Service charges
C2C3C418 Meaning of “service charge” and “relevant costs”. C1
1
In the following provisions of this Act “service charge” means an amount payable by a tenant of a F1dwelling as part of or in addition to the rent—
C5a
which is payable, directly or indirectly, for services, repairs, maintenance F2, improvements or insurance or the landlord’s costs of management, and
b
the whole or part of which varies or may vary according to the relevant costs.
2
The relevant costs are the costs or estimated costs incurred or to be incurred by or on behalf of the landlord, or a superior landlord, in connection with the matters for which the service charge is payable.
3
For this purpose—
a
“costs” includes overheads, and
b
costs are relevant costs in relation to a service charge whether they are incurred, or to be incurred, in the period for which the service charge is payable or in an earlier or later period.
C7C819 Limitation of service charges: reasonableness. C6
C91
Relevant costs shall be taken into account in determining the amount of a service charge payable for a period—
a
only to the extent that they are reasonably incurred, and
b
where they are incurred on the provision of services or the carrying out of works, only if the services or works are of a reasonable standard;
and the amount payable shall be limited accordingly.
C92
Where a service charge is payable before the relevant costs are incurred, no greater amount than is reasonable is so payable, and after the relevant costs have been incurred any necessary adjustment shall be made by repayment, reduction or subsequent charges or otherwise.
2A
F3. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2B
F3. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2C
F3. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3
F3. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F44
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F5C105
If a person takes any proceedings in the High Court in pursuance of any of the provisions of this Act relating to service charges and he could have taken those proceedings in the county court, he shall not be entitled to recover any costs.
C11C1220F6 Limitation of service charges: consultation requirements
1
Where this section applies to any qualifying works or qualifying long term agreement, the relevant contributions of tenants are limited in accordance with subsection (6) or (7) (or both) unless the consultation requirements have been either—
a
complied with in relation to the works or agreement, or
b
dispensed with in relation to the works or agreement by (or on appeal from) F57the appropriate tribunal.
2
In this section “relevant contribution”, in relation to a tenant and any works or agreement, is the amount which he may be required under the terms of his lease to contribute (by the payment of service charges) to relevant costs incurred on carrying out the works or under the agreement.
3
This section applies to qualifying works if relevant costs incurred on carrying out the works exceed an appropriate amount.
4
The Secretary of State may by regulations provide that this section applies to a qualifying long term agreement—
a
if relevant costs incurred under the agreement exceed an appropriate amount, or
b
if relevant costs incurred under the agreement during a period prescribed by the regulations exceed an appropriate amount.
5
An appropriate amount is an amount set by regulations made by the Secretary of State; and the regulations may make provision for either or both of the following to be an appropriate amount—
a
an amount prescribed by, or determined in accordance with, the regulations, and
b
an amount which results in the relevant contribution of any one or more tenants being an amount prescribed by, or determined in accordance with, the regulations.
6
Where an appropriate amount is set by virtue of paragraph (a) of subsection (5), the amount of the relevant costs incurred on carrying out the works or under the agreement which may be taken into account in determining the relevant contributions of tenants is limited to the appropriate amount.
7
Where an appropriate amount is set by virtue of paragraph (b) of that subsection, the amount of the relevant contribution of the tenant, or each of the tenants, whose relevant contribution would otherwise exceed the amount prescribed by, or determined in accordance with, the regulations is limited to the amount so prescribed or determined.
C13F720ZA Consultation requirements: supplementary
1
Where an application is made to F60the appropriate tribunal for a determination to dispense with all or any of the consultation requirements in relation to any qualifying works or qualifying long term agreement, the tribunal may make the determination if satisfied that it is reasonable to dispense with the requirements.
2
In section 20 and this section—
“qualifying works” means works on a building or any other premises, and
“qualifying long term agreement” means (subject to subsection (3)) an agreement entered into, by or on behalf of the landlord or a superior landlord, for a term of more than twelve months.
