Service charges: challenging significant costs

A recent Upper Tribunal decision provides useful guidance on challenging significant service charge costs. It considers what leaseholders need to show when they believe a landlord has chosen an unnecessarily expensive way of carrying out works, and when the landlord may need to explain and justify that choice.

The case of Mr Mohammed Naeem and Mr Russell Smith v Abacona Investments Limited [2026] UKUT 154 (LC) concerned Endwood Court, a block of 36 flats built in the 1960s.

In 2019, the landlord carried out external works to part of the building and charged leaseholders a total of over £124,000. The largest single cost was scaffolding, at around £75,000.

Two leaseholders, Mr Naeem and Mr Smith, challenged that cost. They argued that the scaffolding was unnecessarily expensive and that cheaper methods of access could have been used.

They pointed to earlier decoration works carried out in 1992 using roof cradles. They also produced alternative quotations suggesting that the 2019 works might have been carried out for considerably less using rented cradles or a scissor lift.

The landlord argued that the comparison with the earlier works was not appropriate. The 2019 project involved more substantial repair and remediation, including removing old render, repairing distorted steel window frames, splicing in new timber sills and applying weatherproof coatings. Its position was that heavy scaffolding was an appropriate and necessary method of access for those works.

Under Section 19 of the Landlord and Tenant Act 1985, service charges are only payable to the extent that the costs were reasonably incurred. The issue for the tribunal was therefore whether the landlord had acted reasonably in incurring the scaffolding cost.

Importantly, that is not the same as simply asking whether a cheaper option can be identified after the event.

The First-tier Tribunal initially dismissed the leaseholders’ challenge.

On review, it accepted that roof cradles had probably been used for the 1992 works and had later been removed, apparently to make way for telecommunications equipment on the roof.

However, it still rejected the challenge. The tribunal considered that the leaseholders had not shown that the alternatives they suggested, including cradles and a scissor lift, would have been safe, lawful or practical for the works carried out in 2019.

As 27 years had passed since the earlier works, it considered there was insufficient evidence to show that the same methods could reasonably have been used again.

The Upper Tribunal found that the First-tier Tribunal had taken the wrong approach to the evidence.

Once the leaseholders had raised a plausible case that alternative methods of access might have been available, the landlord needed to explain why scaffolding was reasonably required.

The leaseholders did not have to prove every detail of their suggested alternatives before the landlord was required to justify the charge.

However, the leaseholders still lost the appeal.

The Upper Tribunal looked closely at the specification for the 2019 works and found that the project went well beyond straightforward external decoration. It involved repair and remediation to the building fabric and window areas.

In those circumstances, heavy scaffolding was a reasonable and practical method of access. The fact that a cheaper method had been used for different, simpler works in 1992 did not establish that scaffolding was unreasonable for the 2019 project.

The Upper Tribunal therefore corrected the First-tier Tribunal’s approach to the evidence but did not change the final outcome.

The case shows that leaseholders can question a significant service charge item where there is a credible basis for doing so.

You do not necessarily need to prepare a complete expert case at the outset. If you can identify a plausible reason why a cost may be unreasonable – for example, because a realistic cheaper method appears to have been available – that may be enough to require the landlord to explain its decision.

But identifying a cheaper option does not, by itself, make the landlord’s cost unreasonable.

The tribunal will look at what the landlord was actually trying to achieve and whether its chosen method was reasonable for those particular works. A method suitable for straightforward decoration may not be suitable for more substantial repair or remediation.

The case also shows why comparisons with earlier works need to be treated carefully. The nature of the work, safety requirements and practical circumstances may have changed.

It should not be read as establishing that scaffolding is always reasonable for external works, or that roof cradles or scissor lifts are not appropriate. Each case will depend on its own facts.

For leaseholders considering a service charge challenge, the key point is that a large cost can properly be questioned, but the tribunal will ultimately consider the evidence about the works, the options available and whether the landlord’s decision was reasonable in the circumstances.