Unpaid service charges/how to save your home

Unpaid service charges/how to save your home

The questions are: (i) is the service charge due? (ii) can the landlord rely on that unpaid charge to claim possession?
Does the claimed service charge accord with the lease?

Carefully study the lease. There have been many, many cases and it is likely that the wording has been argued over before the decision reached on identical wording.
Has there been consultation? Are the charges reasonable? Have they been demanded soon enough?

The lease is not the end of the story. Long lessees have valuable rights the Landlord and Tenant Act (LTA) 1985. They may try to resist or limit payment on the grounds that they were not consulted before work began, that the work was not done to a reasonable standard, that the charges for it are unreasonable, or that the demand has been delivered too late.

Such disputes can be dealt with by a Leasehold Valuation Tribunal (LVT) or by the court. The court may defer to the LVT’s greater expertise in this area by transferring to part of the proceedings
Has there been a valid demand?

Under the LTA 1987, any written demand served by a landlord on a residential tenant for rent or other sums payable must state the name and address of the landlord. If it does not, then any part of the amount demanded which consists of a service charge… shall be treated for all purposes as not being due… at any time before that information is furnished’.

The address of the landlord’ must be a place of residence, a place of business, or (if a company) the registered office. The address of its managing agent will not do.

A residential service charge demand must also be accompanied by a summary of tenants’ rights and obligations in relation to service charges. Otherwise, the tenant may withhold payment. The summary must be in a lengthy prescribed form. Sending a summary after the demand will not work.
How large is the debt? For how long has it been outstanding?

One more hurdle for the landlord. No forfeiture is possible unless the debt exceeds a prescribed amount (currently £350), or includes an amount which has been outstanding for more than a prescribed period (currently three years).
Has the service charge been admitted or determined?

If the landlord has got everything right so far, and the tenant has not paid, can the court grant a possession order without more? No. Section 81 of the Housing Act 1996 gives residential lessees a further line of defence. A landlord ‘may not… exercise a right of re-entry or forfeiture for failure by a tenant to pay a service charge’ unless it has been ‘determined’ that the amount of the charge is payable, or the tenant has admitted it. ‘Determined’ means that there has been a final determination by a court, a LVT or an arbitral tribunal. The judge will look at this even though the defendant has not taken the point.
Service of a possession claim against a tenant itself amounts to forfeiture. This step cannot be taken until there has been a determination or admission. So, failing agreement or arbitration, two separate sets of proceedings are needed: the first for a determination; the second to claim possession.

So there is definitely hope for long lessees.