3
The Secretary of State may by regulations provide that an agreement is not a qualifying long term agreement—
a
if it is an agreement of a description prescribed by the regulations, or
b
in any circumstances so prescribed.
4
In section 20 and this section “the consultation requirements” means requirements prescribed by regulations made by the Secretary of State.
5
Regulations under subsection (4) may in particular include provision requiring the landlord—
a
to provide details of proposed works or agreements to tenants or the recognised tenants’ association representing them,
b
to obtain estimates for proposed works or agreements,
c
to invite tenants or the recognised tenants’ association to propose the names of persons from whom the landlord should try to obtain other estimates,
d
to have regard to observations made by tenants or the recognised tenants’ association in relation to proposed works or agreements and estimates, and
e
to give reasons in prescribed circumstances for carrying out works or entering into agreements.
6
Regulations under section 20 or this section—
a
may make provision generally or only in relation to specific cases, and
b
may make different provision for different purposes.
7
Regulations under section 20 or this section shall be made by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.
C14C15C1620AF8Limitation of service charges: grant-aided works.
Where relevant costs are incurred or to be incurred on the carrying out of works in respect of which a grant has been or is to be paid under F9section 523 of the Housing Act 1985 (assistance for provision of separate service pipe for water supply) or any provision of Part I of the Housing Grants, Construction and Regeneration Act 1996 (grants, &c. for renewal of private sector housing) or any corresponding earlier enactmentF10or article 3 of the Regulatory Reform (Housing Assistance) (England and Wales) Order 2002 (power of local housing authorieses to provide assistance), the amount of the grant shall be deducted from the costs and the amount of the service charge payable shall be reduced accordingly.
F112
In any case where—
a
relevant costs are incurred or to be incurred on the carrying out of works which are included in the external works specified in a group repair scheme, within the meaning of F12Part I of the Housing Grants, Construction and Regeneration Act 1996, and
b
the landlord participated or is participating in that scheme as an assisted participant,
the amount which, in relation to the landlord, is F13the balance of the cost determined in accordance with section 69(3) of the Housing Grants, Construction and Regeneration Act 1996 shall be deducted from the costs, and the amount of the service charge payable shall be reduced accordingly.
C18C1920BF14 Limitation of service charges: time limit on making demands. C17
1
If any of the relevant costs taken into account in determining the amount of any service charge were incurred more than 18 months before a demand for payment of the service charge is served on the tenant, then (subject to subsection (2) ), the tenant shall not be liable to pay so much of the service charge as reflects the costs so incurred.
C202
Subsection (1) shall not apply if, within the period of 18 months beginning with the date when the relevant costs in question were incurred, the tenant was notified in writing that those costs had been incurred and that he would subsequently be required under the terms of his lease to contribute to them by the payment of a service charge.
C21 20C F15 Limitation of service charges: costs of proceedings.
1
A tenant may make an application for an order that all or any of the costs incurred, or to be incurred, by the landlord in connection with proceedings before a court F16, residential property tribunal or leasehold valuation tribunal F58or the First-tier Tribunal, or the F17Upper Tribunal, or in connection with arbitration proceedings, are not to be regarded as relevant costs to be taken into account in determining the amount of any service charge payable by the tenant or any other person or persons specified in the application.
2
The application shall be made—
a
in the case of court proceedings, to the court before which the proceedings are taking place or, if the application is made after the proceedings are concluded, to a county court;
F18aa
in the case of proceedings before a residential property tribunal, to a leasehold valuation tribunal;
b
in the case of proceedings before a leasehold valuation tribunal, to the tribunal before which the proceedings are taking place or, if the application is made after the proceedings are concluded, to any leasehold valuation tribunal;
F59ba
in the case of proceedings before the First-tier Tribunal, to the tribunal;
c
in the case of proceedings before the F19Upper Tribunal, to the tribunal;
d
in the case of arbitration proceedings, to the arbitral tribunal or, if the application is made after the proceedings are concluded, to a county court.
