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Service charge disputes can involve substantial sums, particularly where major works are proposed or charges have accumulated over several years. They can also affect relationships within a building and, in some cases, the saleability of a leasehold property.
We advise leaseholders, freeholders, landlords, management companies and managing agents on residential service charge disputes, from an initial review of the lease and charges through to negotiation and First-tier Tribunal proceedings.
The starting point is usually to establish what the lease allows, what has actually been charged, whether the costs are reasonable and whether the correct procedures have been followed.
We have a specialist property disputes team experienced in residential landlord, tenant and leasehold disputes.
Our disputes lawyers are supported by one of the largest residential property practices in the country. This can be particularly useful with service charge disputes, which often require detailed consideration of leases, title documents, previous transactions, management arrangements and major works documentation.
We act on both sides of these disputes – for leaseholders challenging charges and for freeholders, landlords, management companies and managing agents seeking to justify or recover them. This gives us practical experience of the arguments and pressures on both sides.
Our property disputes team is mainly based in our large Central London office at Carter Lane, and with more than 15 offices across England and Wales we advise clients nationally.
A service charge dispute is not always simply an argument about whether a bill is too high.
We advise on issues including:
whether a particular cost can be recovered under the lease;
unreasonable or unexpectedly high service charges;
major works and substantial one-off demands;
Section 20 consultation and whether the correct procedure has been followed;
repairs or works said to be unnecessary, excessive or poorly carried out;
management and professional fees;
reserve and sinking fund contributions;
historic or previously uncollected charges;
incorrect allocation or apportionment between flats;
inadequate accounts or supporting information;
services which have not been provided or are of poor quality; and
recovery of unpaid service charges.
We can also advise where the service charge forms part of a wider dispute about how a building is being managed.
Often, yes.
If the same charge affects a number of flats, it is worth establishing whether other leaseholders have the same concerns. A coordinated challenge can be considerably more effective than several leaseholders raising the same issues separately.
It can also make obtaining legal advice and pursuing a dispute more proportionate. A relatively modest disputed charge for one flat may represent a substantial sum when multiplied across an entire development.
Where possible, speak to other affected leaseholders early and retain copies of communications, demands and other relevant documents.
If dissatisfaction goes beyond a particular charge and concerns the wider management of the building, there may also be other legal options to consider.
Major works are a particularly common source of service charge disputes because individual leaseholders can unexpectedly face demands for thousands or sometimes tens of thousands of pounds.
Disputes can concern:
whether the works were actually required;
whether the cost is reasonable;
the scope of the proposed works;
whether competitive estimates were properly obtained;
whether the work has been carried out to an appropriate standard; and
whether the correct consultation procedure was followed.
The lease, Section 20 documentation, estimates, invoices and evidence about the works themselves can all be important in assessing whether there are grounds for challenge.
You should not assume that you have to pay a charge simply because it has been demanded. Equally, simply withholding payment without considering the legal position can create additional problems.
The freeholder or management company may pursue the arrears and may also seek interest or legal costs where the lease allows this. Continued non-payment can potentially lead to more serious enforcement action.
The appropriate strategy depends on the circumstances. Options may include challenging the demand before payment, seeking further information, negotiating, paying while making clear that the charge is disputed, or pursuing a formal challenge.
Taking advice early is particularly sensible where the amount is substantial or proceedings have been threatened.
We also advise freeholders, landlords, management companies and managing agents dealing with service charge challenges or unpaid charges.
This includes disputes over whether expenditure is recoverable under the lease, major works and consultation requirements, responding to challenges from individual or groups of leaseholders and recovery of outstanding service charges.
Where substantial expenditure is planned, obtaining advice before works are committed to or demands issued can reduce the risk of a later dispute.
Early advice can be particularly important where a challenge involves several leaseholders and could affect the funding or management of the wider development.
The value and wider significance of the dispute matter.
It rarely makes sense to incur substantial legal costs over a relatively small service charge unless there is a wider issue at stake. Conversely, major works, recurring charges or a dispute affecting numerous leaseholders can quickly involve significant sums.
We consider the amount at stake, the strength of the legal position, the number of leaseholders affected and the realistic options for resolving the dispute before recommending how far it should be taken.
If you are challenging a service charge, facing a substantial major works bill or dealing with unpaid service charges, we can review the lease and relevant documents and advise on the most proportionate way forward.
Contact our specialist property disputes team to discuss your situation.
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