LVT
Disputes on the increase
Michael Lee asks why more leaseholders are taking their service charge problems to the LVT?
i
n the last three years, the number of service charge disputes determined by the leasehold Valuation tribunals (lVts) in england
has increased by 165%. not surprisingly, by far the busiest region is london at just over 50% (in 2010) of cases, with its share increasing from 38% in 2008. however, it is interesting to note that during this period the biggest regional growth has been seen in the northern and eastern regions of england. From a sample taken of 50
cases from the busiest two regions, the top three reasons for disputes in London are: unreasonable charges (19%); insurance premiums (15%) and major works (14%) while in the Southern region they are: withheld service charges (41%), major works (27%) and unreasonable charges (14%). Disputes over managing agents’, administration and consultants’ fees are generally low across the country. The issue of unreasonableness was dealt with in the case of
Shersby, where the Upper Chamber (previously known as the Lands Tribunal, which is where LVT decisions are appealed) held that it had to be proven that a landlord (or RMC) acted unreasonably or improperly and that if it had acted within a range of alternatives then it had not acted unreasonably. This effectively widened the scope of what is
reasonable. It is also fair to say that, in reasonableness challenges, landlords/RMCs are favoured more than in any other area of Landlord & Tenant law.
WHY THE INCREASE?
The increase in cases is thought to be mainly due to the increasing awareness of legislation and availability of explanatory information on the internet, combined with ever increasing consumerism and cost awareness. The relative ease of access to the LVT and the ability to self-represent makes it an attractive option for dispute resolution. However, this does have repercussions on Resident Management
Companies (RMCs) and property managers who will face non– recoverable costs in representation and attendance which a self representing lessee will not face (see page 20 for more on this).
WHO PAYS?
In the event of a lessee withholding service charges, the LVT will determine the reasons for non-payment (i.e. the liability to pay and reasonableness of those charges). Each party pays their own costs. However, the costs of the landlord or RMC may be recoverable from service charges as it is fairly common in residential leases for the landlord’s legal costs in managing the property to be rechargeable. These can include the costs of court or LVT actions, whether initiated by the landlord or the tenant. Section 20c of the Landlord and Tenant Act 1985 enables a tenant to seek an order that the costs incurred by the landlord from proceedings before the LVT are not to be included in the service charges. This allows a tenant to seek that any reduction
What is the LVT?
The Leasehold Valuation Tribunal (LVT) is an accessible, informal, independent and impartial tribunal service which deals with a wide variety of disputes. Among other matters, these include the liability to pay and reasonableness of service charges; insurance; the appointment of a manager; lease variations; and consultation requirements for major works. It is an expert tribunal with the panel applying their own knowledge and experience and acting judicially and fairly.
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www.flat-living.co.uk There are five regionally based LVT offices, plus one for Wales.
In England the offices and their percentage of total national service charge disputes heard are: London (50.5%), Southern (21.5%), Northern (11.5%), Eastern (11.5%) and Midland (5%). The tribunal usually consists of a lawyer, who is often the chairman, and one or two surveyors. In order to make the LVT accessible, proceedings are semi-formal with parties not having to be professionally represented. However, in cases involving substantial amounts of money with lawyers and experts, traditional court practice is likely to be followed, although where surveyors/property managers/lessees are appointed then a softer approach can be taken.
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