% of service charge and statement of rights

[Helen C]

In the original lease for my property I am obliged to pay 9% of the total service charge. The copy of the lease I received from the sellers solicitor had the 9% crossed out and 6.5% was handwritten instead. I imagine (!) this is not legally binding but the previous owners have been paying 6.5% and I bought the property expecting to pay this amount.

I have now received an invoice for service charges (no information, calculation or statement of my rights included). The year end is June 08. I have received an invoice for 6 months to June 08 based on 9%. There is also a credit for the previous 6 months (which had been paid by the previous owner and then I paid an amount for my period of occupation on sale completion) and the charge for this period has been recalculated based on 9%.
I am concerned about paying 9% given the nature of my property and the other properties. Both myself and my neighbour live in two storey dwellings with our own front and rear entrance. However I believe this benefit is reflected in the purchase price. We have access to communal grounds and driveways etc but there are no communal internal areas relating to the property.

Most remaining properties have communal hallways and most share a communal entrance. These areas are maintained to a high standard.

9% is the highest paid by any leaseholder. Two flats in the orginal manor house pay 9% but two pay only 7%. The proportions of the manor house are also significantly grander than my property and maintenance of windows etc would be higher. Cleaning (presumably of communal areas) is alo included in the total service charge which I am paying towards. It seems unreasonable to pay 9% when we probably don’t have the highest use of the service charge. If the allocation was based on property values I bought for £310,000 just after a property in the manor house was sold for £475000.

Can I dispute the % I have to pay and how?

Also the invoice contained no information of calculations and no statement of my rights. Can I withold payment on this basis and if so until when?

[jeffrey]

First, the service charge collections cannot exceed 100%. Check the figures, if you can, to see what they total. If the figures are wrong, and if L won't recify, you can seek a Court Order under part IV of LTA 1987 for variation of all the leases.

Quite separately, L must provide regular Statement of Account (revised s.21 of LTA 1985) as supporting evidence for every s/c demand: see s.18-s.30 of LTA 1985 as amended last year by 2002 Act. If L fails to do so,you cannot be made to pay so far as demand is unreasonable- see s.19 of 1985 Act.

[Helen C]

Thanks

The problem is that the orignal leases only totalled 98%. This is why they have started varying the %s but it seems to be that the process needs to start from scratch as some of the justification for increasing some and reducing others is arbitrary and in my opinion unfair. I am concerned that it is going to be an expensive business to re-allocate.
Also I need to know how many leaseholders need to agree. The majority (8 from 15 flats) have a nice low 5% and I can't see them agreeing to changes, likewise the large expensive properties who currently pay less than me.

[jeffrey]

But the lease cannot be varied unilaterally. Consider the part IV procedure; let the Court force agreement on the freeloading majority!

[Helen C]

I like the idea. But when we start talking about court orders I get nervous that it will start getting expensive. Can I do this myself or do I need a solicitor? Is there a fee for applying to the court?

[jeffrey]

You will definitely need a solicitor (and, no, I don't deal with litigation- sorry). The Court would require detailed submissions on what is proposed, esp. as Order has to be:
a. served on all lessees (and, where applicable, their mortgagees); and
b. registered at HMLR against all affected titles.

[Helen C]

Waht would be a sensible basis for apportioning this service charge amongst the residents? The problem we have is there are three types of property - 4 apartments in an old listed building with lovely communal areas. Two houses and a flat in the old part but with no communal areas. 8 flats in a newish (20years) extension with nice communal areas. service charge is mainly gardening and grounds but also a contribution to sinking fund, cleaning, insurance and management fees.
In my opinion I do not have greatest use of service charge but how would an expert determine this? I don't want to go down the route of a court order unless I am fairly confident it will rule in my favour. What is the cheapest way of getting an appraisal of the properties and how the charge should be allocated? If I could get this I may be able to take this to the members and avoid a court order.

[LongsufferingLeaseholder]

In my opinion I do not have greatest use of service charge but how would an expert determine this? I don't want to go down the route of a court order unless I am fairly confident it will rule in my favour. What is the cheapest way of getting an appraisal of the properties and how the charge should be allocated? If I could get this I may be able to take this to the members and avoid a court order.

Your lease may specify some form of expert to whom the management company will turn to resolve a dispute on a matter such as apportionment.

Jeffrey is correct that technically you can apply to the LVT (not the court as you seem to own a leasehold property) to vary your lease on the basis that it is defective but what he does not hint at is the match you will then be taking to the powder keg that are residents management companies and the unfortunate nightmare that will then ensue (including endless legal paperwork) before it is resolved (not to mention neighbours who will no longer speak to you). Litigation is not straightforward like property convenancing is. It is messy, stressful, painfu, costly and vexatious.

The bottom line is how strongly do you feel about the unfairness of the current system, how long do you plan to stay there and how prepared are you to permanently fall out with many of your neighbours.

What Jeffrey does not tell you is that when you come across something like this frequently it is easier either just to accept it or to sell up and move. If you fight it you must be prepared for a very long and painful ride before there is a final resolution.

I speak from personal experience on a dispute involving an attempt by a management company to alter our specified percentage service charges from thsoe stated in our individual leases. This has been ongoing for over four years now.