Service Charge Mistakes

Five common mistakes landlords make when serving a demand for service charges

Service charges are tricky for landlords. The rules are complex and the process can be awkward. Still, it’s extremely important to get the details right. This could be the difference between a valid and invalid demand for payment.

Unfortunately, many landlords skip the details and end up losing out. With that in mind, we’ve listed five of the most common and easily fixed mistakes landlords make. Have you had trouble serving demands? This might just help!

1. Failing to include the landlord’s name and address.

This is a crucial detail that’s easy to miss: you have to include the name and address of the landlord. Sections 47 and 48 of the Landlord and Tenant Act 1987 confirm that the service charge demand must include the landlord’s name and address in England and Wales at which notices may be served.

This rule includes right-to-manage companies too. A managing agent’s address cannot be used in the landlord’s place. It seems a minor detail, but it’s the details that make all the difference!

2. Not reading the lease

Next, you have to read the lease – or at the very least you should know what’s on it. Of course, many leases are seriously outdated. Still, it should state when and how a demand for payment of service charges can be given to a leaseholder.

Here are some details that should be on there:

· whether the payments are fixed or variable

· whether payments are in advance or in arrears

· the dates that a leaseholder should pay, and whether these are interim or balancing sums.

It’s also important to consider the notice provisions in the lease. These could dictate how the demands should be sent.

If you serve a demand without checking any of this, it’s all too easy to demand something that the lease doesn’t allow. So again, the details matter.

3. Not complying with the 18-month rule

What is the 18-month rule? A demand must be issued within 18 months of the cost being incurred. If it is not, then a landlord loses the right to recover the cost.

A landlord can get around this by ensuring a notice is served during the 18 months, explaining that the tenant will be required to contribute to the cost that has been incurred.

4. Omitting the summary of rights and obligations.

Every demand for payment has to come with a summary of rights and obligations. You can find the specifics in the Service Charges (Summary of Rights and Obligations, and Transitional Provision) (England) Regulations 2007.

These regulations also specify the format. It must be legible in typewritten or printed form, in a typeface of at least 10 points. It also has to include the title “Service Charges — Summary of tenants’ rights and obligations”.

If the demand doesn’t come with this summary, a leaseholder is within their rights to withhold payment of a service charge.

5. Not taking advice

Our first four points were very specific. Now it’s time to close on a more general point. If there’s one take-away from this article, it’s this: the details are easy to get wrong, but incredibly important. If you misstep on any of these points, you could end up in an unpleasant and costly dispute.

The relationship between landlord and tenant is subject to a lot of complex regulation, and service charges are just one part of this. Professional legal advice is always a good idea!

Get in touch

At Bate & Albon, our landlord and tenant lawyers are highly skilled at guiding you through this complex area of law. Our goal is to help you achieve your goal – whether it’s serving a demand for service charges or any other issues affecting landlords.

If you have any questions at all, please get in touch.