3
The court or tribunal to which the application is made may make such order on the application as it considers just and equitable in the circumstances.
C22X121F20Service charge information
1
The appropriate national authority may make regulations about the provision, by landlords of dwellings to each tenant by whom service charges are payable, of information about service charges.
2
The regulations must, subject to any exceptions provided for in the regulations, require the landlord to provide information about—
a
the service charges of the tenant,
b
any associated service charges, and
c
relevant costs relating to service charges falling within paragraph (a) or (b).
3
The regulations must, subject to any exceptions provided for in the regulations, require the landlord to provide the tenant with a report by a qualified person on information which the landlord is required to provide by virtue of this section.
4
The regulations may make provision about—
a
information to be provided by virtue of subsection (2),
b
other information to be provided (whether in pursuance of a requirement or otherwise),
c
reports of the kind mentioned in subsection (3),
d
the period or periods in relation to which information or reports are to be provided,
e
the times at or by which information or reports are to be provided,
f
the form and manner in which information or reports are to be provided (including in particular whether information is to be contained in a statement of account),
g
the descriptions of persons who are to be qualified persons for the purposes of subsection (3).
5
Subsections (2) to (4) do not limit the scope of the power conferred by subsection (1).
6
Regulations under this section may—
a
make different provision for different cases or descriptions of case or for different purposes,
b
contain such supplementary, incidental, consequential, transitional, transitory or saving provision as the appropriate national authority considers appropriate.
7
Regulations under this section are to be made by statutory instrument which, subject to subsections (8) and (9)—
a
in the case of regulations made by the Secretary of State, is to be subject to annulment in pursuance of a resolution of either House of Parliament, and
b
in the case of regulations made by the Welsh Ministers, is to be subject to annulment in pursuance of a resolution of the National Assembly for Wales.
8
The Secretary of State may not make a statutory instrument containing the first regulations made by the Secretary of State under this section unless a draft of the instrument has been laid before, and approved by a resolution of, each House of Parliament.
9
The Welsh Ministers may not make a statutory instrument containing the first regulations made by the Welsh Ministers under this section unless a draft of the instrument has been laid before, and approved by a resolution of, the National Assembly for Wales.
10
In this section—
“the appropriate national authority”—
- a
in relation to England, means the Secretary of State, and
- b
in relation to Wales, means the Welsh Ministers,
- a
“associated service charges”, in relation to a tenant by whom a contribution to relevant costs is payable as a service charge, means service charges of other tenants so far as relating to the same costs.
C2321AF21Withholding of service charges
F221
A tenant may withhold payment of a service charge if—
a
the landlord has not provided him with information or a report—
i
at the time at which, or
ii
(as the case may be) by the time by which,
he is required to provide it by virtue of section 21, or
b
the form or content of information or a report which the landlord has provided him with by virtue of that section (at any time) does not conform exactly or substantially with the requirements prescribed by regulations under that section.
2
The maximum amount which the tenant may withhold is an amount equal to the aggregate of—
a
the service charges paid by him in the F23period to which the information or report concerned would or does relate, and
F24b
amounts standing to the tenant's credit in relation to the service charges at the beginning of that period.
3
An amount may not be withheld under this section—
a
in a case within paragraph (a) of subsection (1), after the F25information or report concerned has been provided to the tenant by the landlord, or
F26b
in a case within paragraph (b) of that subsection, after information or a report conforming exactly or substantially with requirements prescribed by regulations under section 21 has been provided to the tenant by the landlord by way of replacement of that previously provided.
4
If, on an application made by the landlord to F61the appropriate tribunal, the tribunal determines that the landlord has a reasonable excuse for a failure giving rise to the right of a tenant to withhold an amount under this section, the tenant may not withhold the amount after the determination is made.
