Category Archives: Service Charges

Information for tenants about their rights in disputing service charge, or information regarding charging and collecting service charges for landlords.

Recognised Tenants’ Associations

Leaseholders who want a greater voice in the management of their building may want to think about forming a Tenants’ Association.

A Tenants’ Association can be set up by a group of leaseholders who own leases from the same landlord / freeholder on similar terms.

Forming an Association is a good way for the flat owners to express their collective views to the freeholder and / or their managing agent.

The association could be a company, but does not need to be. It can be a loose collective of people that want to work together to be recognised in consultation on service charge and management issues.

However, in order to be most effective the association needs to be officially “recognised.”

If the association achieves recognised status then the freeholder/landlord must then consult with the association on any plans for major works and notices (such as section 20 notices) must be copied to it. The association can then use its collective voice in any consultations on future works, or major cost items for the building.

There are two ways of obtaining recognition:

1.     Agreement with the landlord

The association approaches the landlord and the landlord agrees to recognise the association. The landlord then confirms this formally in writing. The association is then ‘recognised.’

Any written notification or ‘certificate’ from the landlord recognising the association will continue to be valid unless the landlord/ freeholder gives the association is given six months’ notice withdrawing recognition.

2.     Application to the tribunal

The other way is if a certificate is obtained from the First-Tier Tribunal of the Property Chamber (formerly the ‘LVT’ or ‘Leasehold Valuation Tribunal’). This is much more likely if the freeholder is unlikely to be a willing participant in the recognition of the association.

A certificate is usually granted for a specified period of time (normally four years), but it may be renewed at the end of this time. The tribunal can also cancel the certificate at the end of this period if it considers that there is no advantage for the Association to be recognised.

Who can become a Member of the Tenants’ Association?

Any long leasehold flat owners in the building who are paying variable service charges to their landlord are entitled to be members.

How many flat owners are needed?

As a general rule, the Association will need at least 60% of those flat owners who are entitled to join, to have become members. In other words, if there are 100 flats in the block and all of these are let out on long leases with a service charge, then at least 60 of the flats must join in.

How does the process work?

The formal request for recognition, whether made to the landlord directly or to the tribunal, must include copies of the rules of association or constitution, which should be fair and democratic.

The leaseholders will also have to submit the names and addresses of all of the elected members of the proposed Association with their application.

Can the landlord join?

The landlord and the managing agent are not entitled to become members of the Tenants’ Association. If there are any leasehold owners who do not pay variable service charges, then they can become members of the association, but they are not allowed to vote.

How do we go about forming a Recognised Tenants’ Association?

If you want to form a recognised Association, or to make an application to become one, then the first step is to investigate with your neighbours whether there is sufficient interest to set up an association. You will then need to consider whether to use an incorporated or unincorporated model.

For further information on forming an association, you may need to seek specialist advice. There are some good guides produced by the Federation of Private Residents Associations (FoPRA), or you may be able to get help from LEASE the government advisory body.

Mark Chick 

November 2017

Mark Chick is a solicitor specialising in leasehold issues. To make contact email

Insurance premiums

A lot of leaseholders often ask me what can be done if they want to challenge their insurance premiums.

The position is of course that service charges are the subject of the FTT’s jurisdiction under s.19 of the Landlord and Tenant Act 1985.

However, the tribual is generally reluctant to look to far into the cost of cover. The received wisdom has been that the landlord places the cover and the tenant reimburses the cost.

However, the case of Cos Services Limited (mentioned below) shows that perhaps the tide is turning. The case concerns block policies and the failure to have competitive cover in the face of evidence to the contrary.

I know from speaking to leaseholders that this is often an issue and I think for those looking to place cover at lower cost, or to promote a discussion about whether costs are reasonable or not this case is good news.

The same will apply to managers who want to help leaseholders find competitive cover.

Mark Chick

Who is responsible for maintaining the structure of the building?


If you live in a freehold property, the answer to this question is simple – if you own the part of the property in question, you are responsible for repairing it.

In a leasehold property a similar logic applies, but you must first establish which bits of the property you own and are therefore also responsible for repairing. This is because with a leasehold property there can be a number of important distinctions between the ownership of a part of the property and the legal responsibility to repair it.

In most leases, the flat owner owns the internal parts of their own flat – for instance, the plaster surfaces of the walls, the floorboards and the ceiling plasterwork. However, the structural or main parts of the building usually belong to the freeholder who has the legal responsibility to maintain and repair them and recovers the cost of doing this via a ‘service charge.’ The proportion of the service charge that you pay might also depend on the size of your flat although this depends on the way in which the leases in the building are written.

There are also some fairly common leasehold arrangements, where the property is effectively divided into ‘layers’ and in which each flat owner is responsible for maintaining their ‘slice’ of the property – both inside and out. This in theory at least makes redecoration and repair of the exterior an interesting exercise and you would hope that the flat owners would co-ordinate in terms of both timing and colour!

This type of arrangement is particularly common in maisonette or ‘one up one down’ type properties – often  in leases granted in the 1970s .

In these ‘maisonette’ leases, it often also turns out that the top floor flat is entirely responsible for maintaining the roof and the ground floor flat is entirely responsible for the foundations.

If your lease has this kind of arrangement then often the only obligation to the freeholder is to pay a ‘ground rent’ – as the insurance of the building is also in the hands of the flat owners. This is at odds with the more frequently found ‘service charge’ type of arrangement mentioned above where the freeholder insurers and the flat owners reimburse the cost of this.

With a leasehold property, the starting point for answering any question about responsibility for maintenance and repair is the lease document itself.

