Service charges

These rights are set out in Section 27A of the Landlord and Tenant Act 1985.

Either you or your landlord can apply to a tribunal for a decision on:

• whether you are responsible for paying the service charges
• who you should pay the service charges to
• how much you should pay
• when you should pay the service charges
• how you should pay the service charges

The application can relate to charges you have already been asked to pay, or charges your landlord plans to make, whether or not you have paid the charge. However, you and your landlord cannot apply to the tribunal for a decision on a service charge which:

• you have already agreed is reasonable or admitted responsibility for paying
• has been decided by a court
• has been referred to arbitration (with your agreement following the dispute)
• has been decided by arbitration as a result of an agreement following the dispute

Also, you cannot apply to a tribunal for a decision on service charges if you are a local authority leaseholder, unless you have been granted a long tenancy or lease.

Any clause in your lease or any other agreement which appears to commit you to taking part in arbitration before a dispute arises will not be valid and will not prevent you from applying to the tribunal.

If you pay the service charge, or any part of it, this does not necessarily mean you are agreeing it is reasonable or admitting responsibility for paying it.

If your landlord is planning to carry out work, they can also ask the tribunal for a decision that their proposals are reasonable, and that you must pay the service charge that relates to the work, before they start spending on the work.

Service charges can include costs relating to things such as maintenance, repairs or other work to the building, improvements, management, cleaning, insurance and other costs which your landlord pays and then charges back to you, such as legal and other professional fees.

You or your landlord can apply to the tribunal for a decision, and the tribunal can look at the conditions of your lease to settle disputes or uncertainties about whether you have to pay a service charge.

There is no simple definition of ‘reasonable’, and the tribunal will consider the evidence presented and then decide on the matter. However, when deciding whether a service charge is reasonable, they may ask some of the following questions.

• Is (or was) the work or services necessary?
  • Is the work or services needed at all?
  • Is the work enough to solve the problem the landlord is trying to fix?
  • Is the work or services adequate or is it too extreme for the problem?
• Is (or was) the original specification for the work or service adequate?
  • Did it include all necessary work or was the job allowed to expand as more repairs were found to be necessary?
  • Are there genuine reasons why extra urgent work is needed?
• What were your landlord’s procedures for costing the work or services?
  • Has your landlord followed the consultation requirements under section 20 of the Landlord and Tenant Act 1985?
  • Are there arrangements for competitive tendering or for collecting competitive estimates?
  • Does the work or services arise from a contract that is already in place?
• What are your landlord’s arrangements for controlling costs?
  • How adequate is site supervision?
  • What controls are there for checking and paying invoices and so on?
  • What arrangements are there for checking the service provided against what was stated in the specification?
  • Is the standard of the work or service proposed or completed appropriate and reasonable?

You and your landlord may have different opinions on what is considered a reasonable or appropriate standard. Your landlord might want to carry out work to a higher standard than you consider reasonable. This might be because you have a shorter interest in the property and because you have to pay for the work through the service charges. Equally, the opposite can apply, and you may expect higher standards because you have to pay for the work.

• Was, or is, the standard of the work or services appropriate?
  • Is the standard of insurance cover appropriate?
  • Will the specification deliver the levels of services or standards of work expected?
  • Is the finished work satisfactory?
  • Was the work carried out in line with the standards set out in the specification?
• What are your landlord’s arrangements for monitoring the way the service is provided?
  • Are services maintained to the agreed level?
• How much is reasonable for you to pay for the work or services?

Your application should be based on firm reasons, not your opinion. In some cases, the tribunal may ask for evidence from an expert witness, normally a property professional.

Application Form – Application for a Determination of Liability to Pay and Reasonableness of Service Charges