Thursday, 3 August 2017

Service Charge Windfall

Service charges for houses and flats held under a long lease may be open to attack (see http://www.breakinglaw.co.uk/search/label/service%20charges) There has just been a Court of Appeal ruling* which could amount to a windfall for tenants under such a lease and an enormous pain in the brickwork for landlords.

An 18 month rule applies to service charge demands under the Landlord and Tenant Act 1985. In so far as a service charge demand relates to expenditure incurred more than 18 months previously, you don't have to pay - unless the landlord has told you in writing during those 18 months that the particular expenditure will be incurred and that you will be charged up for it in due course. For some years it has been thought that the 18 month rule did not apply to interim (or on-account) demands for service charge contributions which are provided for by most leases. But the Court of Appeal has just ruled that the relevant law - you will find it in section 20B of the 1985 Act - does in fact apply to interim demands as well as other demands. This means that if by the time a valid interim demand is given to you, any of the costs covered by it were incurred more than 18 months earlier, you may not be liable to contribute towards them. Whether or not the landlord can get round this by sending you a  supplemental demand will depend on what the lease says. In the Court of Appeal case, the landlord was too late to do this.

Before telling your landlord to get on their bike, it would be wise to get some advice form a professional on how you stand, given the wording of your particular lease.

*The case was Skelton and others v DBS Homes (Kings Hill) Ltd [2017] EWCA Civ 1139