Residential service charges – an overview
Most long leases of residential flats contain an obligation upon the lessor (or landlord) to insure, repair and maintain and provide other services in respect of a building, and an obligation upon the lessee (or tenant) to meet the costs incurred by the landlord by way of service charge. The lease will govern which services the landlord is to provide and which services tenant is to pay for. It will also set out the amount of the tenant’s contribution, how and when the service charge can be demanded and is payable. This general scheme, where the landlord provides the services, but the tenant pays for them, has led to service charges being one of the principal areas of dispute between landlords and tenants.
Legislation has sought to regulate residential service charges. The main areas where tenants have been given rights and protection are as follows:
Tenants do not have to pay service charges that have been unreasonably incurred or for works and/or services that are not carried out to a reasonable standard.
- Even if service charges are reasonably incurred or relate to works and services carried out to a reasonable standard, they will not be recoverable above a statutory maximum if they relate to qualifying works or a qualifying long term agreement, and the statutory consultation process has not been complied with or dispensed with.
- Service charge demands must be issued within 18 months of the costs being incurred and be accompanied by a prescribed summary of tenant’s rights and obligations.
- A landlord cannot forfeit the lease of a residential flat for non-payment of service charges unless the amount payable has either been determined by the County Court or the FTTi or admitted by the tenant.
Service charge disputes are generally resolved by the FTTii. The FTT has limited power to award costs, although it can order costs to be paid by a party who has acted unreasonably in connection with the proceedings. This does not preclude a landlord from claiming costs directly from the tenant, or as part of the service charge expenditure, provided the lease permits this. The FTT or County Court can make an order that all or part of the costs incurred by a landlord in connection with any proceedings are not to be recovered as part of the service charge if it considers it just and equitable in the circumstances.
The law relating to residential service charges is complex and drawn from several different statutory sources. There is also a myriad of case authorities. At Coole Bevis LLP, we have experienced, specialist solicitors who will not only provide you with a clear and concise explanation of the law, but advice that also takes account of the practical, commercial and tactical considerations involved in each matter.
We routinely advise both landlords and tenant upon all aspects of residential service charges, including:
- The terms of a particular lease, the covenants to provide services, the manner in which service charges are to be demanded and the provisions for recovery of legal costs.
- The statutory consultation requirements in relation to qualifying works and qualifying long term agreements.
- Compliance with the RICS Service Charge Residential Management Code (Second Edition).
We have a proven track record of recovering service charge arrears for landlords and RTM companies and offer representation in the County Court, the FTT and, if necessary, appeals to the to the Upper Tribunal (Lands Chamber) or Court of Appeal. We believe in tailoring our services to the needs of each client rather than adopting a “factory” approach to arrears recovery.
For more information about the services we can offer, please contact Jonathan Everett (partner and head of department) on 01903 534505 or at email@example.com or Rebecca Turnbull-Simpson (partner) on 01273 716622 or at firstname.lastname@example.org
This guide provides a general overview of residential service charge law. It is designed to be a summary of the points to consider, rather than detailed advice. This guide should not be relied upon as legal advice, and you should contact Coole Bevis LLP or advice on your specific circumstances.
i First-tier Tribunal (Property Chamber)
ii Although the County Court and the FTT have concurrent jurisdiction, proceedings issued in the County Court, if defended, are likely to be transferred to the FTT for determination of the disputed issues.