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“We are residential long leasehold specialists. Should you have any questions on service charge disputes or leasehold matters more generally, contact us on What is a reasonable service charge?
Service charge disputes are common, but what is a reasonable service charge?
Service charges can rise or fall without limit. But legally, the landlord can only recover “reasonable” costs. As a tenant, you can apply to the tribunal to challenge any unreasonable service charge.
As the tenant, it is important not to pay over the odds for your service charges. Likewise, as a landlord, you must be confident you can recover your expenditure on your property.
“Thank you for your diligence and ready accessibility; we really appreciated that.” MA
For residential leaseholders, a raft of legislation regulates the reasonableness of service charges, including buildings insurance.
See also: Commercial property service charge disputes
“I would like to thank you for your expertise and speed [in the recent matter]. We are relieved that it did not have to go any further.” HT
What are sinking funds?
Most leases allow landlords to collect money ‘up front’ to create one or more reserve or ‘sinking’ funds. Their purpose is to ensure funds are available to cover the cost of irregular and more expensive work. Such work might include decorating the common areas, replacing the lift or carrying out major structural repairs.
A reserve fund also ensures that all tenants contribute fairly to the cost of major works, not just those residents living in the building at the time. This means that when you sell your flat, in most (but not all) cases there is no reimbursement.
In addition, a sinking fund helps budget for major works, avoiding a large (or larger) one-off bill.
Occasionally, leases specify how much a tenant must contribute to the sinking fund annually. However, in most cases, the landlord decides the amount of the contribution. By law, those contributions must be reasonable and just like any other service charge, the tenant has the right to challenge them in the tribunal if they believe it’s unreasonable.
As reserve funds are held for longer periods, they should earn interest.
Service charge dispute solicitors
Whether you are a landlord or tenant, our experienced team will advise and represent you in your service charge disputes. We quickly establish whether:
- the lease permits recovery of particular charges;
- technical grounds exist for challenging service charges;
- the charges are unreasonable because the service costs are too high or unreasonably incurred.
We will advise and assist you in negotiations through to representing you in applying to the First Tier Tribunal (Property Chamber) or the County Court.
“May I convey my very many thanks for everything you have all done to bring this unfortunate situation to a close.” AS
