Service charges are charges made by landlords to recover the costs a landlord incurs in providing building and property services. Service charges are very common for those who live in blocks of flats and are set out in a tenant’s lease or tenancy agreement. Service charges normally cover things like general maintenance and repair, building insurance, central heating, lifts, lighting and the cleaning of common areas.
It is common nowadays for landlord’s to appoint a professional managing agent to deal with the management of the property. If so, the service charge may cover this cost as well.
The landlord’s power to levy a service charge and a tenant’s obligation to pay it is governed by the lease between the landlord and the tenant. There is no obligation on a tenant to pay anything in addition to what is specified in the lease.
Residential service charge disputes often arise due to the differing aspects landlords and tenants have in regards to the upkeep and maintenance of the building. Landlords obviously have a long-term interest in maintaining the condition and value of the property. Tenants may take a short-term view depending on how long they intend to stay living in the property.
Whilst a landlord is not usually bound to minimise costs when undertaking maintenance, repair and upkeep, a landlord’s services charges must be reasonable.
Both landlords and tenants have a right to ask the LVT whether a charge or proposed charge is reasonable. Unhelpfully however, there is no definition of what is reasonable. The LVT will consider all evidence presented to it and then make a decision.
What can landlords do if tenants refuse to pay the service charge?
Ultimately, a landlord faced with a tenant who will not pay the service charge can forfeit the lease and repossess the property.
As an alternative to forfeiture proceedings, landlords may want to consider recovering the monies by other means such as through the small claims court.
Right to Manage
In certain circumstance, tenants have the right to force the landlord to hand over to them the right to manage the property. This right was introduced to not only deal with bad landlords but also to empower tenants.
The right to manage the process is relatively straightforward. The landlord’s consent is not required and neither is a court order. Tenants do not need to prove that a landlord has been mismanaging the property.
In order to qualify for the right to manage, certain criteria need to be met. Our property litigation team can assist you in understanding the specific criteria for a right to manage the property.
Leasehold Valuation Tribunal
The Leasehold Valuation Tribunal is a tribunal that determines landlord and tenant disputes concerning residential property. The Leasehold Valuation Tribunal can determine a number of matters including the following:
- Liability to pay a service charge and administration charge including who is to pay, how much and when;
- Whether an administration charge should be varied;
- Whether to vary long leases of flats;
- Whether a Right to Manage Company is entitled to acquire the right to manage;
- Whether an estate charge or estate management charge should be varied;
- Whether there has been a breach of covenant or condition in a lease of residential property;
- Whether to appoint a manager of premises that contains flats and who that manager should be; and
- Whether to vary long leases of flats.
Myerson has a wealth of experience of dealing with disputes of this nature. The Myerson Property Litigation department acts for both landlords and tenants and can advise accordingly.