Leaseholders in NPW, Michigan, Ontario Tower and Charrington Tower all received an increased service charge demand for H2 (January 2019 – July 2019) with an uplift for H1 (July 2018 to Dec 2018). On average the increases range from 18% to 27% – a substantial increase by any means.
This is against the background of:
- No certified Service charge accounts from BAML since 2015. The 2016 accounts remain outstanding for the last three years and have been continually promised to us by BAML. This is a historic ongoing issue, the 2015 accounts were only received at the end of 2018.
- BAML’s accountants changing on a regular basis
- A lack of clarity on Reserves
- Increasing Service charge budgets with little clarity
- An ageing estate which requires more work (NPW and Michigan Buildings are now 15 years old ) .
- A substantial major works programme being faced by the entire estate of New Providence Wharf
- A lack of response to the Section 21 and 22 Notices filed by Leaseholders
The majority of Leaseholders have raised concerns about their service charge demands. The NPWLRA sought advice from LEASE and from the Leasehold Knowledge Partnership and considered informal legal advice from experts both residential and external. We consider that the best way forward to assess the reasonableness of the service charges and the lack of accounts is to engage an independent Surveyor and Accountant. We have made enquiries as to the most reliable and experienced experts to do this work and the costs thereof.
The advice from a Surveyor/Accountant
We are advised that we need a management audit for the last three financial years in order to assess the actual costs, their reasonableness and the reasons for significant variations.
The fee’s for such an exercise would be based on time involved which in turn is dependent upon the information available and the extent to which Ballymore have got to in producing draft accounts. They have clearly had historical issues in producing their accounts. If instructed, the Surveyor would appoint an independent firm of accountants and obtain fee estimates/quotations in order for the Residents Association to be happy with their appointment and require a written undertaking to cover their costs.
Assuming that the accountants can collate the necessary information into a form of year end pack ie summary of expenditure with receipts the Surveyor can then review the expenditure and provide his opinion on the various heads of expenditure, significant fluctuations and their reasonableness. He will need to inspect the estate.
In terms of a budget, the fees are likely to be approximately £50,000 plus VAT. We consider this to be a worthwhile and constructive exercise. We have also considered whether a legal opinion would be appropriate. However, any solicitors will also require an accountants report to assess the reasonableness of the service charge. In addition as per the advice received, if Ballymore are required to engage their own solicitors to defend any action and /or respond to solicitors who represent leaseholders, they are able to recoup those costs via the service charges. This will not be to the overall benefit of Leasholders.
If you wish to support getting an accountant/surveyor, we’ll soon be releasing a feature on the website to provide your support.