What is a leasehold service charge and can I dispute it?

Full answer

A service charge is a regular payment, usually collected annually or sometimes in advance quarterly instalments, made by leaseholders (and often by tenants of managed rental blocks too) to cover the cost of services provided by the landlord, freeholder or managing agent for the shared benefit of the building or development -- typically including buildings insurance, cleaning and maintenance of communal hallways, lifts, gardens and car parks, staffing costs such as a concierge or estate manager, and a contribution toward major or 'section 20' works such as roof repairs, external redecoration or lift replacement, which can be billed as a large one-off charge when they occur. Leaseholders have a legal right under the Landlord and Tenant Act 1985 (as amended) to have service charges that are reasonable in amount and reasonably incurred, and to be properly consulted before major works above a certain cost threshold are carried out (a process known as Section 20 consultation), giving leaseholders and their representatives the chance to comment on proposed works and contractors before costs are locked in. Leaseholders who believe their service charge is unreasonable, unclear, poorly evidenced, or has been demanded without following the correct consultation process for major works, can challenge it at the First-tier Tribunal (Property Chamber) in England or the equivalent leasehold valuation tribunal structures in Wales, without needing to go through the ordinary courts, and can request a detailed summary of costs and supporting invoices from the landlord or managing agent as a first step before escalating a dispute. Recent and ongoing leasehold reform has focused heavily on improving transparency and leaseholder rights around service charges, given how common disputes over unclear or excessive charges have become.

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