Legislation protects residential tenants from excessive service charges. Before entering into contracts to provide services or carry out works relating to residential properties, you should consider whether you need to consult with your tenants. If you fail to consult when required, you will only be able to recoup the statutory maximum, unless you receive dispensation from the Leasehold Valuation Tribunal (LVT).
What is a service charge?
A service charge is an amount payable by your tenant as part of or in addition to their rent. Service charges may vary according to the costs or estimated costs incurred in connection with the matters for which the service charge is payable.
Service charges must be reasonable
You can request that your tenant pays you a service charge for costs you incur for:
The costs must be reasonably incurred and the work or services must be of a good standard.
Your tenant can challenge service charge costs
Your tenant can challenge service charge costs by asking the LVT to determine whether:
When is a consultation required?
You must consult with your tenants if either:
What are the consultation requirements?
You must:
You must take note of any written observations provided.
The LVT has the power to dispense with the consultation requirements, if it is satisfied it is reasonable to do so.
Time limits for making service charge demands
What are the penalties for failing to comply with the requirements?
If you do not comply with the consultation requirements, and the LVT does not decide to dispense with the requirements, your ability to pass on costs to your tenant will be limited. The maximum that you will be able to recover is:
Published: September 2011
Contact us:
For further advice on commercial property matters, please contact a member of our commercial property team.
"http://www.warekay.co.uk/news-updates/family