Leasehold Service Charges
Residential Leasehold solicitors dealing with Service Charges in Dorset
Service and Administration Charges are well regulated in England and Wales. There is an array protection for leaseholders afforded within the Landlord and Tenant Act 1985 and subsequent legislation. Alongside this collection of regulations and statutory provisions, there is a developing case law, which can make the entire area particularly complex.
Where a freeholder or manager proposes carrying out works to the property where the leasehold service charges will be more than £250 for any one leaseholder then they must first conduct a consultation exercise. Similarly, certain agreements or contracts for any service for a period of more than 12 months where the cost to a leaseholder is more than £100 per year are caught by this legislation.
There are specific regulations setting out the requirements as to consulting with the leaseholders. A failure to carry out this consultation exercise can be costly for a freeholder or manager.
Recoverability and Reasonableness
A freeholder or manager must ensure that:
- they have followed the correct requirements as to the service of demands. Demands must include specific statutory information and be accompanied by prescribed information as to the leaseholder’s rights and responsibilities.
- they have demanded the costs within the correct timescale. The demand must be issued within 18 months of incurring the cost or the landlord must serve a notice within this time outlining the costs incurred and the leaseholder’s requirement to contribute.
- the costs they are seeking to recover as a Service or Administration charge are costs which are recoverable under the terms of the lease. This can sometimes be a particularly complex task in itself. Most leases are outdated and can, more often than not, be inconsistent with current maintenance practices, health and safety requirements and planning provisions.
- the costs they are seeking to recover as a Service or Administration charge are costs which are reasonable. There are two parts to the legislation. One part deals with a payment in advance of costs being incurred. The other part deals with a payment in arrears, once the costs had been incurred.
Leaseholders can apply to an independent Tribunal to determine their liability to pay leasehold service charges and/or the reasonableness of those service charges.
Leaseholders are also entitled to inspect accounts and other documents, are entitled to details of insurance cover and are entitled to summaries of the leasehold service charges.
For a free initial chat with one of our expert residential leasehold property solicitors to discuss how we can help you, please contact us now.