Service charges in England: how to check the bill and challenge it

The annual service charge demand rarely makes pleasant reading: lifts, cleaning, buildings insurance, roof repairs, sometimes a reserve fund contribution with no explanation attached. The law does not require you to pay whatever the managing agent asks. It requires you to pay what is reasonable — and it gives you the tools to test that.

What can a service charge actually cover?

Only what your lease allows, and only at a reasonable price. Section 19 of the Landlord and Tenant Act 1985 puts it plainly: costs count towards a service charge "only to the extent that they are reasonably incurred", and where they are spent on services or works, "only if the services or works are of a reasonable standard". Anything above that is not payable.

The same section deals with money taken in advance. Where a charge is payable before the costs are incurred, "no greater amount than is reasonable is so payable", and once the real costs are known an adjustment must follow — by repayment, by reducing a later charge, or otherwise.

Can you demand a breakdown?

Yes, and it is a right rather than a favour. GOV.UK states that you can ask for a summary showing how the charge is worked out and what it is spent on, and that you can see the paperwork behind that summary, such as receipts. GOV.UK describes a landlord's failure to provide this information as a criminal offence.

There is a separate rule about the demand itself. Under section 21B of the Act, a demand for payment of a service charge must be accompanied by a summary of the rights and obligations of tenants. If it is not, the tenant may withhold payment, and the lease terms on late payment or non-payment do not apply to the period withheld.

How far back can old costs be billed?

Eighteen months — one of the most useful deadlines in English housing law. Section 20B says that where costs were incurred more than 18 months before a demand for payment is served on you, you are not liable for the part of the charge that reflects them.

There is one way round it for the landlord. If, within those 18 months, you were notified in writing that the costs had been incurred and that you would later have to contribute to them under your lease, the time limit does not bite. So keep those "for information only" letters about future works — legally, that is exactly what they are for.

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When is a section 20 consultation compulsory?

Before large spending. You have a right to be consulted if your share would come to more than £250 for planned work, or more than £100 a year for work and services under a contract lasting more than 12 months. GOV.UK notes that there is a limit on what you have to pay if the consultation was not carried out properly — which is why disputes over a major facade repair or a lift replacement are often won on procedure rather than on the figures.

What about ground rent and the reserve fund?

Ground rent turns on the date of the lease. For leases granted before 30 June 2022 you do not have to pay unless the landlord has sent a formal written demand; unpaid ground rent can be recovered going back six years, and it can only be increased if you agree or the lease allows it. For leases granted on or after 30 June 2022 you usually cannot be charged more than a "peppercorn" ground rent, which is zero. One caveat from GOV.UK: the change applies only to new leases, so if you bought from another leaseholder after that date you still pay whatever your lease requires.

On reserve or sinking funds, GOV.UK is blunt: you will not usually be able to get back money you have paid in, including when you move house.

Where do you go if talking fails?

To the First-tier Tribunal (Property Chamber — Residential Property). Leaseholders, tenants and freeholders can all apply, and its cases include service and administration charges, the cost of buildings insurance, the appointment of a manager, Right to Manage, breach of a lease, varying a lease, buying the freehold and extending a lease.

Four situations in which a service charge application will not get through: you have already agreed to pay the charge, the dispute is already being handled — by a court, for example — or the charge is a fixed one. A wider limit applies too: you cannot use an ombudsman once you have applied to the tribunal.

In practice you download the form for your type of case, email it to the regional office for your area, and the form itself states the fee. If you receive certain benefits or are on a low income, you can apply for help paying it. Before all that, GOV.UK suggests mediation: it is confidential and usually quicker and cheaper than court. And there is a flip side worth remembering — if you simply stop paying a charge you are responsible for, your landlord can take you to court.

Wales runs a different process: applications there go to the Leasehold Valuation Tribunals.