SERVICE CHARGE & ACCOUNT INSPECTION

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1/2/20: No further communications has been received from the managing agent or committee on this matter since the last meeting in November 2019 when they attempted to obtain a Signed Non-Disclosure Agreement!

 

Service Charge Witheld at February 1, 2020

£406.20

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23/1/20 - Report on The Service Charge Being Witheld

Due to the length of time the issue of the director and committee refusing to allow unconditional access to carry out an Inspection of the 2017/18 Annual Accounts, there will be a report issued from time to time to inform residents and visitors alike as to what the current situation is. 

The request for an account inspection arose out of the lack of co-operation by the director, committee and previous managing agent/accountant.  Originally a request was made as far back as 2017 to the parties concerned for a breakdown/analysis of the Repairs & Renewals item shown in the annual account, as there was absolutely no detail attached to the account and residents wanted to know how their money had been spent, so after numerous requests and refusals,only one other option was left - to request an account inspection.  The reason for witholding the Service Charge was, and remains to gain proper unrestricted access to the 2017/18 Accounts to ensure that residents monies have been spent appropriately and accounted for with relevant documentation.

As this is the first report, lets recap the events since the Service Charge Withdrawal commenced back in May 2019, and reflect on how this situation has developed into such a farce, and the lengths the director and committee have and continue to go to in order to prevent the account being Inspected including breaching the lease, committing an prosecutable offence under the Landlords and Tenants Act 1985, and ultimately the attempt to obtain a signed Non-disclosure Agreement prior to an Inspection taking place, this latest event is a red flag and is practically an admission of major wrongdoing.  A summary of these events can be viewed here.

These ongoing avoidance tactics just do not make any kind of sense if everything is above board and there is nothing to hide, however it has led to speculation by a number of residents as to the reason why the director and committee continue  down this road. 

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1/1/20:  As the committee continue to refuse access without pre-conditions or requiring a signed Non-disclosure Agreement, the Service Charge will continue to be witheld until such times as they comply with their legal obligations and allow the Account 2017/18 to be Inspected, they continue to breach the lease and commit an offence under the Landlord's and Tenant's Act 1985.

Service Charge Witheld at January 1, 2020

£367.90

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1/12/19: The Service Charge continues to be witheld until such time as the director and committee fulfill their legal obligations to the residents and give unconditional access to the 2017/18 Account Inspection.  Further to this, a request has been made to Inspect the 2018/19 Account - to date there has been no response to the email request.

Service Charge Witheld at 1/12/19

£329.60

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29/11/19:  Condition 2 - Letter regarding the Account Inspection

"You will adhere to, non-disclosure of the outcome of your visit to our Office, there are to be NO comments placed ON YOUR WEBSITE or discussed VERBALLY outside of this Office."

Do the director and committee not realise that by attempting to gain a signed non-disclosure they have raised a red flag which indicates that they know there is the possibility of something incriminating  turning up during an Inspection of the account which they want to keep hidden from the residents at all costs.  They can't even claim confidentiality because what we are talking about is the residents funds who are entitled to inspect the accounts and see where every penny is spent!

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OUTCOME OF THE SCHEDULED ACCOUNT INSPECTION 27/11/19

UNBELIEVEABLE!

On arrival to carry out the Inspection as scheduled, I was presented with the following letter which I was expected to sign prior to being allowed to make the Inspection.  I refused to sign and would not agree to any of their conditions consequently the inspection did not take place, however the meeting continued with the managing agent when a number of matters were discussed relating to the accounts in general.

The director and committee are once again playing stupid games in order to ensure that this account is not inspected, their behaviour is even more suspicious when you read condition No 2 in their letter below.

Sooner or later they are going to have to allow an Inspection to take place so they may as well agree to it - without conditions - and put this matter to rest once and for all.

So the situation has not changed and my withdrawal of the Service Charge continues until such time as the director and committee give unconditional access to an inspection.

