable advice.

[andydd]

Thanks for all the help we have received here. We have written to the landlord asking for a copy of the specifiation of works, and tender documents.
We have also mentioned the difficulties we have experienced with the consultation process, mainly that 30 days doesn't give you very long to sort things out, and that we are not really in any position to make spend decisions as there are not enough leaseholders to get the RTM.
We have said we would not be able to take on any extra borrowing to fund the work, and have asked for details of how necessary and urgent the work is. We have pointed out that this has come whilst banks aren't lending etc.
We remember that when the stock transfer consultation was going on, a cap on capital works in the first 5 years was mentioned, but we can't find any details of that now.
We will consider consulting a surveyor in due course, and are trying to get the other 2 leaseholders motivated to help.
We are working on getting alternative quotes for the work.
We think the landlord probably did abide by the S20 rules ok.
Once again, thank you for your invaluable advice.

Unfortunately being unable to raise the money for the cost of the works wont be considered a valid reason for non-payment, have you considered an application to the LVT, this can be done before of after the building works.

Andy

[Poppy]

We have also mentioned the difficulties we have experienced with the consultation process, mainly that 30 days doesn't give you very long to sort things out,
The law specifies that lessees must respond within 30 days. Please don’t blame the housing association for that.

We have said we would not be able to take on any extra borrowing to fund the work ... We have pointed out that this has come whilst banks aren't lending etc.
How you pay for your share of the work is down to you. If you're lucky, the housing association may permit you to stagger payments over a few of years. You need to politely ask for credit or time to pay. I strongly suggest you do so.

We will consider consulting a surveyor in due course, and are trying to get the other 2 leaseholders motivated to help.
I don't think you are helping your situation by considering consulting a surveyor in due course. You really ought to have instructed a surveyor or found an alternative contractor when the members mentioned it to you three weeks ago. Your housing association is probably marching ahead with the works, whilst you consider.

If I were you, I would be doing my very best to find a contractor to do the job more cheaply and/or consult a surveyor to find out how necessary the works are.

[surreygirl]

What is S20 requirement! just tried to search on the internet but nothing came up!

[jeffrey]

What is S20 requirement! just tried to search on the internet but nothing came up!
It's s.20 of LTA 1985 and other sections inserted thereafter. See s.18-s.30 via this link: http://www.statutelaw.gov.uk/legResults.aspx?LegType=All+Legislation&title=landlord+and+tenant+act&Year=1985&searchEnacted=0&extentMatchOnly=0&confersPower=0&blanketAmendment=0&TYPE=QS&NavFrom=0&activeTextDocId=2177215&PageNumber=1&SortAlpha=0

[surreygirl]

Thanks for that Jeffrey. Very helpful.