Residential Service Charges- Is Your Demand Valid?

The overriding principle when considering residential service charges are:

• A landlord or management company is not obliged to provide any service which are not expressly set out in the lease; and
• A landlord or management company cannot raise a service charge demand and the tenant is not obliged to pay for anything that is not covered in the lease.

Once the landlord has ascertained what the service charge is going to be for the year (if the payment is to be made on account) or once the landlord knows what cost is has incurred then the next step is to demand payment from the tenant.

Residential service charges are heavily regulated by statute. If the landlord or management company does not comply with the statutory requirements then the service charge demand will be invalid.

If the service charge demand is invalid there will be no requirement for the tenant to pay the sum demanded until the landlord or management company has served the correct form of demand.

Before making any service charge demand, the landlord must supply tenants with an address in England and Wales for the service of notices.

If the landlord is demanding the service charge payment then any demand for service charge must:

• Be in writing;
• Contain the name and address of the landlord and if two addresses appear, it must be made clear which one is the landlord’s address; and
• Be accompanied by a summary of the rights and obligations of tenant of dwellings in relation to service charges. This must be sent at the same time as the demand. If it is not sent at the same time, the tenant is entitled to withhold payment.

If the management company is demanding payment then there is no need for the demand to contain the name and address of the landlord but it would be best practice to include it.

The service charge demand must be issued within 18 months of the cost being incurred by the landlord or management company.

If the demand is not sent within this time period then the costs cannot be recovered unless the landlord or management company has notified the tenant within 18 months of the cost being incurred that the costs have been incurred and that the tenant will be requirement to contribute towards them by making a service charge payment.

Read our next blog in this series to find out what information a tenant can ask the landlord or management company to provide in relation to the service charge and what applications they can make to the Tribunal. If you missed the first blog in this series you can find our article on the importance of the terms of the lease here.