Using LEASE Early Neutral Evaluation to resolve your service charge dispute
What is ‘Early Neutral Evaluation’? Early Neutral Evaluation is an assessment of the issues in dispute, designed to serve as...
What is ‘Early Neutral Evaluation’?
Early Neutral Evaluation is an assessment of the issues in dispute, designed to serve as a basis for further negotiations and to avoid the time, expense and anxiety caused by unnecessary litigation. An independent expert expresses an opinion on the merits of the issues raised by the parties. The opinion is not binding but gives you an unbiased evaluation of the relative strengths of the parties’ cases, and guidance as to the possible outcome if the matter proceeds to the First-tier Tribunal (Property Chamber) (F-t T).
What is the evaluator’s role?
The evaluator can only give his or her independent view about the prospect of success in the F-t T but the evaluator cannot make binding decisions or rulings.
The evaluator needs your help in order to form a view on the matters in dispute. By presenting your dispute properly you will clarify your case for the evaluator. This guide is to help leaseholders and landlords get their statements ready for evaluation and save time, money and anxiety for everyone involved.
You can use the online Early Neutral Evaluation form to find out if the other party to the dispute would like to participate.
The guide is split into three sections:
Section 1 What an evaluator looks for.
Section 2 gives an example of a leaseholder’s statement.
Section 3 gives an example of a landlord’s statement.
Who will see the information you give us?
- All documents you give to LEASE in support of your submissions will be made available for the parties to the dispute. It is your responsibility to make sure that you do not send us information which you do not want the other party to the dispute to see.
- This includes the details of the dispute, and your statements about what you are disputing and why; or, if you are the landlord, your submitted details and statement as to why a service charge is payable and the sum demanded is correct.
What an evaluator looks for
An evaluator can only give a view that is based on the information with which he or she is provided, and generally will not contact the parties for follow-up information or supporting information.
The evaluator needs to know what the dispute is about and how much is being disputed. So it is worth taking time to state your case properly so that the evaluator is not in any doubt about what the dispute is about.
You may wish to include such information as:
- Background facts;
- What item(s) of the service charge are disputed and accepted;
- The amount disputed;
- Why it is payable/not payable;
- Relevant periods
When reviewing your statement, the evaluator will usually ask him or herself these questions:
- What item(s) of service charge are disputed? (For example cleaning, roof repair, etc.);
- Does the lease say that the leaseholder has to pay?
- What is the landlord required to do to become entitled to payment of the service charge?
- Did the landlord fail to meet those obligations regarding service charges? If so, what effect does that have on the amount claimed? (You can find further guidance on service charges in our booklet Service Charges and other issues)
- Has the leaseholder the obligation to pay the amount disputed under the lease?
- What information has the landlord or agent produced to show the service charge is due and payable? (Service charge demand etc).
The evaluator can only work with the information submitted. He or she knows nothing about the dispute except what the parties send in. Therefore, it is important that you state your case clearly. Evaluators will generally not contact landlords or leaseholders to ask them for missing information.
Step 1: Outline the dispute
What is being disputed and how much is being disputed?
Give a brief explanation of the items in dispute, and how much is disputed. For example:
Check you have totalled the amount in dispute correctly.
Explain your dispute:
- If you are disputing several service charge items, it is helpful to give a breakdown of the amount disputed for each item, and some details of what each dispute is about.
- Explain why you think you are entitled not to pay the amount disputed.
- Think about the questions that the evaluator will be asking at this stage:
- What are the leaseholder’s obligations?
- What are the landlord’s obligations and did the landlord comply with them?
It is essential that you give a breakdown of each disputed charge if there is more than one item in a service charge bill. So, for example, if the service charge totals £300, but was made up of different services (e.g. cleaning £75, gardening £25, management fee £200), spell this out.
Step 2: Support your explanation with relevant information
In many disputes, the landlord and the leaseholder do not agree about the facts. The evaluator will not usually form a view one way or the other if there is no supporting information. But keep your supporting information to what is relevant and essential to the dispute.
The evaluator will not go looking for information:
- Don’t say; information is available “on request” or “if required”.
- It is your responsibility to make sure that you provide all relevant information when stating your case.
Some examples of information that you may want to send to the evaluator:
|The lease||shows what the leaseholder and the landlord agree to do|
|The service charge demand||shows the amount requested to be paid|
|Service charge statement||shows what the leaseholder paid and what is owed|
|Estimates||show the approximate cost of carrying out work/services|
|Quotes||show the quoted cost of carrying out work/services|
|Invoices||show the cost paid/to be paid for carrying out work/services|
|A photo of the building and a statement of the number of units in it||Shows the building as it is currently and helps the evaluator to understand the context of the dispute.|
Send copies of correspondence only if it will help the evaluator to decide:
- what is being disputed
- how much is being disputed
- why you think it is payable/not payable
- that the amount you are claiming or disputing is justified
The evaluator does not need a detailed account of everything that happened during the dispute. Large amounts of emails/correspondence obscure the relevant facts and bury the important information. Submit only key documents.
Sending information that is not relevant could delay the progress of your evaluation or make evaluation inappropriate.
Stick to the facts. The evaluator will not take suspicions or unsupported opinions or unsupported allegations into account.
Make sure your information is RELEVANT: it’s the quality – not the quantity – that matters
Information will be relevant if it shows why the service charge is payable/not payable.
Information will not usually be relevant if it simply duplicates something you have already submitted and/or:
The evaluator will not take into account information that is illegible or photos that are unclear.
An example of a leaseholder’s statement
|Details of the dispute|
|How much is the total service charge? (What period?)||£1,000 (eg 1 April 2015 to 31 March 2016) )|
|How much of it is disputed?||£700|
|Breakdown of disputed charges?|
|Common parts redecoration||£150|
|Other (please specify)||£0|
Please Note: this is only a guide to presenting a statement; the arguments are not necessarily valid.
An example of a landlord’s statement
|Details of the dispute|
|How much is the total service charge? (What period?)||£1,000 (eg 1 April 2015 to 31 March 2016)|
|How much of it is conceded?||£0|
|Breakdown of disputed charges?|
|Common parts redecoration||£250|
|Electricity to common parts||£200|
- The evaluator must make a decision on the basis of the information provided by both leaseholder and landlord. This process is information based. Nevertheless, the decision is not binding and does not have to be accepted by either party.
- You should submit information only where you consider that it is directly relevant to the dispute.
- Try to view the information you are submitting from the point of view of an independent third party who does not know the property. Will your information convince that person?