SERVICE CHARGE AUDITS AND CONSULTANCY

PSL was asked to audit approximately 50 locations from a total portfolio of 600, where the management of the service charges were outsourced. Audit reports were prepared for each location and a consolidated report for the whole project.

The audits revealed there was a lack of documentation held which meant that the service charge costs could not be managed or controlled. Even where information was available there was a lack of evidence that costs were being challenged.

Key service charge issues were not being identified and therefore not taken into account. The audit conducted by PSL recommended improved procedures and action by PSL ’s consultancy team.  Since PSL began its consultancy activity on this commission, service charge savings in excess of £3m have been achieved and a further £3m are under contention.

ADMINISTRATION

One of the benefits of Administration is the workload it removes from the desks of Estate Surveyors or Managers, thus freeing them to concentrate on other issues.

In the first year of a service charge commission for a portfolio of 320 locations we handled a total of 2,560 documents including 2,274 invoices and 286 budgets and certificates. This saved the client over 1,500 hours of administration time alone, before considering the issues which require attention from the monitoring and analysis.

Savings achieved for this client in the first year were approximately £250,000 with a further £300,000 under investigation.

ADMINISTRATION

A client placed a portfolio of 65 locations representing the highest 20% service charge cost locations, representing approximately £6m per annum, with Property Solutions for Administration.

Over a two and a half year period the Administration process has driven out ongoing savings of £145,000 per annum, (and climbing) more than covering the administration fee. (consultancy savings for this client in the same period topped £1.8m). The clients overall service charge budget has been suppressed by approximately 3%.

ADMINISTRATION SAVINGS

A landlord was charging management fees on demised electricity and charging them at a rate higher than permitted in the lease. Saving £42,100.

ADMINISTRATION SAVINGS

Landlord failed to return balancing credit that was due. Saving £5,300.

ADMINISTRATION SAVINGS

Over collection of costs in respect of landscaping charges. Saving £99,000.

ADMINISTRATION SAVINGS

Landlord had been apportioning costs in respect of lifts to a ground floor tenant. This was specifically excluded in the lease. We were able to backdate the reimbursement. Saving £5,000.

ADMINISTRATION SAVINGS

The landlord had levied interest charges on late payment. Our investigation determined that payment had been made on time and that the landlord had misapplied the monies against other items. We were able to achieve a complete write back of the interest. Saving £10,000.

ADMINISTRATION SAVINGS

We established that because a landlord had not revised service charge budgets, that excess sums had been collected in respect of refurbishment works. A complete refund was obtained. Saving £7,400.

ADMINISTRATION SAVINGS

An analysis of a lease showed that the managing agents had ignored a cap on the level of the management fee. Saving £14,900.

ADMINISTRATION SAVINGS

The landlord tried to introduce costs to cover a Customer Service Desk and associated management fees. It was determined that this was an unreasonable charge as it was done for the managing agents convenience in order to meet the landlords obligations and was of no direct benefit to the tenant. Saving £4,800.

ADMINISTRATION SAVINGS

Our client occupied office accommodation connected with a major shopping centre. Our review of the apportionment, where there was only one schedule, showed that our client was bearing costs for services from which it received no benefit. The situation was further complicated by the apportionment being based on historic rateable values.

We were able to negotiate a re scheduling of the costs and the apportionment percentages. Saving £209,000.

ADMINISTRATION SAVINGS

The landlord failed to apply a service charge cap that was in place in the early years of the lease. Saving £4,000.

ADMINISTRATION SAVINGS

The landlord misapplied a rent credit against charges for another building. Saving £3,100.

ADMINISTRATION

Miscalculation of management fee by managing agents. Saving £4,500.

ADMINISTRATION

The landlord was charging management fees at 10% of services plus 5% of passing rent, ignoring a 10% cap on the value of services. We were able to negotiate a reversal of the 5% on rent charge. Saving £1,267.

ADMINISTRATION

A review of year on year budgets compared with the certificates showed consistent over budgeting. We were able to negotiate a reduction in the current years budget. Saving £4,600.

ADMINISTRATION

An analysis of the service charge budget identified the installation of security and access control equipment in a building which has only been operational for six months. Savings anticipated £70,000.