How to Dispute a Service Charge, Your Rights and the Process

What is a Service Charge?

A service charge is a payment made by a leaseholder to a landlord or management company to cover the costs of managing, maintaining, and insuring a building and its common parts. Service charges are authorised by the lease and governed by the Landlord and Tenant Act 1985 (as amended by the Commonhold and Leasehold Reform Act 2002 and the Leasehold and Freehold Reform Act 2024).

Service charges are one of the most contested areas of residential leasehold law. Leaseholders regularly challenge charges they consider to be excessive, unjustified, or incurred without proper consultation.

The Reasonableness Test

Under section 19 of the Landlord and Tenant Act 1985, service charges are only payable to the extent that:

• The costs have actually been incurred (or are to be incurred)
• The costs are reasonably incurred
• The works or services are carried out to a reasonable standard

This statutory reasonableness test applies regardless of what the lease says. A lease that purports to require payment of any charge the landlord chooses to levy cannot override the section 19 protection.

Your Rights to Information

Before disputing a service charge, gather the relevant information:

If the landlord fails to comply with a request under section 21 or 22, this is a criminal offence under the 1985 Act.

The Section 20 Major Works Consultation

Before carrying out works that will cost any leaseholder more than £250, the landlord must follow a statutory consultation process under section 20 of the 1985 Act. This involves two notices: a Notice of Intention (setting out the proposed works) and a Notice of Estimates (setting out at least two contractors' quotes). Leaseholders have the right to make observations at each stage.

If the landlord fails to follow the section 20 process correctly, the amount recoverable from each leaseholder through the service charge is capped at £250 per leaseholder, regardless of the actual cost of the works. There is no cap if the works were genuinely urgent.

How to Challenge a Service Charge

Step 1: Write to the landlord or managing agent

Set out your concerns in writing, requesting a breakdown of the charges and supporting invoices. Many disputes are resolved at this stage once the landlord is required to justify the figures.

Step 2: Contact the Leasehold Advisory Service (LEASE)

LEASE provides free, impartial advice to leaseholders in England and Wales. Their advisers can help you understand your rights and assess the strength of your challenge.

Step 3: Apply to the First-tier Tribunal (Property Chamber)

If the dispute cannot be resolved, either party can apply to the First-tier Tribunal (Property Chamber) for a determination of whether the service charge is payable and in what amount. The Tribunal has wide powers to examine the reasonableness of costs and the conduct of the consultation process.

The Tribunal process is designed to be accessible without legal representation, though many leaseholders and landlords do instruct solicitors or surveyors for significant disputes. The Tribunal can award costs against a party who has acted unreasonably in connection with the proceedings.

Step 4: Withholding payment, proceed with caution

Withholding service charges is risky. Unpaid service charges can trigger forfeiture proceedings, which, if not defended, can result in the loss of the lease. Always seek legal advice before withholding payment, even where you have strong grounds to dispute the charge. Property Passport UK records leasehold and tenure data for properties, and buyers should always review current and anticipated service charge levels as part of their pre-purchase due diligence.