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.
What can tenants do if they are unhappy about service charges?