Flat-Living.co.uk Legal update
Enforcing service
charge payments
Effective management of service charge arrears is essential for all
Resident Management Companies (RMCs) and, by extension, the
leaseholders that are dependent on them to provide services,
writes Stan Gallagher, Barrister, Tanfield Chambers.
s with any landlord, an 1 The further statutory constraints (but as yet not the
A
RMC is obliged to perform wholesale abolition) of the right of forfeiture for the non-
the landlord’s covenants payment of service charges by residential leaseholders; and
whether or not some or 2 The concurrent (but not exclusive) jurisdiction of the
all of the leaseholders Leasehold Valuation Tribunal (the LVT) to determine service
are actually paying their service charge disputes. Unlike the Civil Courts, the LVT has very
charges: see Yorkbrook Investments v limited powers to award costs.
Batten (CA). However, unlike external The traditional form of long residential lease is a product of the days
landlords, a RMC will have no funding when the landlord’s principal remedy for unpaid service charges was
other than what it collects as service to forfeit the lease. Broadly, the right of forfeiture (as moderated by
charge. Arrears therefore threaten the rights of relief against forfeiture) amounts to a security for compliance
RMC’s solvency. Enforcing payment of with the tenant’s covenants: generally, forfeiture will only be relieved on
service charges is more difficult these terms that fully compensate the landlord for the breach, for example
days. Consider the twin peaks of: a forfeiture for non-payment of service charges generally only will
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