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18/11/19 - Response Accepting this Appointment

Dear Mrs. M.......,

Thanks for your email giving an alternative date for the Inspection of the 2017/18 Account to take place, 1pm on Wednesday November 27, 2019 will be fine.

Email with an alternative Date to Inspect the 2017/18

Mon 18/11/2019

Dear Mrs S.......  

Apologises for the delay in replying.  Would the date 27th November 2019 at 1pm, be convenient for to attend our Office. 

Please advise,  

Many Thanks V.... M.......

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Follow-up email - Inspection of 2017/18 Account 

12/11/19

Dear Mrs. M.......

As you haven't responded to my email below, I'm a little concerned that perhaps you did not receive it and may be expecting me to attend the meeting which you set up for tomorrow afternoon the 13th Nov.  Perhaps you could confirm if you have in fact received it and what alternative arrangements you can make in order for the Inspection to take place.

I look forward to hearing back from you.

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Inspection of 2017/18 Account  - A Development

On November 8, 2019 I received the following email from the managing agent.  From it's contents it would appear that the director and committee have decided to comply with their Legal Obligations contained within the Lease and abide by the Landlord's & Tenants Act 1985, and agree to allow the Inspection of the 2017/18 Account to take place without conditions attached. 

Hi Mrs S.......

I would like to Invite into our Office to inspect the year 17/18 Accounts,  I have a free Afternoon on 13th November 2019, 1pm.  Would that be a suitable time and day for you.

Please advise.  Many Thanks

V.... M.......

There follows my response:

Dear Mrs. M.......

Many thanks for your message and invitation to Inspect the 2017/18 Account which is appreciated, unfortunately I have an appointment on Wednesday afternoon which I can't put off.  Would it be possible to move the Inspection to another day of your choosing - I am available any other day next week or when ever would be convenient to you.

Thanking you in advance and look forward to hearing back from you.

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Update - Service Charge witheld at November 1, 2019

Inspection of 2017/18 Accounts 

Further to the meeting with the managing agent on 3/10/19, this was followed by a number of phone calls from their solicitor.  The purpose of these communications were to discuss the options they were willing to consider with a view to resolving the issue, these options were:

(1) paying all monies owed before an Inspection takes place

(2) pay a deposit on monies owed before an Inspection

Neither of these are acceptable and the parties concerned were informed again that as soon as the Inspection of the 2017/18 Account takes place without conditions, reimbursement would be made.

The Service Charge will continue to be witheld until such time as the director and committee fulfill their Legal Obligations and allow the Inspection to take place.

The resolution to this ongoing issue is simple and it's time that the director and committee took their legal obligations seriously and ALLOWED THE INSPECTION TO TAKE PLACE WITHOUT CONDITIONS and bring these shenanigans to a close!

Service Charge witheld at 1/11/19

£291.30

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21/10/19 - Letter received requesting a Meeting

A further meeting requested to discuss 'issues' - see here for full details and the response to the request.

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A Meeting with the Managing Agent 3/10/19

(Abridged)

The Managing Agent requested a meeting with with me to discuss the Service Charge Issue relating to the Inspection of the 2017/18 Account.

After some discussion on various aspects of the issue, I was asked if I would agree to the removal of the sign in my window and to paying the monies owed - I stated that I would concur with this request as soon as the Inspection had taken place and not before.  The managing agent then requested that I put in writing my commitment to reimburse the Service Charge which has been witheld to date - see the confirmation email below:

"Dear Mrs M.......

Further to the meeting of today, you requested that I put it in writing that I would reimburse the Service Charged owed to you once the Inspection of the 2017/18 had taken place, I don't understand why you needed this confirming again as I already stated this to you - in writing - on a couple of occasions including on the website - which you say you haven't looked at."

The matter remains unresolved.

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Service Charge witheld at October 1, 2019

Inspection of 2017/18 Accounts 

Until such time as the director and committee of the SRA Ltd fulfill their Legal Obligations and allow ' unconditional access' to inspect this account, the Service Charge will continue to be witheld.

