Service charge disputes are becoming increasingly common between flat owners and landlords, however there are a range of statutory provisions to give flat owners some protection from landlords.
Julie Tomasik, director and residential property lawyer at Ansons Solicitors in Staffordshire explains what you can do to protect yourself from the outset if you are buying a flat or leasehold property.
“If you are intending to buy or sell a leasehold property, you should be aware whether there is a service charge provision in your lease and how it will affect you. At Ansons Solicitors, we will examine your lease and explain all conditions to you, so there are no unpleasant surprises in the future” says Julie.
What is a service charge?
A service charge is the fee set by landlords to cover the costs of maintaining the building and communal areas. This could include:
The conditions of your service charge will be set out in your tenancy agreement. If there is a service charge included in the terms of your lease, the Tribunal has granted tenants protection from historic costs under the ’18-month rule’.
What is the 18-month rule?
The ’18-month rule’ prevents landlords from recovering service charges from flat owners if the costs were incurred more than eighteen months before they have been demanded. With this rule in place, flat owners are protected from suddenly receiving large bills for costs incurred many years previously.
However, the recent case of Westmark (Lettings) Ltd v Elizabeth Peddle and others  highlighted a problem regarding interpretation of this rule when there are multiple sets of intermediate landlords: when are costs ‘incurred’ for the 18-month time limit to begin – when the service is provided, or when the bill for the service is issued?
In this case, multiple tenants in a development in Queens Square, Bristol, were presented with bills for work dating back to 2009, they claimed that the 18-month rule applied, and they did not have to pay.
There were several intermediate stakeholders between the management company and the tenants. Due to terrible mismanagement over the years, this meant there had been a substantial delay in billing procedures from tier to tier.
The Upper Lands Tribunal decided that the 18-month rule reset each time the costs were incurred. So, the costs were only incurred by the management company when it received the bill, and not when to work was carried out or even billed to intermediate companies.
As this case and many others highlight, this is a complicated area of law and mistakes and delays can be expensive. It is always advisable to have your tenancy agreement checked before you sign so you know what you are letting yourself in for.
If you would like advice regarding your tenancy agreement or service charge provisions, please contact Julie Tomasik at Ansons Solicitors on 01543 267 988 or by email at firstname.lastname@example.org.
The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice. The law may have changed since this article was published. Readers should not act on the basis of the information included and should take appropriate professional advice upon their own particular circumstances.