5
Where a tenant withholds a service charge under this section, any provisions of the tenancy relating to non-payment or late payment of service charges do not have effect in relation to the period for which he so withholds it.
C24C25C2621BF27 Notice to accompany demands for service charges
1
A demand for the payment of a service charge must be accompanied by a summary of the rights and obligations of tenants of dwellings in relation to service charges.
2
The Secretary of State may make regulations prescribing requirements as to the form and content of such summaries of rights and obligations.
C27C283
A tenant may withhold payment of a service charge which has been demanded from him if subsection (1) is not complied with in relation to the demand.
C27C284
Where a tenant withholds a service charge under this section, any provisions of the lease relating to non-payment or late payment of service charges do not have effect in relation to the period for which he so withholds it.
5
Regulations under subsection (2) may make different provision for different purposes.
6
Regulations under subsection (2) shall be made by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.
C31C32C30C2922 Request to inspect supporting accounts &c.
1
This section applies where a tenant, or the secretary of a recognised tenants’ association, has obtained such a summary as is referred to in section 21(1) (summary of relevant costs), whether in pursuance of that section or otherwise.
2
The tenant, or the secretary with the consent of the tenant, may within six months of obtaining the summary require the landlord in writing to afford him reasonable facilities—
a
for inspecting the accounts, receipts and other documents supporting the summary, and
b
for taking copies or extracts from them.
3
A request under this section is duly served on the landlord if it is served on—
a
an agent of the landlord named as such in the rent book or similar document, or
b
the person who receives the rent of behalf of the landlord;
and a person on whom a request is so served shall forward it as soon as may be to the landlord.
4
The landlord shall make such facilities available to the tenant or secretary for a period of two months beginning not later than one month after the request is made.
F285
The landlord shall—
a
where such facilities are for the inspection of any documents, make them so available free of charge;
b
where such facilities are for the taking of copies or extracts, be entitled to make them so available on payment of such reasonable charge as he may determine.
6
The requirement imposed on the landlord by subsection (5)(a) to make any facilities available to a person free of charge shall not be construed as precluding the landlord from treating as part of his costs of management any costs incurred by him in connection with making those facilities so available.
C34C35C3623 Request relating to information held by superior landlord. C33
1
If a request under section 21 (request for summary of relevant costs) relates in whole or in part to relevant costs incurred by or on behalf of a superior landlord, and the landlord to whom the request is made is not in possession of the relevant information—
a
he shall in turn make a written request for the relevant information to the person who is his landlord (and so on, if that person is not himself the superior landlord),
b
the superior landlord shall comply with that request within a reasonable time, and
c
the immediate landlord shall then comply with the tenant’s or secretary’s request, or that part of it which relates to the relevant costs incurred by or on behalf of the superior landlord, within the time allowed by section 21 or such further time, if any, as is reasonable in the circumstances.
2
If a request under section 22 (request for facilities to inspect supporting accounts, &c.) relates to a summary of costs incurred by or on behalf of a superior landlord—
a
the landlord to whom the request is made shall forthwith inform the tenant or secretary of that fact and of the name and address of the superior landlord, and
b
section 22 shall then apply to the superior landlord as it applies to the immediate landlord.
C3723AF29 Effect of change of landlord
1
This section applies where, at a time when a duty imposed on the landlord or a superior landlord by or by virtue of any of sections 21 to 23 remains to be discharged by him, he disposes of the whole or part of his interest as landlord or superior landlord to another person.
2
If the landlord or superior landlord is, despite the disposal, still in a position to discharge the duty to any extent, he remains responsible for discharging it to that extent.
3
If the other person is in a position to discharge the duty to any extent, he is responsible for discharging it to that extent.
