Residential Service Charges
The Landlord of a block of flats is likely to be able to recover the costs they incur in providing services to the block of flats from the Tenants through the “Service Charge”.
The Tenant’s Lease will set out what costs the Landlord can recover through the Service Charge, for example maintenance, repairs, insurance and managing agents’ fees. The Landlord can only recover the costs if it is covered under the terms of the Lease. The Lease will also set out how the Landlord can recover the costs for example the dates for payment and whether payment must be made in advance. The Landlord can only demand payment in accordance with the terms of the Lease.
When a Landlord makes a Service Charge demand or when a Tenant receives one, consideration should be given to the following:-
Is the work or service covered under the terms of the Lease?
If not then the Landlord cannot charge those costs.
Is the Service Charge being demanded in accordance with the terms of the Lease? (for example is the payment date correct; is the Service Charge payable in advance or arrears; is an accountant’s certificate required?)
If not then the Service Charge is not payable until it is demanded correctly in accordance with the terms of the Lease.
Have the costs been reasonably incurred and is the service or work to a reasonable standard?
If not then the costs may not be payable.
Have the costs been demanded within 18 months of being incurred or, if not, has the Tenant been notified within that same 18 month period that the costs have been incurred?
If not the costs may not be payable.
Is the Service Charge demand accompanied by a Summary of Rights and Obligations?
If not the Service Charge is not payable until it is included.
Does the Service Charge demand have the Landlord’s name and address on it?
If not the Service Charge is not payable until it is included.
If repairs, maintenance and improvements have been carried out which require the Tenant to contribute more than £250 to one particular item, has the Landlord consulted with the Tenant by following the procedure laid down by statute?
If not then the Tenant is may not be liable to pay any more than the £250.
If there is a contract for the provision of services for a period of more than 12 months (e.g. a cleaner or gardener) which requires the Tenant to contribute more than £100, has the Landlord consulted with the Tenant?
If not the Tenant may not liable to pay any more than the £100.
Service Charge Disputes
If there is a dispute about matters relating to the Service Charge then the Tenant or the Landlord can make an application to the Leasehold Valuation Tribunal (LVT). The LVT has power to decide about all aspects of liability to pay Service Charges and, where necessary, can interpret the Lease to resolve disputes or uncertainties. The LVT may determine whether a Service Charge is payable and if so the amount payable.
If a Tenant is considering withholding payment of their Service Charge they should seek independent legal advice because if they are not legally entitled to withhold payment, the Landlord could claim from the Tenant any legal costs they incur in trying to obtain payment.
If you would like legal advice on Service Charges or any other Landlord and Tenant issues please contact us.
