The Daily Telegraph - Property - - Property Clinic -

Con­tin­u­ing the se­ries in which our Clinic ex­perts pro­vide a guide to those dif­fi­cult prob­lems that can trip up the un­wary.

This week, David Flem­ing on ser­vice charges: Most of the flat own­ers in my build­ing are in dis­pute with the free­holder over the ser­vice charges he is de­mand­ing. What rights do we have? By statute, ser­vice charges are only payable in­so­far as they are rea­son­ably in­curred and for a rea­son­able amount. Fur­ther­more, where build­ing works are in­volved, no in­di­vid­ual lessee has to pay more than £250 to­wards them un­less the free­holder has gone through a com­plex con­sul­ta­tion pro­ce­dure in­volv­ing the ob­tain­ing of at least two es­ti­mates. The same now ap­plies for what are known as “qual­i­fy­ing long-term agree­ments”. Th­ese are agree­ments (such as con­tracts with man­ag­ing agents) that can last longer than a year. What hap­pens if we refuse to pay? The land­lord may ei­ther sue in the County Court or bring pro­ceed­ings be­fore the Lease­hold Val­u­a­tion Tri­bunal to de­ter­mine the rea­son­able­ness of the ser­vice charges. The costs of this sort of lit­i­ga­tion are high and I ad­vise flat-own­ers that it is only worth ar­gu­ing about ser­vice charges if a suf­fi­cient num­ber be­come in­volved. Any­thing else we have to watch for? Some­times, the land­lord will sim­ply wait, safe in the knowl­edge that one day the lessee will wish to sell his flat and that it would be very dif­fi­cult to do this if ser­vice charges are un­paid. Ac­cord­ingly, in a se­ri­ous case it is prob­a­bly worth­while for the lessees them­selves tak­ing the ini­tia­tive by ap­ply­ing to the Tri­bunal for a dec­la­ra­tion that the ser­vice charges are not payable. This sounds quite se­ri­ous. Could we not try an­other approach? Most of us have bet­ter things to do than en­gage in dis­putes that the­o­ret­i­cally could lead to a court or tri­bunal case ev­ery time a ser­vice charge de­mand is sent out. The al­ter­na­tive is for the lessees col­lec­tively ei­ther to ex­er­cise their rights to buy the free­hold or their right to take over the man­age­ment of the build­ing. It is, how­ever, im­por­tant to re­alise that this is not a panacea for all ills.

Block man­age­ment is a com­plex busi­ness and peo­ple have dif­fer­ent op­nions of what con­sti­tutes a rea­son­able ser­vice charge. Ac­cord­ingly, in­stead of get­ting in­volved in dis­putes with a third party, it is quite com­mon where the lessees have col­lec­tively bought the free­hold for in­di­vid­ual flat own­ers to end up ar­gu­ing with their neigh­bours. David Flem­ing is head of prop­erty lit­i­ga­tion at William Heath & Co.

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