Service Charge Disputes
How to tackle a service charge dispute
Service charge disputes take many forms and remain common between freeholders and leaseholders.
Early action is vital to make sure that small, easily addressed issues don’t grow into bigger problems which are more difficult and costly to resolve.
Here at Wards Solicitors, our specialist dispute lawyers act regularly for leaseholders, also known as tenants, providing practical advice on how to deal with a service charge dispute.
We also advise freeholders, also known as landlords, and management companies on the appropriate processes to put in place should a service charge dispute arise.
What exactly is a service charge?
Service charges are levied by landlords to pay for the upkeep of a property, for example to cover maintenance and repairs, building insurance and management costs.
The lease, signed by both parties, outlines the contractual obligations of the freeholder to carry out its responsibilities and the leaseholder’s duty to renumerate the landlord for doing so.
What safeguards and protections exist?
Residential tenants or long leaseholders enjoy certain protections against excessive service charges limiting them to reasonable costs when it comes to existing outgoings and advance payments.
Freeholders are also restricted to demanding only reasonable administration charges.
They must also consult with tenants if they want to carry out works at the property above a certain value or wish to enter into any related contractual agreement for more than 12 months.
- Tenants have the right to information about the costs making up a service charge and can ask to see accounts, receipts and any other related documents;
- Landlords who don’t comply with these provisions are strictly limited in how much expenditure they can recover from tenants.
What causes a service charge dispute?
Disputes can be around unreasonably high charges, or fees taken at a higher rate than set out in the lease or for things not even covered by the lease.
They also occur when a landlord carries out refurbishments or improvements not detailed in the lease, rather than essential repairs, or when the work carried out is substandard.
They can also occur, as detailed below, when a leaseholder doesn’t pay the service charge or doesn’t keep the property concerned in a good state of repair as contractually obliged.
Forfeiture: As a freeholder, how do I deal with a long leaseholder who isn’t keeping up with service charge payments?
The forfeiture of long leasehold premises in this scenario is something that the Wards Solicitors’ Disputes Team is experienced in dealing with.
When a long leaseholder has a mortgage, it’s common for the mortgage lender to step in and discharge outstanding service charges up to a certain point. After this, it’s likely it will exercise its power to force a sale.
If the leaseholder doesn’t have a mortgage, a freeholder can sometimes move to issue court proceedings to forfeit a long residential lease subject to various statutory restrictions.
Repairs: As a freeholder, how do I deal with a long leaseholder failing to carry out the repairs they are responsible for?
In this case, the freeholder can make an application to the Property Chamber in England or a Leasehold Valuation Tribunal in Wales for direction to either:
- Ensure the repairs are carried out;
- Potentially forfeit the lease
These are specialist proceedings and Wards Solicitors’ highly experienced dispute lawyers always aim to recover the maximum amount of legal charges permissible under the terms of the lease.
How we can help
Wards Solicitors award-winning Disputes Team is experienced in dealing with service charge disputes and will always try to avoid going to court if possible.
However, if your case does end up in the courtroom, we will fight your corner to get you the best possible result.
Service charge disputes are dealt with in the First Tier Tribunal of the Property Chamber, which has its own practice and procedures, created under Part 1 of the Tribunals Court and Enforcement Act 2007.
Get in touch
If you would like further advice or want to discuss a dispute with one of our lawyers, please click here to see our Residential Property Disputes team.
Find your nearest Wards office here.