Case study: seeking transparency over service charges

Claire bought the lease on her first home in 2005 and has lived there ever since.

Despite being a new build property, many of the flats were impacted by damp. Eventually an insurance claim went in and was paid out to the residential management company, who held it for future works on behalf of residents.

Claire had concerns about the management company. It did not engage with residents or hold AGMs, and Claire and her neighbours were never sure how the members had been elected, or how they could join.

In 2020, things got worse. Many mortgage lenders were requesting EWS1 forms before granting a mortgage on a property - where a surveyor had to assess the fire risk posed by the external wall of a building.

These checks came around as a result of the aftermath of the Grenfell Tower fire - and the realisation that many buildings had been constructed with combustible materials in their external walls, as well as a range of other defects like missing fire breaks.

Claire’s block was given a B2 grading. This means combustible materials are present and the risk from the external wall is high. Remedial works will almost certainly be required.

Claire and her neighbours entered a cycle which will be familiar to any other leaseholders who have lived through it. A ‘waking watch’ team was appointed to patrol the building around the clock looking for signs of fire. This cost £20,000 a month.

Eventually, an alarm system was installed – paid for by the waking watch fund. The money from the insurance claim, which should have been used to fix damp, was used towards some building safety expenses.

“It was very opaque,” says Claire. “We couldn’t figure out how the money was being spent, or how our service charges were being calculated.”

“LEASE has been helping us with access to service charge expenditure,” she says. “We just wanted to understand how the management company was spending our money.”

With help from LEASE, the residents were able to push for the first AGM since Claire had moved into the building in 2005 to be held in December 2024.

“Our constitution states that accounts must be presented at an AGM if requested. We felt there was no visibility with the company directors. We were concerned that people weren't being updated and we struggled to get transparency over our accounts.”

Claire and others put themselves forward for election to the board. “We had a number of people willing to be elected, which is our constitutional right.”

“We had to go through a long application of outlining our skills to join the board, which we all did in a very short period that were never shared with voters. But when we got to the AGM [which was held virtually] our cameras were switched off, microphones muted, and we went through the entire AGM, without being able to speak.”

Claire feels there is a lack of engagement and communication around building safety issues. Initially, an application to the Building Safety Fund had been approved and since then the original developer of the building has now agreed to fund remediation. But timelines are unclear, and problems with the alarm persist.

Leaseholders, with help from LEASE, have however got access to some accounts - which she says highlight questions around competitive tenders for many of the varied tasks relating to the building.

The stress of the issues with the building has taken a toll. “The stress has impacted my work. But the advisor at LEASE gave me some really sound advice. We just wanted some transparency, but we wouldn’t have got it without your help.”