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Landlords and Tenants - Are Your Service Charges Reasonable?

on Thursday, 12 October 2017.

Whether you are a tenant or landlord, it is in your interest that your block of flats is well maintained and insured. Usually the landlord carries out these tasks.

The cost is then split between the flat owners and paid by them in their service charge, in accordance with the terms of their lease. Some landlords and managing agents take their responsibilities seriously and treat the flat owners fairly. Some do not.

The recent case of Cos Services Limited v Nicholson & Willans regarding a block of flats in Harpenden highlights this and shows how the law can help tenants achieve fair and reasonable service charges.

Under the Landlord and Tenant Act 1985, any costs forming part of a service charge billed to residential flat owners are only payable to the extent that they have been "reasonably incurred". If challenged, the burden is on the landlord to prove that this requirement has been satisfied.

In this case, the landlord arranged a block insurance policy that cost over £13,561. The flat owners found comparable insurance that would cost just £3,017 and challenged this. The Upper Tribunal agreed that the insurance premiums being charged by the landlord to the tenants were excessive and not "reasonably incurred".

This case is a stark warning to landlords. If you do not ensure that charges are reasonably incurred, you will not be able to recover them from the flat owners.

For more information, please contact David Marsden, in our Commercial Property team, on 01923 919 303.

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