six-monthly service charge update 2019 - anthony collins · • garden maintenance • lighting...

Six-monthlyService Charge Update 2019

Your Service Charge Team

Jonathan CoxPartner

Contact Details

T: 0161 470 0311E: [email protected]

Emma HardmanSenior Associate

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Penny BournesSolicitor

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Topics

Case law update

Case law conclusions

Legislation & consultations

Together with Tenants

Building a Safer Future

Terminology

The Act – Landlord and Tenant Act 1985

The Consultation Regulations – The Service Charges (Consultation Requirements) (England) Regulations 2003

FTT – The First-tier Tribunal (Property Chamber)

UT – The Upper Tribunal (Lands Chamber)

Case Law Update

Curo Places Limited v Pimlett

• Facts

• Mr Pimlett held a weekly periodic assured tenancy of bungalow within sheltered scheme

• In 2016 Curo consulted with residents about proposed change

• In 2017 Curo served notice of variation on Mr Pimlett to introduce grounds maintenance as a service under tenancy & corresponding service charge

• Before then, always provided service but not charged for it

• Issue: did tenancy allow Curo to introduce grounds maintenance service under the tenancy agreement & charge?


• Tenancy – Clause 2.10.1

“The Trust agrees to provide the Services (if any) listed in the Tenancy Agreement and for which you pay a service charge providing that, subject to consultation with tenants:

(i) the Trust may stop providing any of the Services if it reasonably believes it is no longer practicable to do so; or

(ii) provide the same service in a different way; or

(iii) it may provide extra Services if it believes this would be useful.”


• FTT

• Mr Pimlett argued grounds maintenance not an “extra” service as had always been provided

• Curo argued it was “extra” to those listed in tenancy & defined as “Services”

• FTT considered various documentation including Board Report

• Held:

• Grounds maintenance not an extra service because tenant previously benefited from it

• Curo could not rely on Clause 2.10.1 to add into service charge

• Costs not recoverable through service charge


• UT

• UT considered only tenancy agreement & understanding of parties at commencement of tenancy

• Upheld decision of FTT

Wilcock v The Guinness Partnership

• Facts

• Mr Wilcock held a weekly periodic assured tenancy of flat

• Service charge schedule provided list of services:

• Garden maintenance

• Lighting (stairways)

• Landlords lighting external

• Fly tipping of waste in car park

• Guinness introduced bulk rubbish removal from car park from time to time

• Guinness sought to charge Mr Wilcock for costs through service charge

• Issue: was cost of this service recoverable?

Wilcock v The Guinness Partnership

• FTT

• Held

• Tenancy included a variable service charge provision & so landlord entitled to charge for services in addition to those listed

• Amounts reasonable

• UT

• Held

• Variable service charge provision permitted variation of amount, not services on notice

• Services landlord obliged to provide & tenant obliged to pay for did not include bulk rubbish removal

London Borough of Southwark v Baharier

• Facts

• Outdated heating and hot water system – originally installed in 1968

• Southwark proposed new system involving communal boiler & individual radiators in each room

• Ms Baharier (leaseholder) disputed liability under lease terms


• Lease terms

• Landlord obliged to provide services & to ensure maintained at reasonable level & to keep in repair any installation connected with provision of services

• “services” defined to include central heating & hot water supply

• Service charge contribution provisions included costs of

• Providing the services

• Maintenance of building

• Installation (by improvement) of double glazed windows & entry phone system


• FTT

• Baharier argued works were improvement & not recoverable under lease

• FTT indicated view that landlord entitled to charge for repairs not improvements

• Southwark argued works were repairs & recoverable

• Held

• Works improvements

• Not recoverable


• UT

• Southwark argued

• Question of repair or improvement irrelevant

• It was providing a service

• If not, works were repairs because design identical

• Baharier argued that was a new point & Southwark could not raise

• Held

• Could raise new point – no unfairness or inconvenience

• Was a service – could have been no intention for installations to remain

• Could recover costs

Section 20(1) of the Act

“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) the appropriate tribunal.”

Section 20ZA(2) of the Act

“In section 20 and this section –

…

“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”

Bracken Hill Court at Ackworth Co Ltd v Dobson

• Facts

• Bracken Hill Court at Ackworth Co Ltd (the management company) entered contract with managing agent for 364 days

• Orally renewed contract

• Charged Dobson (leaseholder) approximately £200 per year for managing agent costs

• No section 20 consultation

• Issue: was the contract a QLTA?

Bracken Hill Court at Ackworth Co Ltd v Dobson

• FTT

• Held

• Was a QLTA

• Costs limited to £100 per year as no consultation

• UT

• Held

• Not a QLTA

• Contract for 364 days not for a term of more than 12 months – each renewal a separate term

• Costs recoverable in full

Section 27A of the Act

“(1) An application may be made to the 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.

…

Section 27A of the Act

(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.”

