Service charges and other issues
A guide to service charges, administration charges, ground rent, recognised tenants associations and forfeiture.
LEASE was approached by a group of leaseholders in a converted industrial building in Wales, which consisted of 15 flats all on long leases.
Following a change of freeholder, the leaseholders were served with Section 20 notices for major works. Overall costs for the work were estimated in excess of £500,000 with around £38,000 payable by each leaseholder.
LEASE reviewed a sample lease as well as other relevant documents and advised the leaseholders that:
- At least one item of the major works – repairing the windows – was the responsibility of the leaseholders, not that of the freeholder;
- The costs of repair and maintenance must be reasonable and the leaseholders could make a challenge to the Leasehold Valuation Tribunal (LVT);
- It is important to obtain expert evidence; and
- The correct procedure for raising an advance service charge payment did not appear to have been followed.
We also provided advice regarding the Right to Manage a block of flats as well as the right to seek the appointment of a manager by the tribunal and alerted the leaseholders to the importance of the RICS Service Charge Management Code of Practice.
On the strength of this advice the leaseholders succeeded in having the window works removed from the project, saving around £10,000 per leaseholder. In addition, they have now made application to the LVT regarding the reasonableness of the other costs.
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