4
Where the other person is responsible for discharging the duty to any extent (whether or not the landlord or superior landlord is also responsible for discharging it to that or any other extent)—
a
references to the landlord or superior landlord in sections 21 to 23 F30and any regulations under section 21 are to, or include, the other person so far as is appropriate to reflect his responsibility for discharging the duty to that extent, but
b
in connection with its discharge by the other person, section 22(6) applies as if the reference to the day on which the landlord receives the notice were to the date of the disposal referred to in subsection (1)F31 and
c
any regulations under section 21 apply subject to any modifications contained in the regulations.
C61C3824Effect of assignment on request.
The assignment of a tenancy does not affect the validity of a request made under section 21, 22 or 23 before the assignment; but a person is not obliged to provide a summary or make facilities available more than once for the same F70dwelling and for the same period.
C40C41C3925 Failure to comply with s. 21, 22 or 23 an offence.
1
It is a summary offence for a person to fail, without reasonable excuse, to perform a duty imposed on him by section 21, 22 or 23.
2
A person committing such an offence is liable on conviction to a fine not exceeding level 4 on the standard scale.
C43C4426 Exception: tenants of certain public authorities. C42
1
Sections 18 to 25 (limitation on service charges and requests for information about costs) do not apply to a service charge payable by a tenant of—
unless the tenancy is a long tenancy, in which case sections 18 to 24 apply but section 25 (offence of failure to comply) does not.
2
The following are long tenancies for the purposes of subsection (1), subject to subsection (3)—
a
a tenancy granted for a term certain exceeding 21 years, whether or not it is (or may become) terminable before the end of that term by notice given by the tenant or by re-entry or forfeiture;
b
a tenancy for a term fixed by law under a grant with a covenant or obligation for perpetual renewal, other than a tenancy by sub-demise from one which is not a long tenancy;
3
A tenancy granted so as to become terminable by notice after a death is not a long tenancy for the purposes of subsection (1), unless—
a
b
it is granted at a premium calculated by reference to a percentage of the value of the dwelling-house or the cost of providing it, and
c
at the time it is granted it complies with the requirements of the regulations then in force under section 140(4)(b) of the M2Housing Act 1980 F37or paragraph 4(2)(b) of Schedule 4A to the Leasehold Reform Act 1967 (conditions for exclusion of shared ownership leases from Part I of Leasehold Reform Act 1967) or, in the case of a tenancy granted before any such regulations were brought into force, with the first such regulations to be in force.
C45C46C4727 Exception: rent registered and not entered as variable.
Sections 18 to 25 (limitation on service charges and requests for information about costs) do no apply to a service charge payable by the tenant of a F38dwelling the rent of which is registered under Part IV of the M3Rent Act 1977, unless the amount registered is, in pursuance of section 71(4) of that Act, entered as a variable amount.
C48C4927AF39 Liability to pay service charges: jurisdiction
1
An application may be made to F62the appropriate tribunal for a determination whether a service charge is payable and, if it is, as to—
a
the person by whom it is payable,
b
the person to whom it is payable,
c
the amount which is payable,
d
the date at or by which it is payable, and
e
the manner in which it is payable.
2
Subsection (1) applies whether or not any payment has been made.
C503
An application may also be made to F63the appropriate tribunal for a determination whether, if costs were incurred for services, repairs, maintenance, improvements, insurance or management of any specified description, a service charge would be payable for the costs and, if it would, as to—
a
the person by whom it would be payable,
b
the person to whom it would be payable,
c
the amount which would be payable,
d
the date at or by which it would be payable, and
e
the manner in which it would be payable.
4
No application under subsection (1) or (3) may be made in respect of a matter which—
a
has been agreed or admitted by the tenant,
b
has been, or is to be, referred to arbitration pursuant to a post-dispute arbitration agreement to which the tenant is a party,
c
has been the subject of determination by a court, or
d
has been the subject of determination by an arbitral tribunal pursuant to a post-dispute arbitration agreement.
5
But the tenant is not to be taken to have agreed or admitted any matter by reason only of having made any payment.
