Can Service Charges Be Disputed?

One of the regular themes I see on my Leasehold Advice Facebook Group can be summed up in one question … “Can Service Charges Be Disputed?”  The members of the group have all sorts of questions and all sorts of scenarios, but very few of them have actually got a formal ‘service charge dispute’. And that frustrates me … because I provide advice on their issues, I signpost them in the right direction, but they don’t take action.

Can service charges be disputed?  Yes … and you should do something about it!

The first step in "doing something about it" is reading the lease. You need to clarify, for instance:

• What should have been done but wasn’t; e.g. gardening or cleaning
• What was included in service charges but shouldn’t have been; e.g. improvements
• What should have been sent but wasn’t; e.g. a service charge demand on the first day of the financial year, posted to your address
• What action should have been taken but wasn’t; e.g. repairing the roof to stop rain leaking into the flat

Most leaseholders know when the Landlord or their Managing Agent hasn’t done a good job. That’s why leaseholders get upset and complain on the Facebook Group. But knowing something’s wrong – and proving something’s wrong – are two different things. So, the starting point is always clarifying which clauses in the lease have not been followed.

The second step, having identified what is wrong, is to communicate. Before you get into a service charge dispute, you need to communicate with the Landlord and their Managing Agent so that they know something’s wrong ... "there is a dispute". You are aware of the problem – they may not be. So, tell them.

Tell them calmly, politely, and informatively … in writing. Provide an explanation of the situation – like telling a story, with a beginning, a middle and an end. Explain the problem, from your viewpoint as the leaseholder. Provide details of the lease clauses which have not been followed. Add details of any relevant Landlord & Tenant law, if that’s appropriate; e.g. section 20. And suggest what should be done to remedy the problem – or ask what they intend to do to remedy the problem – and the circumstances of the situation will probably determine which approach you take there.

If it’s an emergency situation, like an electrical blackout in the communal hallway … or a broken down lift with somebody in it … telephone. Make sure the managing agent is aware and has told you they’re dealing with it. Then confirm everything in writing.

But a service charge dispute doesn’t normally involve an emergency situation. Nor does it normally revolve around one little incident or problem. It’s normally a wider scenario, or a series of things done wrongly, or a persistent lack of action. There’s usually time for a leaseholder to carefully consider the situation, clarify the problems, and communicate their thoughts.

If the Landlord and/or Managing Agent responds positively and proactively to your email/letter, a resolution normally follows. But unfortunately, that’s not always the case. In those unhappy circumstances, you need to move to step three.

Step three involves more communication. You need to write again, to notify the Landlord or Managing Agent that following your letter/email of {date} the problems have not been rectified. Consequently, you regard this as a formal ‘service charge dispute’ and you are going to take action to progress that dispute.

Obviously, it’s useful to know before that notification, what you’re going to do to “progress” that dispute. Some careful prior thinking is therefore required – often with a calculator in hand.

If you are, for example, annoyed that the communal hallway hasn’t been cleaned for the last 14 weeks … and you’ve got photographs and diary notes to back up that annoyance … you need to decide what is an appropriate financial amount to ‘attach’ to your dispute. You cannot withhold 100% of the service charge due, just because some cleaning has not been done for a few weeks. That would be disproportionate. Paying all of the service charges due except for your proportion of cleaning – and explaining that to the managing agent – would be a better way forward.

Or if your dispute involves major works expenditure and the managing agent didn’t comply with the section 20 consultation requirements – you are still going to be liable for £250 of that expenditure, so you should pay that and withhold the rest.

“Can I Stop Paying?” No! But you can explain, withhold an appropriate amount, and then take action to sort out the dispute.

After step three you may see the managing agent taking action and resolving the dispute. That would be good. But if they don’t … what next?

My suggested step four is double-checking you’re on a sound footing. Get some specialist leasehold advice to ensure your interpretation of the lease and the facts on the ground are correct. You do not want to embark upon ‘action’ unless you have a good basis for that action and a realistic chance of success (although no legal process is guaranteed).

Assuming the double-checking is positive, your advisor will no doubt signpost you in the right direction. That may well be

• An application to the First-tier Tribunal for a determination on the liability to pay, and reasonableness of, service charges
• An application to the First-tier Tribunal for a determination on the liability to pay an administration charge
• An application to The Property Ombudsman in order to make a complaint about the Managing Agent and/or Landlord

So, dear reader, going back to the original question “Can Service Charges Be Disputed?” the answer is, of course, “Yes”. But if you’re going to dispute service charges, you need to do so in the right way. Don’t spend all day on Facebook being a victim, moaning about how bad the managing agent is. Use that time proactively to;

1. clarify precisely what the problem is,
2. communicate your annoyance and explain the problem,
3. quantify what that means in pounds and pence,
4. double-check you’re right by getting specialist confirmation,
5. then progress the dispute along the right path towards a resolution.

Good luck!