Service Charges: If It Ain’t Broke… Don’t Fix It!
The Case of Tedworth North Management Ltd v Miller and Ogorodnov  highlighted the risks involved with landlords seeking to recover costs and expenses through a Service Charge when the works aren’t specifically covered within the Landlord’s Lease obligations.
A Management Company Landlord of a block of flats replaced the building’s window-frames and then sought to recover the costs of doing so from the Tenants of the flats via the Service Charge.
Some Tenants refused to pay claiming the replacement went beyond the scope of the Service Charge provisions in their Leases because the Landlord was only required to:
“wash and paint in appropriate colours and in a workmanlike manner all the outside wood iron and cement work of the Building usually painted and also at all times…to keep the interior and exterior walls and ceilings and floors of the Building…and the roof structure and the foundations and main drains thereof in good and substantial repair and condition.”
Nowhere in the Lease was the Landlord able to undertake works to the building at will and charge those works back to the Tenants.
Both the First and Upper Tier Tribunals found that the wholesale replacement of the windows was excessive and the disrepair to the windows in question could have, instead, been remedied by way of specific repair and redecoration.
So what does this mean for Landlords, Tenants and Management Companies?
Whilst what amounts to ‘repair’ will always turn on the facts of each individual situation, where the alleged disrepair could be resolved through lesser means (e.g. redecoration rather than replacement) the additional costs, if deemed to be excessive, may not be recoverable.
If you are a Tenant:
- Ensure your Lease obliges the Landlord to provide a breakdown of what the costs and expenses of the Service Charge actually cover
- Make sure you keep an eye out for any unusual or unexpected expenditure on the Service Charge statements
- Check that your Lease obliges you to pay for them
If you are a Landlord:
- Ensure that any works you undertake in anticipation of recouping the cost from a Tenant are covered by the provisions of the Service Charge, unless you are willing to make a capital investment in the property yourself; or
- Approach any Tenant directly to agree a separate contribution (outside of the Lease obligations) for any discretional improvements that you wish to make
If you are a Management Company that is contracted to repair and maintain a property:
- Ensure that any works that you arrange to have undertaken are contracted in the name of the Landlord (with the Landlord’s knowledge, approval and consent); and
- Ensure the Landlord is aware of any works proposed that don’t fall within the provisions of the Service Charge as it’s highly likely that a Landlord will be unwilling to pay for arranged works that it can’t recover
If you require more information or support with Service Charge provisions within a Lease, please contact a member of our Property team today.