Advice on service charge dispute with your landlord
by Peter Richards — Posted on 23 June, 2017
Service charge dispute
We look at how a lessee can obtain a good outcome in a service charge dispute with the freeholder.
Service Charge disputes are one of the main causes of landlord and tenant disputes – but landlords are obliged by law to present the Service Charge under the terms of the lease and also make available to leaseholders the accounts which comprise the annual services charge. Leaseholders should also be given notice of any extraordinary repairs and maintenance charges, including repairs carried out as an emergency.
Extraordinary repairs may also be paid for under insurances – which leaseholders pay for. Therefore, any additional charges for “emergency repairs” or “extraordinary repairs” must be accounted for under the Service Charge, with accounts available to show what these involved and how much they cost. The service charge should reflect the true costs of expenditure on a property – with tenants paying a percentage under the lease.
However, in some cases, tenants feel that their landlord and its agents are profiting by the Service Charge by overcharging for maintenance, services or administration.
The sort of disputes that may arise over a Service Charge include:
- Failure to attach a full breakdown of costs with a Service Charge invoice
- Failure to notify tenants of when and where they can inspect accounts
- Hefty administration fees (e.g. managing agents’ fees)
- Unexplained maintenance charges
- Unscheduled service charge invoices (e.g. “balancing” Service Charge invoices without notice, or with no explanation for this).
Section 20 Notices
A section 20 notice is the means by which landlords can lawfully recover the full service charge for substantial works to a building, such as a roof repair or something equally significant. Landlords are required by law to consult their tenants in cases such as this. A section 20 consultation period will generally begin with a ‘notice of intention’, by which the landlord informs tenants of the proposed works. Leaseholders then have a minimum of 30 days to respond and raise any issues. After that, they will generally be given a notice of estimated costs of the works (at least two estimates) and a minimum of 30 days to respond to this new information, before a final decision will be made as to which contractor has been chosen.
If a notice is not served correctly, then tenants may not be legally obliged to pay it especially if no breakdown in costs has been attached and the relevant accounts have not been made available for inspection.
Tenants usually only have a short time in which to dispute a Service Charge – and taking legal advice from a specialist housing solicitor can help resolve disputes without having to refer the matter to the First-tier Tribunal (Property Chamber – Residential Property).
This has replaced the Land Valuation Tribunal (LVT), which used to deal with Service Charge disputes. Tenants should remember, however, that if a case is referred to the Tribunal, legal costs might be even higher if a landlord appoints its own solicitor and the tenant is required to pay costs.
We successfully represented a leaseholder in a service charge dispute in which the defendant freeholders waived the service charge costs and agreed to also pay our client £17,000 by way of settlement, please click here for further details on this case.
How Starck Uberoi can help
Starck Uberoi advises both landlords and tenants on service charge disputes – including representing clients at the First-tier Tribunal. We can also advise on alternatives to litigation or the First-Tier Tribunal in Service Charge disputes, including mediation and dispute resolution. Our housing solicitors advise both landlords and tenants in housing and property matters, including landlord and tenant disputes and Service Charge disputes. For expert legal advice, visit the Service Charge Disputes section of our website, or to book an appointment please call 020 8840 6640. We are based in Ealing, our office is located 10 minutes from Ealing Broadway Station.