Howe v Mahamood

• Facts

• The lease required

• Mr Mahamood as freeholder to “…insure & keep insured the building…”

• Mr Howe to contribute 1/6th of landlord’s costs through service charge, including costs of insurance

• Mr Howe argued no liability to pay because

• Lack of evidence as to insurance taken out

• Where was evidence, non-compliance because 4 separate policies

• Incorrect apportionment

Howe v Mahamood

• FTT

• Held no jurisdiction to hear matter

• UT

• Held

• FTT wrong to decide it had no jurisdiction

• Lease did not require just one policy

• Some reapportionments

Section 81 of the Housing Act 1996

“(1) A landlord may not, in relation to premises let as a dwelling, exercise a right of re-entry or forfeiture for failure by a tenant to pay a service charge or administration charge unless -

(a) it is finally determined by (or on appeal from) the appropriate tribunal or by a court, or by an arbitral tribunal in proceedings pursuant to a post-dispute arbitration agreement, that the amount of the service charge or administration charge is payable by him, or

(b) the tenant has admitted that it is so payable.

…

(3) For the purposes of this section it is finally determined that the amount of a service charge or administration charge is payable –

(a) if a decision that it is payable is not appealed against or otherwise challenged, at the end of the time for bringing an appeal or other challenge, or

Section 81 of the Housing Act 1996

(b) if such a decision is appealed against or otherwise challenged and not set aside in consequence of the appeal or other challenge, at the time specified in subsection (3A).

(3A) The time referred to in subsection (3)(b) is the time when the appeal or other challenge is disposed of -

(a) by the determination of the appeal or other challenge and the expiry of the time for bringing a subsequent appeal (if any), or

(b) by its being abandoned or otherwise ceasing to have effect.

…

(5A) Any order of a court to give effect to a determination of the appropriate tribunal shall be treated as a determination by the court for the purposes of this section.”

Stemp v 6 Ladbroke Gardens Management Ltd

• Facts

• Ladbroke Gardens (freeholder) undertook major works

• Demanded £37,000 through service charges

• Stemp (leaseholder) refused amount

• FTT decision that Stemp liable to pay

• In between issue of proceedings & FTT decision, further service charge demands

• Issue: was freeholder entitled to forfeit lease?


• FTT

• Stemp argued

• Right to forfeit had arisen when they refused to pay

• Waived by subsequent demands

• Ladbroke Gardens argued

• Could not waive breach until Section 81 satisfied

• Held

• No waiver

• Could exercise right to forfeit


• UT

• Held freeholder had waived breach

• Knew there was a breach of lease entitling it to forfeit when Stemp failed to pay

• Chose to waive

Case References

• Curo Places Limited v Pimlett [2019] UKUT 0130 (LC)

• Wilcock v Guinness Partnership Limited [2019] UKUT 0146 (LC)

• London Borough of Southwark v Baharier [2019] UKUT 73 (LC)

• Bracken Hill Court at Ackworth Management Co Ltd v Dobson [2018] UKUT 333 (LC)

• Howe v Mahamood [2019] UKUT 0155 (LC)

• Stemp v 6 Ladbroke Gardens Management Ltd [2018] UKUT 375 (LC)

Case Law Conclusions


• Does FTT have jurisdiction?

• Variable service charge

• Section 13 Housing Act 1988

• Valid services

• Check completed occupancy agreement

• Individual occupancy agreement determines process for introducing new services

• Caution following Curo case about existing services


• Repairs v improvements [v services]?

• Contract length

• Caution over waiver

Legislation and consultations

Rents from April 2020

• MHCLG Direction & Rent Policy Statement

• Regulator’s Consultation on new Rent Standard

• Affordable rent inclusive of service charge

• No limit otherwise

Leasehold Reform

• MHCLG Consultation ‘Implementing reforms to the Leasehold System’

• Law Commission:

• ‘Leasehold home ownership’; buying your freehold or extending your lease

• ‘Reinvigorating commonhold’: the alternative to leasehold ownership

• ‘Leasehold home ownership’: exercising the right to manage

Secretary of State Announcement

Sale of houses on leasehold basis only

• Homes England to renegotiate Help to Buy

£0 ground rents

Ground Rents (Leasehold Properties) Bill

Leasehold Reform

• House of Commons Leasehold Reform Committee Report

• Law Commission plan to look at unfair terms in long leases

• Expected implementation of Law Commission’s recommendations on ‘Event Fees’

NHF Together with Tenants

• Charter

• Right to be listened to & have view heard on decisions that affect services

• Collective right to influence decisions that affect services

• Information they need to make informed decisions & hold to account

Building a Safer Future

• Post Hackitt

• Resident Engagement Strategy

• All residents

• Management Summary

• Engagement Plan

Disclaimer: Whilst every effort has been made to ensure the accuracy of these materials,

advice should be taken before action is implemented or refrained from in specific cases.

No responsibility can be accepted for action taken or refrained from solely by reference

to the contents of these materials. © Anthony Collins Solicitors LLP 2019

QUESTIONS?Anthony Collins Solicitors134 Edmund StreetBirminghamB3 2ESUnited KingdomTel: 0121 200 3242

[email protected]: @ACSLLP

Anthony Collins Solicitors76 King StreetManchesterM2 4NHUnited KingdomTel: 0161 470 0310

mailto:[email protected]

mailto:[email protected]

six-monthly service charge update 2019 - anthony collins · • garden maintenance • lighting...

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