The property management experts at Brady Solicitors set out 14 strategies to help you minimise service charge disputes and stay out of the First-tier Tribunal.
The First-tier Tribunal (FTT) can deal with disputes relating to a range of leasehold and property management matters, including service charge liability; building insurance; right to manage; appointment of a manager; lease variations and lease extensions, and major works consultations.
Few managing agents or management company directors relish facing a challenge at the FTT as, although the Tribunal seeks to be relatively informal, it is inevitably a time consuming and stressful process.
Brady Solicitors can support you through the FTT but, more importantly, can help you to take proactive steps and improve your service charge procedures to prevent disputes from occurring in the first place.
Read the Brady Solicitors top tips for avoiding the FTT
- Read and understand the lease – it’s a short point but an essential one! Service charge demands must be made in accordance with the lease.
- Issue service charge demands at the right time – for example are they in advance or in arrears? Quarterly or annually?
- Get the percentages right. Make sure you understand how the service charge costs should be apportioned across each individual leaseholder.
- Ensure administration fees and service charges are reasonable. This includes insurance premiums.
- Be clear what is covered in the management fee and what is not.
- Make sure the service charge demand, budgets and accounts are clear so leaseholders understand the individual cost elements (don’t use vague words such as ‘utilities’).
- Make sure you consult on major works plans and share the detail early to identify any concerns and enable leaseholders to budget for any cost.
- Be aware of the 18 month rule – make sure you issue service charge demands on time.
- Make sure your service charge demands are compliant and include the necessary rights and obligations documents.
- Issue service charge demands to leaseholders at the correct address. Where leaseholders are not resident in the building, you will need to have a clear system for maintaining up-to-date address details.
- Keep good records and check up on contractors – if you are charging for the hedge trimming, make sure that the hedges have actually been trimmed.
- Be transparent and open with your leaseholder communications. From online portals through to face to face forums, by giving leaseholders a chance to air their concerns you can tackle issues before they escalate and prevent problems from festering.
- Understand – and ensure leaseholders also understand – areas of responsibility between the management company, the freeholder and the leaseholder.
- Be visible – supervise work, make on site visits and attend meetings.
The best way for managing agents and management companies to avoid the FTT is to make sure your service charge procedures and leaseholder consultations are precise, accurate and transparent.
There will always be some situations where you can’t avoid the Tribunal – mistakes can happen and leaseholders are not always reasonable. In these situations you need to be able to prove you have done everything you can – good record-keeping and documentation will be key to this. You should also note that the FTT will often request to inspect the building.
In cases where proposed costings are disputed, you do also have the option to pre-empt those disputes by first seeking guidance from the FTT yourselves.