Service Charge

The Budget page shows what the Management Company plans to spend over the next year. As you may know De Montfort Court comprises twenty-five flats and each flat pays an equal share of Service Charge. This seems a bit unfair because some flats are quite large, for example flat 5 has three bedrooms and others are one bedroom.

But that is how the leases were constructed back in 1979 and there is little appetite for changing them. The law on service charges is complex and managers have a lot of latitude in how they spend the money. At De Montfort Court we try to be transparent at all stages and in particular at the planning and budgeting stage.

Our current service charge has returned to the 24/25 level of £1500 per year or £125 per month. The lease requires it is paid on the 24th June and the 25th December but Directors have taken the view that monthly payment at £125 per month at present is fair and that we can manage the cash flow. We have only twice in thirty-three years withdrawn the privilege of monthly payment.

Service Charge can be challenged and here is the advice from Lease Advice (https://www.lease-advice.org/costs-and-charges/service-charges/challenging-service-charges/) 

You can challenge a service charge for a leasehold property if:

  • the landlord did not follow the correct process for issuing the demand

  • the terms of your lease do not require you to pay the charge (it’s best to get legal advice on this as leases can be complex)

  • you think the cost is not reasonable
  • you do not think the service or work was done to a reasonable standard
  • you do not think the work was necessary
  • you think the work could have been done over time to spread high costs
  • you think the work was only needed because of the landlord’s negligence, such as a failure to properly maintain the building
  • the landlord did not follow the correct process for consulting leaseholders about major works, and you lost money or rights as a result
  • the landlord did not issue their demand in time (there is a time limit for recovering service charge costs)

If your challenge progresses to a tribunal or court you will need to prove your grounds for challenging the charge. There is no set time limit for challenging a service charge, but it’s best to raise any concerns within a reasonable time.

It is possible, where you think work is too expensive, to ask the Management Company to obtain more quotations or suggest alternatives. We will listen. All Directors pay Service Charge so we all have an interest in keeping costs down. Haward writes on the topic and has had two articles published on service charges.