Service Charge witheld at 1/10/19:

£253.00

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Service Charge witheld at September 1, 2019

UPDATE 

£214.70

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WINDOW NOTICE

The Sycamores Committee

now state they are taking Legal Action to recover the Service Charge witheld to date.

After 7 months of silence and no communication from them on this matter, they say they will allow an Inspection of the 2017/18 Accounts.  However it comes with a number of unacceptable conditions attached before they will let the inspection go ahead.   

It is questionable why they have waited so long before they have addressed the situation - and why now! 

Given that it is the director and committee who are actually guilty of breaching the Lease and being in  contempt of the Landlord & Tenants Act Law 1985, this does not appear to be a very sensible approach on their part to addressing or solving the matter. To say the least it is rather bizarre as their handling of the ongoing situation will no doubt come under investigation if or when it ever gets to a court situation. 

Once again - until such time as they fulfill their Legal Obligations and allow proper and unrestricted access to this account, the Service Charge will continue to be witheld.

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Response email  sent 17/8/19 to the Managing Agent's letter of Aug 14, 2019

Dear Mrs. M.......

Thank you for  your latest letter of August 14, 2019 where you informed me that the director and committee intend proceeding with legal action against me to recover the Service Charge I have witheld to date.

To be absolutely clear - my reason for witholding the Service Charge was, and remains to gain proper access to the 2017/18 Accounts which they are legally obliged to allow, and by continuing to refuse to allow proper access they themselves have been and are guilty of the following:

 (1) in breaching the Lease of the estate

(2) in being in contempt of the Landlords & Tenants Act 1985

the latter being  a prosecutable offence in itself.   

I strongly advise you to consider the facts, the reasons for the initial reduction in the Service Charge, and eventually the full amount of the Service Charge being witheld, and the sequence of events which runs from Dec 2018:

·         Fact :    December 6, 2018, an official request was made to the Accountant and committee to inspect the 2017/18 Account.

·         Fact :    December 8, 2018, I informed the committee that I would be reducing the amount of monthly Service Charge by £3.30 per month.  This was due to a threatening Solicitors Letter dated  December 1, 2017 regarding the website, and the reason for the reduction was fully explained at the time.

·         Fact :    January 5, 2019, there had been no response to my original request, a further message was sent to the Accountant and committee on 5/1/19 asking for a response.

·         Fact:     January 16, 2019, there had been no reply to the request so I forwarded the request  to the managing agent.

·         Fact :    January 31, 2019 - A reply was received from the managing agent stating my request to inspect invoices and receipts relating to account 2017/18 had been refused by the committee, no explanation was given for their refusal.

·         Fact :    April 4, 2019, I informed  the managing agent and committee that I would be making a further reduction totalling £10 per month relating to 2 further threatening letters received from the Solicitor on June 12, 2018 and June 25, 2018, again the reason for the reduction was fully explained.

·         Fact :   April 19, 2019, The committee were notified  that my Service Charge would be witheld until such times as they complied with their legal obligations towards the residents.  They were also informed at the same time that as soon as an Inspection of the account was carried out that the monies witheld would be reimbursed. 

·         Fact:     Not once between December 6, 2018 and July 22, 2019 (7 months in total) have they made any effort to contact me either by telephone, letter or email, with a view to discussing this matter and possibly having it resolved.·          

It appears that instead of considering and responding sensibly to my last letter on this matter, the director and committee have again decided in favour of threatening me, as they have done so many times before.  Frankly -  I continue to be appalled by this unreasonable behaviour - and in the event that this goes further than their repeated threats, I look forward to my day in court when they will have to justify their position in breaching the Lease and being in contempt of the law itself as outlined earlier.

Yours faithfully,

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Another hand delivered letter from the managing agent on behalf of the committee.

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Response sent via email to the letter below on 9/8/19

Dear Mrs M.......,

I acknowledge receipt of your hand delivered letter dated August 7, 2019, and thank you for the clarification as to which accounting year you were referring to in your previous letter as there had been some confusion on your part whether it was Account Year 2017/18 or the Account still uncompleted for 2018/19.

