Dear Property Doctors,

When purchasing our property, as with others on the development, we agreed to estimated management fees as part of the deal. It was confirmed that all properties would pay equal fees.

Five years on, we have finally been sent actual accounts from the management company, for the period from July 2017 to the end of 2020.

It is clear from the accounts that the management company has failed to collect fees from at least four or five residents.

This has led to the overall accounts being in small deficits for the years now reported. Had they collected the sums that we paid from everyone, we would have had a significant surplus for each year.

There has been no explanation why they have failed to collect these fees. When they issued these long overdue accounts, the management company added some small additional charges for us (and I am guessing all other residents), to cover these deficits.

They are now sending out chasers for these additional payments, adding late payment charges and even threatening bailiffs.

My wife and I have paid their demands promptly each year in the belief that the company was collecting from all 25 residents. The shortfall is purely and simply because they have failed to collect all fees. 

I have always been happy to pay my fees, despite terribly poor service. However, I see absolutely no reason why I should now pay these additional charges to compensate the management company for their failure to collect the money from other residents for four years. Surely it is their duty to collect from the non-payers rather than send threatening, insulting claims to us?

MS, by email

Unfortunately, disputes about service charges in flats are very common. Obviously, you should try and resolve any issues directly with the managing agents. But if you are not happy, you can always apply to a body called the First-tier Tribunal to say that the service charges have not been reasonably incurred and are not for a reasonable amount. This should be very much a last resort since these cases are invariably complex. 

I note there are 25 residents, so I imagine there are 25 flats which share the service charges. I always advise individual clients that it is best to join with as many others as possible if they want to challenge the service charge. 

Firstly, the managing agents will take more notice if a number of people are complaining rather than just one. Secondly, if you decide to engage solicitors to take the freeholder to the tribunal, then obviously the costs can be split if several of you are acting.  

It is best not to withhold service charges if there is a dispute.  You should pay “under protest”. The reason for that is that most leases enable a landlord to recover their costs of taking proceedings to recover service charges. You would not wish to become liable for substantial legal costs in arguing about fairly small amounts of money. 

Turning to your specific complaint, the service charges that you are liable to pay cannot be increased because other leaseholders have not paid.  You are only obliged to pay the proportion set out in your lease of the total costs incurred by the freeholder.  

If some lessees do not pay, then it would be up to the freeholder to “lend” money to the service charge fund for the work to be carried out and recover it later.  In practice, it is often the case that where people do not pay, the reserve fund is used to “subsidise” the non-payers.  

Finally, you mention “late payment charges”.  This comes back to the point I made, namely that most leases do provide that the costs of recovering service charges in arrear can be claimed against the leaseholder who does not pay.  Each lease is different but it may well be that under the terms of the lease the managing agents are entitled to debit you with the lease fees.

David Fleming is the head of property litigation at William Heath & Co solicitors (williamheath.co.uk)

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