Lease Extensions and Property Management
Service Charges Disputes
Leaseholders are becoming more aware of the rights afforded to them by legislation, in respect of their flats. One of the most contentious areas for leaseholders and landlords alike is Service Charges.
What is a Service Charge?
A service charge is an amount payable by the Leaseholder of a dwelling as part of (or in addition to) the ground rent, which is directly or indirectly for services, repairs, maintenance, improvements or insurance. Basically, a service charge is how the Landlord or Management Company recovers the costs of complying with his obligations from the Leaseholders of the property.
What can you do if there is a dispute over service charge?
Leaseholders have a right to challenge their service charge if they are not happy with it. This right is afforded by Section 27A(1) of the Landlord and Tenant Act 1987. This allows a Tribunal to determine whether a Service Charge is payable, who it is payable by and to, how much is payable, when it is payable and how it is payable.
There are three main reasons that service charge can be challenged in this way; either because:
- the demands to pay are not contractually valid i.e. there is no provision in the lease
- they are not legally valid, or
- The amount of the service charge is not reasonable
Remember that a lease is a contract and all parties to it are bound by its terms.
Therefore, if service charges are not demanded within the confines of the lease then there may be scope to challenge them.
The Landlord and Tenant Act sets out formalities that the landlord must follow. Failing to follow these strict requirements has the same effect as if the demands had not been served. No payment is due until they are corrected.
For example the provisions of Sections 47 and 48 provide that the Landlord must include his name and address on all Service Charge demands. It is not enough for the Landlord’s agent’s details to be provided.
Additionally, Section 21B requires that all demands for Service Charge are accompanied by a Summary of Rights and obligations. There is no obligation on a Leaseholder to make payment if this has not been served with each demand.
There are also various other statutory controls such as the “18 month rule” for demanding service charges and the consultation requirements for major works, which can leave landlord’s in trouble if not complied with.
How can we help?
Successful service charge challenges by Leaseholders can result in heavy discounts to the Service Charge.
We are able to offer fixed fee arrangements for dealing with any aspect of a service charge dispute – from an initial review of the lease to advise on the service charge provisions, right through to preparing for a Tribunal hearing. We can also deal with supplementary service charge issues such as applications for dispensation from consultation requirements and general advice.
Should you need any assistance in this respect please do not hesitate to contact us today.