Planned Review & Adjustment of Service Charges

Dear Residents,

Subject: Planned Review and Adjustment of Service Charges

We are writing to inform you that the Board of Directors will be undertaking a detailed review of the current service charges over the coming months, an exercise that will undoubtedly result in a significant increase in flat block service charges for leaseholders and the estate charge paid by both leaseholders and freeholders.

This decision has not been taken lightly and follows extensive analysis and consideration of the financial challenges inherited from the previous developer directors and their appointed managing agents.

Unfortunately, years of mismanagement, poor financial oversight and a lack of strategic financial planning have left the development underfunded and unable to be maintained to an acceptable standard and in compliance with our various statutory obligations. Most significantly the level of accumulated reserves for funding major capital works are inadequate to fund the increasingly necessary scope required due to the age of the estate.

The challenges presented by the financial situation we have inherited have been compounded by the significant increases in the cost of labour and materials for maintenance and construction works over the past few years.

Since handover from the developer nearly 18 months ago, the Board of resident directors has worked diligently to understand the true cost of maintaining Watercolour, committing a huge amount of time and effort to this exercise. This has included benchmarking the service charges against similar developments, and it has become clear that the current and recent years charges are not in line with what is required to sustain and improve the estate.

The accounts for the years 2019 – 2023 inclusive are now at a stage where there remains one issue to resolve, which is the incorrect allocation of electricity charges across the estate schedule and the individual flat block schedules. The Board is actively pursuing the detailed information from past managing agents that will enable us to correctly allocate costs and finally issue these accounts. This exercise has again involved a huge amount of time and effort by several members of the Board, both past and present.

One of our top priorities remains the refurbishment of the sandy paths which, as you are aware, are in urgent need of attention. The results of an initial tender exercise based on three alternative finishes has resulted in a cost of nearly £900 per property for the lowest cost option, before any adjustment for using some of the limited reserves that will be available.

We are therefore continuing to explore alternative and more cost-effective solutions and will seek further competitive tenders from contractors. However, the costs involved remain substantial due to the scale and nature of the work required.

We understand that any increase in charges will be concerning, particularly in the current economic climate, and we want to assure you that this review will be conducted on a fair, reasonable, and justifiable basis.

We would like to remind you that all members of the Board are also residents and will equally be impacted by any decisions to increase the charges.

Our goal is to ensure that the finances are finally put on a sound footing, thus ensuring Watercolour is not only maintained to an acceptable standard, but also enhanced for the benefit of all residents by creating a safer, more attractive community.

Further details will be shared in due course, at which time we will welcome your feedback and engagement.

Thank you for your continued support and understanding in the meantime.

Watercolour Management Company Limited

Planned Review & Adjustment of Service Charges.pdf

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