As already stated I will reimbursed monies owed and remove the notices as requested once a full Inspection of the 2017/18 Account has been completed and not before.

I look forward to your response when hopefully common sense will prevail and this matter can be resolved in a reasonable manner which would be in the interest of all concerned.

cc The committee - Doris Clark, Joyce Lowes, D M....., S T......

8/8/19 Latest from the committee and managing agent

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Confused management & committee

Referring to the letter received from the managing agent on behalf of the director and committee dated 23/7/19 which was received on the 29/7/19 and responded to, there has been no reply from them to the request to clarify which accounting year they were referring to.  It would appear they must still be confused and can't make up their mind about what they are talking about and offering,  or perhaps they were being deliberately ambiguous for some unknown reason when they stated "view the Audited Accounts once completed for year ending 17/18".

So to clarify - the Inspection requested and originally refused by the committee  (see here) is for accounting year 2017/18 - this is the year prior to the managing agent taking over on 1/4/2018, it is Account year 2017/18 which was 'audited' and issued to the residents and  presented at the Agm in 2018.   It can only be assumed by their statement to "view the Audited Accounts once completed for year ending 17/18", that they are referring to accounting year 2018/19 and not 2017/18! 

To bring the managing agent and committee up to date, the amount of Service Charge being witheld is £176.40 which includes August, and as previously declared in a letter to the committee and managing agent dated 19/4/19, this will be reimbursed once an Inspection of the 2017/18 Account has been made and not before.

Regarding  the 'Threat', please take note, this is not the first time that Legal Action has been threatened, these were an attempt at the time to bully and intimidate which proved unsuccessful then and won't work this time either, but the committee are free to go down that route if you so choose - after all neither the managing agent or committee have to foot the bill, as usual it falls to the residents to pay.

It's good to remember that the committee have shown themselves on numerous occasions to be untrustworthy, and have been prepared to breach the lease and break the law when it suits them.  They are not fit to hold the positions they do, however they will continue to do as they please until such times as the residents take control and decide not to vote them back in.

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NOTICE - 1/8/19

Service Charge witheld at August 1, 2019

£176.40

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Response sent 29/7/19

Email response to the letter dated 23/7/19 sent to the managing agent:

Dear Mrs M....... 

Thank you for your letter of 23rd which was hand delivered today, and which I've read with interest, however some clarification is required before I could make any kind of informed decision. 

1)  Your letter stated and I quote - "view the Audited Accounts once completed for year ending 17/18"

I would like to point out that the accounts for year 17/18 are already complete and were presented at the 2018 AGM. 

Perhaps someone in your office has gotten mixed up with the years because going on what is in your letter, it reads like you may be talking about year 18/19!

I would also like to point out that I am at the moment only interested in year 17/18 and that is the account which I and Mrs. B.... wish to inspect.

Can you please confirm exactly which year you are referring to? 

2) Can you confirm that you have the space there at your office where the inspection could take place and where Mrs B.... and I can work undisturbed? 

3) Can you confirm whether members of the committee will be in attendance during the inspection?  

I look forward to receiving your reply.

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Letter received from the managing agent.

 

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NOTICE - 1/7/19

  The Estate Committee which is made up of: 

            The SRA Director: Mrs Doris M. Clark,

The SRA Secretary: Mrs Joyce Lowes,

 +  Mrs S. T…… & Mr D. M…..

have collectively breached the Terms of the Lease and broken the Landlord & Tenants Act 1985, by REFUSING to allow an Inspection of the 2017/18 Accounts -  they are legally obliged to do so when a resident makes the request.

Until such time as the committee fulfill their Legal Obligations as per the Lease etc., the resident at No. 26 is witholding payment of the monthly Service Charge.

