28 May 2010 by

Services Charges: Striking a balance

The recovery of service charges can sometimes be an area of contention between landlords and tenants, often leading to one party feeling aggrieved whether in terms of what they are being asked to pay or the failure to be paid. The area of service charges is also one in which mistakes are commonly made.

Here are some service charge pointers for both landlords and tenants to look out for:

1. Check your lease. This will dictate what the landlord is entitled to recover as part of the service charge as well as how the service charges should be apportioned, whether they are payable by instalments, whether estimates are required to be served and when and whether there is any requirement for the landlord’s accounts to be certified by an accountant.

2. Beware of consultation under Section 20 of the Landlord and Tenant Act 1985. This will apply where repair or maintenance is to be undertaken (‘qualifying works’) or where a contract of more than 12 months is entered into (‘qualifying long-term agreements’.)

The triggers for consultation will be if the contribution of any one tenant exceeds £250 for qualifying works or £100 for qualifying long term agreements. If this applies then, unless the Leasehold Valuation Tribunal (‘LVT’) has permitted dispensation, strict procedures will need to be followed otherwise the landlord will be limited in what he can recover from the tenants.

3. All demands for service charges must be issued in writing within 18 months of the charge being incurred and contain the landlord’s name and address. Any service charge demand and reminder letter sent after 1st October 2007 must be accompanied by a formal summary of rights and obligations, the content and form of which are prescribed by Parliament. Failure to comply with these requirements will restrict the landlord from recovery.

4. Ensure that the service charges include any allocation of discount (such as insurance or utilities) or credit which may be due.

5. Finally, the landlord is only entitled to be reimbursed, not to make a profit from service charges. The landlord should exercise reasonableness, striking a balance between his and the tenants’ objectives, for example how the building is maintained, which contractors are instructed and, most importantly, the overall cost.

In the event a dispute arises it will generally be the LVT which can investigate on application by either party, however as with any form of proceedings these can sometimes prove costly and so if the parties can agree a way forward this will always be best.

14 May 2010 by Sarah Davies

Coalition Conveyancing

Well it's finally over, and we have a new coalition government! We've heard the policies but what does that mean for you if you are thinking of moving home and what are the implications for the conveyancing process as a whole?

21 May 2010 by Nicki Iliffe

HIP Replacement

As from today Home Information Packs (HIPs) have been suspended and are therefore not required for any homes put on the market from now onwards. You do, however, still have to have commissioned (but not necessarily have received) an energy performance certificate before marketing your property.

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