6 Reasons Why Lessees May Withhold Payment Of Their Service Charges


From our experience lessees are becoming ever more aware of their rights in relation to service charge payments. Here are some tips to try to avoid the tenant withholding payment:

1. Failure to provide receipts and invoices…

Section 22 of the Landlord and Tenant Act 1985 gives a lessee the right to inspect the receipts and invoices which relate to any figure stated in the service charge. You have one month to reply to their request, and you must allow 2 months for the lessee to inspect the documents. If you do not allow the lessee to inspect, the lessee can withhold payment of the service charge to the period to which their request relates.

2. Failure to provide a summary of costs…

A lessee may ask for a summary of costs. You should keep an accurate record of the accounts in relation to the service charges. The summary must be certified by an accountant if the property contains more than 4 flats (Section 21(3), 21(6) & 28(1) Landlord and Tenant Act 1985).

3. Absence of a prescribed notice…

Ensure that each time you demand a payment of ground rent, service charge or an administration charge it is accompanied by a prescribed notice that includes information about the lessee’s rights regarding forfeiture and failure to pay ground rent (Section 153, Leasehold Reform Act 2002). This requirement relates to all demands, including reminders.

4. Failure to keep copies of correspondence…

Keep a copy of all ground rent and service charge demands including the prescribed information. Keep information with regard to the date that the demands were sent and the method by which they were sent. If a lessee later disputes the service charges and/or ground rent, you may be required to show evidence that all the required information was sent to the lessee.

5. Absence of the landlord’s details

Every demand or invoice for a ground rent or service charge must state the name and address of the landlord, and the landlord’s contact details. If a lessee makes a written request for the name and address of the landlord, you must reply within 21 days (Section 1, Landlord and Tenant Act 1925). If you do not comply with this request you are liable to a fine of up to £2,500.

6. Failure to keep information

Keep details of the insurance policy for the premises on file. A lessee has a right to ask for a summary of the insurance policy. If a lessee makes this request in writing, you have 21 days from receiving the letter to comply with it (Section 30A, Landlord and Tenant Act 1985). If you do not comply with this request you are liable to a fine of up to £2,500.

If you are not sure on any of the legal aspects of these tips then please feel free to email or telephone Georgina Little without obligation on 020 7079 4190 or glittle@bishopandsewell.co.uk.


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