Karen Bright from Bishop & Sewell provides us with some important advice
As a leaseholder, you should remember that under the terms of your lease, you may be required to pay service charges to your landlord for its costs incurred in providing services to a building. Your lease may also provide for you to pay administrative charges, contributions to reserve or sinking funds and insurance contributions.
Any sums a lessee is required to pay must be properly demanded by your landlord. This means that the landlord must follow the correct procedure. The demands must be in writing and must contain the landlord’s name and address for service of notices in England & Wales.
The landlord must also provide a Summary of Rights and Obligations when serving the service charge demands. You may wish to check that the service charges are demanded within the dates and in the sums specified by your lease. The demands would normally be served at the property address unless you have provided an alternative address. You should keep a copy of any notice provided by you to your landlord.
In the circumstances where the service charges have been properly demanded from you, the landlord can nevertheless only recover those costs which are reasonable. If you have concerns about the sums requested in the demands, you should ask your landlord for more information and to inspect the supporting documents. If your landlord does not provide you with an adequate explanation about these costs and you consider them to be unreasonable, you may apply to the First Tier Tribunal for a declaration of reasonableness. Tribunal proceedings can be lengthy and expensive. It is not usually possible for a lessee to recover its legal costs unless the landlord acts unreasonably. However, a landlord may be able to recover its costs from a lessee if it behaves unreasonably or there is an appropriate clause in lease permitting this.
If you do not dispute the amount of the service charges and your financial situation has changed which means you are unable to afford to pay them as required under the terms of your lease, you should inform your landlord and / or your managing agent without any delay. You should attempt to agree a payment plan that can work both for you and your landlord. In some circumstances you may be able to request your lender to make payment on your behalf.
It is not advisable to ignore service charge demands. There are certain options open to your landlord which may include issuing court proceedings against you for the recovery of the service charge arrears. Once a court judgment has been obtained, the landlord may make an application for a charging order. This is a charge registered on your leasehold title and which stays there until the property is sold. Alternatively your landlord may forfeit your lease.