Amount  witheld at July1st, 2019 

£138.10

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No. 26 is now

A SERVICE CHARGE FREE-ZONE

Until the director and committee allow Inspection of the 2017/18 Account.

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Notification email sent to the director, committee & managing agent 19/4/19

To: The director, committee and managing Agent.

I am writing to inform you that I am withholding my Service Charge until further notice – due to your continuing refusal to allow myself being a resident of the Sycamores and equal shareholder in the SRA Ltd – to inspect the 2017/18 Account. Your refusal to allow a resident to inspect the SRA Account is illegal, breaching the terms of the Lease – and is a criminal offence under the Landlord and Tenant’s Act 1985. Therefore I will not contribute any further Service Charge payments to the company funds until you fulfil your legal obligations to me as a resident and shareholder. Once a full inspection of the accounts has been carried out, I will be happy to reimburse all monies withheld.

Resident of No. 26

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Service Charge - For the period 1/4/19 - 31/3/20

Reference letter to the residents dated 1/4/19 where it states:

NO ACTION REQUIRED - All payment plans will remain the same.

Once again attention is drawn to the Clause 3.5 of the Lease:

In calculating the amount of Service Charge from time to time the Lessor shall take into account any past deficiency and any future expenditure (whether annual or recurring or not) which may be likely to be incurred by the Lessor under any of the heads aforesaid so as to enable the Lessor to meet such expenditure out of the funds in the hands of the Lessor representing service charges paid by the Lessees of Dwellings in the Scheme if and when such expenditure shall be incurred and shall also take into account and give due allowance for any surplus arising out of such service charge previously collected but not in the event wholly expanded.

The director and committee once again are in breach of the terms and conditions of the Lease and their responsibilities, anyone reading the highlighted areas above would have no difficulty actually understanding what it means, so why don't they.

For the past 3 years that I know of there has been a huge shortfall each year with regard to the amount of Service Charge received, this has been documented in an earlier article which can be viewed here.  The Service Charge is intended to be self financing for the most part, this is normally achieved by looking at the previous years expenditure and setting the level for the coming year accordingly.

What has been happening is that this shortfall has been subsidised out of the Sinking fund which is intended for major future expenditure and not for the day to day expenses and repairs and renewals, in fact nowhere in the Lease does it state that this is allowed.

It would appear that in this instance, the director and committee choose to ignore the terms of the Lease to keep the Service Charge at a low level.  In the past because of this practice, the Sinking Fund percentage was actually increased from 3% to the current 5% to cover for the shortfall in Service Charge.  

Isn't it about time that the decisions relating to the estate's finances were handled properly and not at the whim of the director and committee!

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Letter sent to the director, committee & managing agent by the website owner 5/4/19

Dear director, committee and managing agent,

A Further Service Charge Reduction

No doubt the annual account for year 2018/19 is now complete and included in that will be charges for 2 further letters from the company solicitor to myself, these were mentioned in my letter to you of 9/12/19.

I wish to inform you that I am now making a further reduction in my Service Charge contribution for the same reason outlined in that letter, this will apply from 1/4/19 until 31/3/20.

Please find enclosed my cheque for £28.30 for April 2019's charge, this is the reduced amount I will continue to pay until the end of this financial year.

Yours faithfully

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Question sent to the managing agent, director and committee 25/3/19

Observations on the Service Charge

What is the criteria used to work out the level of Service Charges for different types of properties on the estate i.e: 

Property Type

Monthly Payment

   
2 Bedroomed apartment .......................................................................

Around £44.00

2 Bedroomed apartment with garage ...................................................

?

   
2 Bedroomed terraced bungalow with own garden .........................

£38.30

2 bedroomed terraced bungalow with own garden and garage ........... ?
   
1 bedroomed flat ...................................................................................

£38.30

1 bedroomed flat with garage (if applicable) ......................................... ?

There appears to be an anomaly, why would a 1 bedroomed flat have the same charge as a 2 bedroomed bungalow with a garden? 

Note:  To date there has been no response from either the managing agent, director or committee on this matter.

