Flat-Living.co.uk Service charges
can be of positive benefit to both landlords and residents as it should ultimately save either party having to find large sums of money at short notice for major items of repair. As buildings age, more maintenance will inevitably be needed. For example, in ten years’ time
a new roof, downpipes or heat- ing system may be required. The benefit of a sinking fund is that each resident contributes a set amount of money each year to this fund via their service charge, which then covers the cost of ma- jor repairs when they are needed. However, as Shelter points out on its website (
www.shelter.org. uk) if leaseholders sell their home before the money has been spent on repairs, the landlord is under no obligation to refund the mon- ies. If you don’t already have a sinking fund for your building and want to set one up, a formal agreement must be established between the landlord and all the other leaseholders.
CHALLENGING CHARGES
If leaseholders are unhappy with the cost of their service charge or believe they are getting little in return, they are entitled to write to their landlord/freeholder and try to negotiate a lower charge or improved service. If this does not produce results, the next step is to go to a Leasehold Valuation
Tribunal (LVT), which comprises three members including a legally qualified chairperson and has the power to decide whether or not the services the landlord is charging is a reasonable rate for the service delivered. It is not ad- visable for residents to withhold their service charge because if it is not paid they could end up in court or - in extreme cases – be threatened with eviction.
THE LEGAL FRAMEWORK
Under the Commonhold and Leasehold Reform Act 2002,
landlords are obliged to pro- vide tenants with detailed in- formation including:
details of service charges incurred
and obligations in relation to service charges
insurance for the building
In some circumstances the
tenant may withhold payment until the landlord complies with these requirements. (source: The Service Charge Company) Under the Act, Landlords must
also consult with tenants if ex- pensive work is needed and the landlord wishes to:
costing more than £250 per ten- ant per year; or service (such as gardening/ cleaning) which will cost more than £100 per tenant per year
If the landlord doesn’t meet his obligations under the Act, the ten- ant will not have to pay more than either £250 or £100, unless the LVT rules that he has to.
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