Leases are not always easy to understand and it may help to get professional help in understanding and interpreting the terms in your lease, particularly before commencing major works, or incurring large expenditure as problems can arise if you carry out work on areas that are not owned by you, or that require the consent of the freeholder to carry out work.

If you do require assistance with this sort of issue a specialist solicitor, such as a member of the Association of Leasehold Enfranchisement Practitioners (ALEP) will be well placed to provide you with help and practical guidance on these matters.

Service Charge Disputes – and how to avoid them

Here are some points to consider if you are involved in (or are trying to avoid) a service charge dispute.

How often do I hear the words, “I think we have a service charge dispute…. what should we do about this?” A dispute about service charge, if not handled correctly can be the route to quite a lot of misery.

The first thing to realise about service charges is that they are not an inequity but rather, something of a necessity!

Any property with a shared ownership structure needs to be maintained and what flat owners often do not realise is that taking proactive steps to either buy the freehold or to take over the management of the building under the Right to Manage (RTM) legislation does not necessarily lead to lower service charges in the short term. In fact, sometimes quite the reverse is true. Often their service charges will increase because of the quality of the materials or frequency of services being provided.

Avoiding a dispute

The first piece of guidance is of course, to avoid any kind of dispute at all costs. How can this be done?

Well, in a small block where everyone is a shareholder in a company owning the freehold having the service charge budget approved by the company in a general meeting might help.

Whilst the consultation requirements under the service charge legislation are myriad (see the various requirements for s.20 notices etc,) the tribunal does have a power to dispense with consultation requirements in certain circumstances. In particular, this applies in the case of an emergency, but there is also nothing to say that a ‘one off’ error in the consultation process (although this would depend on the exact circumstances) made by a well-intentioned, self-managed group of residents might not also be excused.

Additionally, if the company has approved the budget and the member in question was present and ratified it (or indeed was perhaps even a director of the company a the time) it is going to be very hard for them to argue (whatever a strict interpretation of the service charge legislation might say) that they did not know what was going on. There might even be a legal argument that they would be prevented from bringing a later challenge as to do so would be unfair.

Preparation is key

The best piece of guidance is to take all possible steps to ensure that any budget is properly prepared. This may well involve a fairly detailed consideration of what work is proposed and how it will be done (in case this is also subject to challenge).

The next sensible thing to do is probably to get professional advice. A good managing agent makes all the difference to the relationship between flat owners and also to the relationship between the freeholder and the flat owners when it comes to the ‘day to day’ aspects of running a building. Additionally, a good managing agent will also be able to provide effective advice on the service charge consultation procedures. Whilst some people resent the suggestion of the imposition of an additional layer of cost in a small building, experience tends to show that if there is likely to be any friction at all, then having a managing agent in place provides a significant advantage and longer term cost saving.

So, why are service charge disputes often the route to a lot of misery?

One of the main reasons is that the LVT has no costs jurisdiction (other than £500 for frivolous or vexatious behaviour and this is quite rarely used).

Therefore a key issue in taking a case to the LVT on the question of service charges is not only ‘what is it going to cost?’ but also ‘where are these costs going to end up?’

If no-one is going to be awarded costs (win, lose or draw) then who is going to pay? the answer is, sadly that unless the lease is strongly in the landlord’s favour that the most likely outcome is that ‘everyone’ is going to pay, via the service charge budget.

A clear cost/benefit analysis therefore needs to be done at each step in the process. With a trip to the LVT with legal representation likely to cost a good few thousand pounds, a dispute about relatively minor sums may be might be ripe for mediation, or may have to be left until the sums are more substantial to make the economics of pursuing it stack up.

Sadly from the landlord’s point of view – particularly with a freehold company owned by the residents, if one person will not pay, the company has little option but to pursue the arrears and if necessary take the budget to the LVT as it can hardly be fair to the other members that one person is not paying when everyone else is.

The second issue affecting the question of costs is what the lease itself says about the right to recover costs. Some modern leases may permit the recovery of costs outside the court process (e.g. LVT costs) from the individual non-paying flat owner. However, a lot of leases do not. This means (that provided that there is an appropriate clause in place) that the costs of any service charge action taken or defended by the landlord will probably end up on the general service charge budget, in other words, paid for by everyone and not just the defaulting party.

There is also another hurdle. Any flat owner who is party to LVT proceedings brought about the service charge also has a right to make an application requesting that the landlord’s costs are not to be added to the service charge budget. This is only likely to be granted where, for instance the lease itself does not permit the costs to be collected via the service charge, or where there is inappropriate behaviour on the part of the landlord.

The third and final element of risk for the landlord is that the costs themselves will of course also be subject to the general test of ‘reasonableness’ applicable to any sum forming part of a residential service charge.

In other words, whilst the lease might permit the costs to be recovered and any application to prevent them being recharged to the budget may have failed the LVT can still decide that the actual amount of costs incurred is ‘unreasonable’ and then seek to reduce the amount added to the budget.

Whilst these principles were designed to ensure a degree of protection for the individual flat owner against an unscrupulous landlord, where the landlord is in fact a collective of flat owners and the behaviour of the non- paying party is clearly unreasonable, these provisions to put RMC companies to significant expense and a degree of risk.

So, having considered all of this, what is the answer? Of course, there is no simple solution, but the first conclusion must be to reduce the risk of disputes by careful consultation and preparation and, if a dispute has arisen to take particular care in the analysis, preparation and presentation of the case. As with all these things, having the access to the right professional advice early on in the process certainly does help.