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The Service Charge

Owner/Residents pay an Annual Service Charge towards the upkeep of the estate, this covers the day to day repairs, renewals, gardening, window cleaning etc.  This service charge also pays the Accountant, the Company Solicitor and the Managing Agent for their services.

In the accounts for the year ended 31 March, 2018, this is what each resident has contributed on a Monthly basis towards the Service Charge for these major items in comparison to what they contributed in previous years:

Comparison of Residents Monthly Service Charge Contribution

Service Item

2017/18 per Month 2016/17 pper Month 2015/16  
Electricity £2.28

£2.43

£2.20  
Insurance £12.25 £13.13 £12.19  
Repairs & Maintenance £7.92 £8.19 £51.29 *
Gardening Expenses £9.70 £8.18 £7.85  
Cleaning and Window Cleaning £5.95 £5.79 £5.00  
Legal and Professional Fees £4.85 £0.00 £1.00  
Management Fees £8.07 £8.07 £8.02  

* This was due to the Painting Contract

It's interesting to note that when a comparison is done between previous years, it shows that the actual Service Charge Receipts did not cover the Expenditure, in each of the last 3 years compared, there has been a shortfall which has been subsidised by the Sinking Fund which is why the Sinking Fund % was increased from 3% to 5%. 

Comparison between the Service Charge Expenditure against actual Receipts

  2017/18 2016/17 2015/16
       
Total Expenditure £34,857 £31,040 £31,040
Total Service Charge Receipts £26,588 £26,629 £27,516
       
Actual Shortfall between receipts and expenditure  £8,269  £4,411  £3,524

There are regulations covering the use of the Sinking Fund in the Lease which can be viewed here, however there is nothing which says it can, or should be used to subsidise the Service Charges - hopefully someone (the director,committee or managing agent) might be good enough to clarify this point eventually. 

With regard to the calculation of the Service Charge itself, it clearly states in the Lease under Clause 3.5:

The decisions which the director and committee are and have been making over the past years with regard to the amount of Service Charge levied could be seen as bad housekeeping at least for all those decisions could have been made with the best of intentions for the residents.   Do they not realise that all they are doing is deferring the ongoing shortfall onto the families of the residents in the event when properties are sold.

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Letter sent to the Managing Agent by the website owner 9/12/18

Service Charge Contribution.

During the recent AGM I asked:  “How much had it cost to send me the Solicitors Letter dated 1st December, 2017? ”, the company solicitor declined to answer and there had been no response from either the director or committee.   There has been 2 letters further threatening letters sent to me on the 12th and 25th June, 2018 - these will be charged for in the next accounting year 2018/19.

As I have no idea how much was charged for the one in 2017, or will be charged for the 2 further ones sent in 2018, I am reducing my service charge contribution with immediate effect.  This will continue until at least the end of the current financial year, and as soon as you let me know the actual cost of these items, a calculation can be made as to what my actual % portion of the contribution is and the correct amount will be adjusted.  In the meantime I am enclosed my regular cheque less the reduction.

It is neither justifiable or reasonable that I should be expected to contribute towards the cost of sending myself threatening letters, especially when the use of the Service Charges Funds has been inappropriate and therefore under the circumstances, not a legitimate expense.

The decision has not been taken lightly and one I would have preferred not to have made, however, given that the original situation (the unofficial website and it’s content) could have been handled in a completely different manner had the director and committee used a little foresight and common sense, instead they opted for intimidation and bullying tactics with no thought for the fact that the residents would have to pay for their decision.

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2018 AGM:  The managing agent stated that it was because of the Sinking Fund remaining at 5% that the Service Charge had remained at it's current rate for so long. 

Note: (A decision was made during the 2016 AGM that the Sinking Fund would be increased from 3% to 5% pm from 1/4/2016 due to the fund being low, the increase was made instead of increasing the Service Charge.)

 

February 17, 2020

Copyright  L Sherwood,  All Rights Reserved, 2017-2020