Leaseholder Tips

Unfortunately when you buy a leasehold property it is difficult to know how ethical your future managing agent and freeholder are likely to be. Many stories appear in the press regarding poor quality repairs, threatening letters and high management fees.

I'd like to share with you a real life story, which will hopefully help you all.

In May 1999 the residents of No.123 Acacia Road received a Schedule of Major Works relating to their leasehold flats. ABC Management Company had sent them details of proposed repair and decoration to the outer elevations and common parts of the building. The Notice stated that comparable quotes were to be raised for the proposed work.

A couple of weeks later two quotes arrived from two companies ABC Building Ltd and XYZ Building services. ABC were the £300 cheaper and their quoted price of £3,100 including VAT was fair at the time.

At this point you should know that Managing Companies must inform you of all works to be carried out over £1,000. If you do have queries regarding the quotations provided you have ...... months to reply. Once this time has elapsed the work can commence,

Now, at this moment in time we had no reason to query the quotes offered.

In mid June work commenced with One cute and Two not so cute workmen doing the necessary. Everything seemed fine; they were sociable, friendly and polite. Within a week and a half the job had been completed. One had even replaced some tiles in my shower for a little extra cash. 

In fact none of the residents had any cause for concern until ABC sent us the final bill for the works carried out. Upon comparing invoices it became apparent that the overall total charge was £5,500. (Spot the difference). On closer inspection of the work carried out, the residents discovered rotten windows painted over, paint already flaking due to poor preparation and in some areas was missed completely.

The residents decided to air their annoyance to the management company and point out the defective work. ABC replied stating that it was common for leaseholders to deliberately avoid payment and that the works had in their opinion been completed to a satisfactory standard.

The residents decided to approach the Leaseholder Advisory Service for guidance. LEASE, as they are known, offer free information and advice for matters relating to disputed management fees, service charges and work carried out. They were able to enlighten the residents as to their rights. LEASE also are able to provide examples of past cases and any outcome. 

Action

The initial actions that were suggested…

Contact Your Mortgage Provider

Withholding ground rent, maintenance and service charges is a breach of your lease. The managing agent could approach the mortgage lender for any outstanding amounts and in turn they are then added to the outstanding mortgage. If you contact your lender first and tell them that you are in dispute, they will note it on your file. You should specifically request that they refrain from paying the managing agent until you tell them otherwise. Tell them that you are not avoiding payment, but require value for money.

Residents Association

LEASE should be able to provide a model constitution for your association. The association should have a Chairperson, Secretary and Treasurer. You should open a bank account and members should contribute a membership fee. This will show the management company you are all acting with one voice and that you are organised! You should gain the acknowledgement of the management company that the "Residents Association exists". From this point onwards you should only answer correspondence as a collective group and demand to be addressed as the "Association". 

Former Cases

All residents should compare notes and share information about any past disputes. This may help in the future if you try to prove mismanagement and negligence.

Record Defective Work

You should record the defective work. Make a list of every defective area, take photographs and if possible employ a chartered surveyor to witness your complaints.

On comparing past work carried out, the residents discovered that the same building companies had quoted for the last 10 years. Every single time the ABC Building quote had ended up at around £200-£300 less than XYZ (how convenient). It also appeared that although residents had complained before they failed to achieve satisfaction, this was due to not being organised and complaining as individuals. 

The residents followed all of the advice listed above and sent a letter to ABC Management Company listing all defective works and enclosing their surveyor's report. The surveyor believed the work to be of poor quality and only worth a figure of £2,500 inclusive of VAT. They pointed out that they had already contacted their mortgage lender regarding the dispute and that any future correspondence should only be addressed to the "Residents Association".

ABC repeated their accusation of avoiding payment and highlighted that each leasehold would be in breach of their lease. The letter received by the "Association" was obviously intended to test the nerve of the individuals involved. The management company were hoping that the suggestion of them taking further legal action would be enough to settle the matter. Bully tactics are not uncommon as the first route the agents employ. 

Tribunal

It may be useful to know that the "Association" could apply to the "Leaseholder's Valuation Tribunal" (LVT) to assess the case. For £500, a Panel could independently judge your case. The evidence that you've been collecting at this point could become very valuable. The LVT can assess what is a reasonable cost for work, reasonable standards for work carried out and fees for management. They can assess if the works were necessary. If the specifications for the work were adequate and if proper procedure was followed, they could even order that a Buildings Manager is appointed to assess future work and in extreme cases of mis-management, order a change of agent. They are not able to award costs.

The "Association" decided to inform ABC Management of their intention to make an application to the LVT to assess the case. (If you make a threat like this you should be prepared to follow it through). 

A week later a letter arrived from the Managing Agent informing "The Association" that they had appointed an independent surveyor to assess the list of defective work. The residents ensured that their interests were represented and arranged to be present during the survey. They made certain that no area was overlooked and provided a copy of the previous surveyors report.

On inspecting the property the "independent surveyor" could only agree with the residents. He recommended that the price for the work should be cut to £2,500 inclusive, with the defective areas put right. He also provided photographs of all defective and unfinished parts.

The Freeholder on hearing this news demanded that ABC were to stand the cost of the second survey and reduce their management charges in-line with the surveyor's estimate. He also demanded that the whole job was to be re-done. 

After years of what appears to be poor management and high charges ABC had finally met their match. ABC will certainly be more careful about how they conduct works at Acacia Avenue in the future that is providing they are still managing the property in three years time when the next major works are due. The ordeal has convinced The Residents Association that they would be better off without the Freeholder and Managing Agent. Now they are organised and have a sound source of advice via the Leaseholders Advisory Service, they have put wheels in motion to force the sale of the freehold.

If you're experiencing problems via a Managing Agent or Freeholder then don't be frightened to stand you ground. Find out your rights, follow the law and don't loose your nerve. Most of the time, managing agents are left to their own devices. It is unusual for managing agents to meet organised Residents with a desire to gain satisfaction. If you show them that they're not dealing with "muppets" and you are aware of your rights, they will treat you with much more respect. 

LEASE - Leaseholders Advisory Service - Tel: (020) 7493 3116

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