Service Charge Disputes
A service charge is a payment made by the tenant to their landlord. This is usually in addition to rent, for the costs incurred in providing services in relation to a property.
The lease will usually specify:
- Certain services the landlord provides.
- Various additional services which the landlord may provide, but without being under any duty to do so. If the landlord decides to provide these services, the tenant must reimburse the landlord through the service charge.
In determining whether a service charge is recoverable or not, it is vital to refer to the ‘contractual’ document. This is the Lease. This will contain terms dealing with obligations on the part of the landlord. As well as how the landlord can recover the cost of carrying out those obligations.
If a service charge is low does it mean everything is in order?
Just because a service charge is low does not necessarily mean everything is in order. Indeed, we would expect to see a material level of ongoing service charges as part of good management of a building. The precise amount depends on the nature of the building and its facilities. A high service charge might well reflect a well-managed building. In turn this will benefit individual lease holders when they come to sell in terms of marketability and value.
In addition to the terms of the lease, there are statutory provisions which:
- Limit what a landlord may recover by way of service charge.
- Require landlords to consult with, and provide information to, their tenants.
We can assist with advising on service charge provisions from the point of view of landlords and tenants. It is vital that landlords and tenants are aware of how their building is managed. They have a mutual interest. Therefore with our assistance will enable disputes to be resolved quickly.
We are aware that special issues can arise where in small buildings, the lessees also own the freehold. This is usually indirectly through membership of a residents management company which is the freeholder. The situation can be very personal and differences can arise. It is important for everyone to be clear what the legal position is. We can help if costs are arising which are outside the scope of the service charges contained in the lease.
If you have a query or would like to book an appointment please get in touch with our team on 01256 320555 or email email@example.com.
Litigation & Employment Director