By Martin Boyd
The problem is the law does not work.
Your right to inspect the accounts happens under s22 of the Landlord and Tenant Act 1985. However, if the landlord ignores that you have no right to take action. You can only inspect for the six-month period after the accounts are published.
So to get the information you want you may need to work in stages.
1) Write to the landlord to say which documents you want the inspect and see what he/it says. Some landlords will co-operate but most will not. You will need to go to their offices if they agree and they may use Covid as a delay for at least a few more months. (It will actually be the agent you write to, but you always address things in the landlord’s name as the law says your contract is with it)
2) If the agent declines, you have a couple of options. If you have a recognised tenants association (RTA) you can use s84 of the 1996 Housing Act.
This is a very useful piece of law that seems to have nothing to do with accounts. However, what you do is appoint your surveyor who then writes “I have appointed X to inspect the accounts”. That person could be you or a third party accountant or another leaseholder. It does not actually have to be a professional accountant. When we did this on my site we took on third party specialist accountant along and an accountant who lived at the site and knew the detail.
This piece of legislation also lets you ask to review both this year’s and past years records. You are probably limited in challenging the accounts from more than six years ago or having a complex legal argument about why some costs might be challengeable over a longer period.
3) If you do not have an RTA you may need to tell the landlord that you believe the charges for the years you want to challenge may not be reasonable and are considering bringing an action under s27A of the Landlord and Tenant Act and that you wish them to disclose the relevant accounting information.
4) To test the landlord you could say I believe I have been overcharged and am considering an action under s27A and would like to know if the landlord is willing to accept judicial mediation by the Tribunal. This is a much lower cost option than a full hearing. If the landlord says no it does not mean they have a strong case but it does provide you with evidence you have tried to cooperate.
HOWEVER, before you do any of this you need to be very clear in your own mind what you are fairly sure you will uncover. You will have to prove you have been overcharged if you go to the tribunal. Professional agents know full well they can only bill you for items they can evidence as being reasonably incurred so you will be looking for needles in haystacks.
If it were me, I would focus on a few specifics that mean you don’t have to try looking at all the records.
Insurance and utilities are common areas for overcharging.
Staff costs, even if high, can always be evidenced, so are almost never worth challenging unless there are large temporary staff costs, in which case your argument is about poor management.
Large contracts can have inflated charges, but it can be difficult to prove the costs should have been substantially lower.