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Service charges are by far the most common source of disputes between residential tenants and their landlords. As an Upper Tribunal (UT) ruling showed, landlords who fail precisely to abide by the letter of leases when collecting them place themselves in financial jeopardy.
A landlord’s managing agent served a demand on a residential tenant requiring her to pay advance services charges of £2,255. It stated that payment of that sum was due ’30 days after date of demand’. After she failed to pay, the landlord launched County Court proceedings against her which were later transferred to the First-tier Tribunal (FTT).
In dismissing the landlord’s claim, the FTT noted that the tenant’s lease stated in terms that she was entitled to ‘not less than one month’s notice’ of any advance service charges before she was required to pay them. The demand was invalid in that the payment deadline it purported to set was not compliant with the wording of the lease. The tenant therefore owed nothing.
In dismissing the landlord’s challenge to that outcome, the UT noted that, allowing for time taken by postal delivery, the landlord gave the tenant only 29 days’ notice of the demand, possibly less. Given that every month of the year, save February, has 30 or 31 days, the notice period given was not equivalent to the full calendar month required by the lease.
The notice provision in the lease was a proviso, or mandatory condition, which had to be satisfied before any sum became payable. Although the sum at stake was relatively modest, the UT’s decision had important implications for the landlord in terms of legal costs.
Often the practicalities of managing service charges do not neatly sit with the terms set out within leases, particularly as circumstances around properties change over time. If you are concerned about the administration of service charges in relation to a property then a timely review would be sensible.
*H Stain Limited v Richmond. Case Number: LRX/71/2020
