Service Charge Disputes

A service charge is a payment made by the tenant to their landlord. This is usually in addition to rent, for the costs incurred in providing services inrelation to a property

Service charges and their recovery are a common reason for disputes. This leaflet is a brief overview of the landlord and leaseholder’s rights and obligations.

Guiding you through Service Charge Disputes

Most long leases of flats provide that the landlord, or a management company, will maintain the structure of the building and common areas subject to the contribution by the leaseholders of the shared expenses by way of service charge.

The process of resolving disputes
Our experienced team can guide you through the whole process, helping you with:
Due to the complexity of Landlord and Tenant law, service charge disputes can be long winded and expensive affairs if not dealt with carefully. Most disputes can be resolved by correspondence and negotiation.
Application to the Tribunal

Either the Landlord or Leaseholder may make an application to a Tribunal (the First Tier Tribunal Property Chamber, formerly known as the Leasehold Valuation Tribunal) to determine whether service charge is reasonable. The Tribunal is more informal than the court. Hearings can be dealt with on the papers alone and the costs are usually lower.
County Court
The Landlord may sue the Leaseholder in the County Court for unpaid service charge. Where questions of reasonableness are raised in defence the matter may be transferred to the Tribunal.
Forfeiture of the Lease

Most leases include a clause permitting the Landlord to forfeit the lease – that is re-enter the property and bring the lease to an end. This historic right has been greatly limited in recent years to include:

1.     A landlord cannot commence forfeiture proceedings or serve a forfeiture notice (‘a section 146 notice’) unless the lessee has admitted the breach or this has been determined by the Court, an arbitrator or the Leasehold Valuation Tribunal.
2.    The Landlord cannot forfeit alease for non payment of rent, service or administration charges unless the sum exceeds £500 or has been outstanding for more than 3 years
3.     The Landlord is not allowed to physically re-enter residential property unless he has first obtained a court order.

The Landlord can waive his right to forfeit by treating the lease as continuing, for example by acceptance of further service charge or ground rent.

Mortgage Lender 
Many leaseholders will have bought their flat with the benefit of a mortgage. It is a standard term in mortgage agreements that the leaseholder must abide by the terms of the lease. If a leaseholder fails to pay their service charge, the Landlord may ask their mortgage lender to pay this and add it to the mortgage.

What are you other options?
Where leaseholders are unhappy with the way the Landlord or management companyare running the block there are other options which we can advise you about.

Right to Manage
The lessees collectively have the right to set up a Right to Manage company which can take over the Landlord’s management functions at the flats. There are a number of restrictions on the Right to Manage and 50% of the lessees must participate, but the lessees need not prove mismanagement or obtain the Landlord’s consent.

Enfranchisement - Buying the Freehold
The lessees may also collectively have the right to force the Landlord to sell them the freehold of the property. The price, if not agreed, will be determined by the Tribunal.

Make an Enquiry

If you would like to find out more or to make an appointment please contact us.