Management Fees

Those who have been paying attention to the Service Charge we pay to FirstPort will have noticed that the "Management Fees" part of this has been increasing. Since FirstPort effectively get to set their own fees, we in the Committee always keep a close eye on this. In addition there is also an "Accounts Preparation Fee" in the estimate. We asked FirstPort what this is and got the following reply:

The accounts preparation fee is paid to FirstPort to cover some of our cost of employing in house accountants. We produce the accounts internally as an alternative to using an external accounting company. The aim of this is to enable better control and to save costs for our customers.

In other words this fee is part of the management fee that FirstPort keep, but under a separate heading. One wonders why this was felt to be necessary.

Back in 2012 we negotiated a reduction in the management fee to £4,800 per year (divided between the properties on the estate, of course). With the "accounts preparation fee" added in, this year the fee is set to be £6,766, which is an increase of 41%. For comparison, total inflation over the same period has been about 6%.

I have written three times to FirstPort asking them to explain this increase. Each time they have acknowledged my emails and promised a prompt reply, but then failed to respond.

If you consult the Transfer Document that came with your house you will find that "Holdings & Management (Solitaire)" are "the Company" it refers to. FirstPort are merely their agents. The Transfer Document says that H&M (Solitaire) will hold our money "in trust" for the benefit of the residents. This phrase "in trust" has an important legal consequence: H&M Solitaire are legally required to act in our best interests at all times. Google "fiduciary duty" if you want more information.

On 18th January I wrote to H&M (Solitaire) to point these facts out, and to say that we believe that it would be in the best interests of the residents if they put the estate management out to competitive tender. I'll let you know when I get a reply.