management fees as a leaseholder

[GirlWithTheMouseyHair]

we're charged management fees by the company our freeholder has contracted to look after the house in which our flat is. Their fee is 15% of what they have spent on our behalf over the year - is this right? Shouldn't it be a flat fee, otherwise surely this encourages them just to find the most expensive quotes they can?

[lalalonglegs]

No, that's standard. As a rule of thumb, they should get three quotes and allow leaseholders a choice of contractors (this isn't the case with very big freeholders such as LAs and housing assns).

[narmada]

Not an expert but if you're unhappy with the management company and there are more than 4 flats in your block, you could always look into your 'right to manage' - e.g., appoint your own management company on your own terms. Providing certain conditions are met, you don't even need to ask the permission of the freeholder. See here

[GirlWithTheMouseyHair]

trouble with that is our freeholder owns two of the 5 flats AND owns the management company!! Good to know it's standard though - though they NEVER send us any quotes at all - is that a legal requirement or just a nice thing that they generally do?

[limitedperiodonly]

Check with these people.

www.lease-advice.org/

Your landlord has to give you a breakdown of costs and draw up service charge accounts for every year. That's a very big thing and if your landlord neglects it you may have trouble selling your flat.

From what I can remember they can choose their own contractor on anything up to £250 per leaseholder and there's nothing you can do.

Anything over that and they have to serve a Section 20 notice under the Landlord and Tenant Act 1985 with a consultation period. (Unless it's an emergency).

They'll give three quotes but they must allow you to inspect them and invite quotes and comments from you within the consultation period.

They don't have to go with your suggestions but if you do dispute it and it ends up in court they have to show they've paid proper account to your views and explain why they've rejected them. They're not automatically breaking the law by going with their own people but they do have an obligation to get the best value for money within reason.

If they break any of those rules they could be lumbered with all the costs over the first £250 unless they can show that the work was reasonable and their breach was just a technicality.

Also, if the work is poor or clearly overcharged you can apply to a court to waive all or some of the cost.

Anyway, Lease will know. It's worth asking them just for future reference. They are really helpful.

Lastly going to court (if that's what you ever have to do) sounds really expensive but it's not because it's usually hived off into a property tribunal where each side pays their own costs and can't claim from the other side no matter what happens.