Do I have to pay for something I do not use?
Landlords often receive requests from their leaseholders to vary the terms of the lease. Whilst such a request may not be phrased in such terms, a leaseholder who does not use communal facilities such as a lift, heating system, door entry system or similar, often says to their landlord that they wish to pay a lower service charge as they do not use or benefit from a particular item.
On the face of it, it may seem unfair that someone should have to contribute towards an item, which they appear to receive no benefit from.
However, the leases set out the services which the landlord is to provide and the mechanism for recovering the costs from the leaseholders through the service charge.
In an ideal world, it is hoped that the service charge percentages stated in all leases for a development, will add up to 100%; and there is no shortfall, which the landlord may have to cover.
A landlord risks under recovering sums if it allows a leaseholder not to pay for a certain element of the service charge because they have said that they do not use or benefit from a particular item. In some circumstances, the lease may permit the landlord varying the service charge percentages, sometimes this may be conditional or based on a particular measurement method. If a variation was challenged by a leaseholder, it would be for the landlord to show why the change complies with the terms of the lease.
Where there is no clause in the lease permitting a variation to the service charge, a landlord should think very carefully before permitting any variation. It is likely that such a variation would result in an under recovery or shortfall on the service charge, which the landlord would have to meet. The landlord is unlikely to be able to recover this element from the other leaseholders, in the absence of prior agreement and further lease variations.
It is dangerous to have leases on different terms and allowing variations which are not properly documented. It is likely that if a landlord agrees to a variation of the service charge contribution, it will need to vary all of the leases for the development in the same or a similar way.
In the absence of all leaseholders formally agreeing and executing the appropriate documents, a landlord would need to consider making an application to the First-tier Tribunal (Property Chamber – Residential Property) (“FTT”).
Section 37 of the Landlord & Tenant Act 1987 states that where at least 75% of the total number of registered owners at the development have consented to the proposed lease variation, and its not opposed by more than 10%, the landlord may apply to the FTT for an order varying the leases. Any Order made by the FTT should be registered against all the legal titles at the development.
Should you require any assistance on the issues raised above, please do not hesitate to contact Karen Bright at Bishop & Sewell LLP. The above is accurate as at 14 January 2022. The information above may be subject to change during these ever-changing times. The content of this note should not be considered legal advice and each matter should be considered on a case-by-case basis.