6
An agreement by the tenant of a dwelling (other than a post-dispute arbitration agreement) is void in so far as it purports to provide for a determination—
a
in a particular manner, or
b
on particular evidence,
of any question which may be the subject of an application under subsection (1) or (3).
7
The jurisdiction conferred on F64the appropriate tribunal in respect of any matter by virtue of this section is in addition to any jurisdiction of a court in respect of the matter.
C51C5228 Meaning of “qualified accountant”. C53
F43C541
The reference to a “qualified accountant” in section 21(6)
(certification of summary of information about relevant costs) is to a person who, in accordance with the following provisions, has the necessary qualification and is not disqualified from acting.
F402
A person has the necessary qualification if he is eligible for appointment as a F41statutory auditor under Part 42 of the Companies Act 2006 .
F443
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4
The following are disqualified from acting—
F45a
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
b
an officer F46, employee or partner of the landlord or, where the landlord is a company, of an associated company;
c
a person who is a partner or employee of any such officer or employee.
F47d
an agent of the landlord who is a managing agent for any premises to which any of the costs covered by the summary in question relate;
e
an employee or partner of any such agent.
5
For the purposes of subsection (4)(b) a company is associated with a landlord company if it is (within the meaning of F42section 1159 of the Companies Act 2006) the landlord’s holding company, a subsidiary of the landlord or another subsidiary of the landlord’s holding company.
F485A
For the purposes of subsection (4)(d) a person is a managing agent for any premises to which any costs relate if he has been appointed to discharge any of the landlord’s obligations relating to the management by him of the premises and owed to the tenants who may be required under the terms of their leases to contribute to those costs by the payment of service charges.
6
a
the persons who have the necessary qualification include members of the Chartered Institute of Public Finance and Accountancy, and
b
subsection (4)(b)
(disqualification of officers and employees of landlord) does not apply.
C55C56C5729 Meaning of “recognised tenants’ association”.
1
A recognised tenants’ association is an association of F51qualifying tenants (whether with or without other tenants) which is recognised for purposes of the provisions of this Act relating to service charges either—
a
by notice in writing given by the landlord to the secretary of the association, or
F65b
by a certificate—
i
in relation to dwellings in England, of the First-tier Tribunal; and
ii
in relation to dwellings in Wales, of a member of the local rent assessment committee panel.
2
A notice given under subsection (1)(a) may be withdrawn by the landlord by notice in writing given to the secretary of the association not less than six months before the date on which it is to be withdrawn.
3
A certificate given F66under subsection (1)(b)(i) may be cancelled by the First-tier Tribunal, and a certificate given under subsection (1)(b)(ii) may be cancelled by any member of the local rent assessment committee panel.
4
In this section the “local rent assessment committee panel” means the persons appointed by the Lord Chancellor under the M4Rent Act 1977 to the panel of persons to act as members of a rent assessment committee for the registration area F67in Wales in which F52the dwellings let to the qualifying tenants are situated, and for the purposes of this section a number of tenants are qualifying tenants if each of them may be required under the terms of his lease to contribute to the same costs by the payment of a service charge..
F535
The Secretary of State may by regulations specify—
a
the procedure which is to be followed in connection with an application for, or for the cancellation of, a certificate under F68subsection (1)(b)(ii);
b
the matters to which regard is to be had in giving or cancelling F69a certificate under subsection (1)(b);
c
the duration of such a certificate; and
d
any circumstances in which a certificate is not to be given under subsection (1)(b).
6
Regulations under subsection (5)—
a
may make different provisions with respect to different cases or descriptions of case, including different provision for different areas, and
b
shall be made by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.
C58C59C6030 Meaning of “flat”, “landlord” and “tenant”.
In the provisions of this Act relating to service charges—
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F54
“landlord” includes any person who has a right to enforce payment of a service charge;
“tenant” includes
a
a statutory tenant, and
b
where the F55dwelling or part of it is sub-let, the sub-tenant.