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Property Service Charges Unravelled

 

If you own a residential leasehold flat you will pay for the services received from the freeholder (usually the landlord) or a management company says Maria Lati, Grant Saw's Residential Property Partner.

 

To avoid disputes the Commonhold and Leasehold Reform Act of 2002 introduced a framework for paying and collecting service charges.

 

Service charges are raised to recover costs incurred for services provided to the leaseholders for example repairs & general maintenance.

 

The lease agreement sets out what can be charged/recovered including whether interest can be charged for late payment, the proportion of the costs to be recovered, and whether managing agents’, legal or other fees can be charged.

 

Leases are commonly drafted in a way to ensure the freeholder makes no financial contribution unless a flat is owned by them. The lease also sets out the leaseholder’s responsibility for making payment and the frequency of the payments.

 

Only reasonable costs can be recovered and if the leaseholders feel that they are unreasonable they have the right to challenge service charges at the Leasehold Valuation Tribunal (LVT). Unfortunately there is no definition of “reasonable” and the LVT merely looks at the evidence presented to it and makes a decision.

 

By the same token the freeholder can also make an application to the LVT to determine that the service charges are reasonable.

 

The freeholder must demand service charges in writing, usually within 18 months from when the works were carried out.

 

A consultation process must be followed by a freeholder for works of repair maintenance or improvement if the charges are £250 or more for any leaseholder.

 

Grant Saw Solicitors advise freeholders, managing agents and leaseholders on all matters arising out of service charges.

 

Maria Lati is the Residential Property Partner at Grant Saw Solicitors LLP

 

If you'd like to talk to a member of our conveyancing team and find out how we can help you, please call us on 020 8858 6971 or e-mail conveyancing@grantsaw.co.uk

 

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