What is a service charge?
A service charge is an amount charged by the Landlord (normally the owner of the building) to the flat owner. This would be in connection with costs incurred with respect to the property. For services such as
- cleaning of communal areas
- lighting of communal areas
- management of the property
A Landlord claims the service charge from the Tenant by serving a service charge demand.
What can be claimed in a service charge demand?
The Lease will set out what items can be claimed in a service charge demand and when they are payable.
Special rules about service charges
There are important statutory procedures that apply to service charges and ground rent demands. For example, a service charge demand must contain the Landlord’s name and address and must be accompanied by Summary of Rights and Obligations and otherwise it is not payable. There are also time limits within which costs must be demanded form the flat owner and obligations on a landlord to consult with the flat owners when major works are being carried out. Flat owners also have various rights to information about service charges and rights to challenge them.
The consequences of failing to follow these procedures can mean that recovery of those service charges/ground rent is not possible or is limited in time.
Disputed Service Charges
If the service charges are disputed either the Landlord or flat owner can apply to the First Tier Property Tribunal who will determine whether a service charge is payable and if so the amount payable, proportion payable, date payable and manner payable.
Although as general rule, each party pays for their costs in the Property Tribunal there are exceptions to this and indeed the Lease itself may allow the Landlord to recover legal costs. Whether you are a landlord or Flat owner, it is therefore important you obtain advice on your ability to recover/liability to pay costs and we can help you with this.
Unpaid Service Charges
If the flat owner has not paid their service charges, enforcement action can be taken against them through the First Tier Property Tribunal or in the County Court. Conversely if you are on the receiving end of enforcement action, we can also advise you.
For information on forfeiting (ending) a lease due to service charge arrears please click here.
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