How to Dispute Service Charges — Your Rights as a Leaseholder

What Service Charges Cover

Service charges are the amounts leaseholders pay towards the cost of maintaining and managing a building. They typically cover buildings insurance, cleaning and maintenance of communal areas, gardening, lift maintenance, management fees, and a reserve (sinking) fund for major future works.

Variable service charges — which most leaseholders pay — fluctuate year to year based on actual costs. Fixed service charges are set in the lease and do not vary; they are less common.

The Legal Test for Reasonableness

Under the Landlord and Tenant Act 1985, variable service charges are only payable to the extent that the costs are:

• **Reasonably incurred**, and
• Where works or services are provided, of a **reasonable standard**

This is a two-part test. A landlord cannot recover costs that were excessive, unnecessary, or relate to works carried out to an inadequate standard. The burden of proving reasonableness lies with the landlord.

Your Right to Information

Before disputing, you are entitled to request supporting information.

**Section 21 of LTA 1985** gives you the right to a written summary of the costs making up any service charge. The landlord must provide this within one month of request (or within six months of the end of the account period, whichever is later). Failure to comply is a criminal offence.

**Section 22 of LTA 1985** gives you the right to inspect the accounts, receipts, and other documents supporting the summary. You can take copies. The landlord must allow inspection within 21 days of your request.

Applying to the First-tier Tribunal

If you cannot resolve the dispute informally, you can apply to the First-tier Tribunal (Property Chamber) for a determination of whether the service charges are reasonable. There is no financial limit on what can be challenged.

The process works as follows:

1. **Application.** You complete a T060 application form and pay a fee (currently £100–£200 depending on the dispute value). The application sets out which charges you are disputing and why.

2. **Directions.** The Tribunal issues directions setting out the timetable for both parties to exchange evidence (statements, accounts, expert reports if needed).

3. **Hearing.** The Tribunal holds a hearing (in person or by video) and makes a binding determination. Hearings for straightforward disputes typically last half a day to a full day.

4. **Decision.** The Tribunal determines what amount (if any) is payable. It can reduce or disallow charges entirely.

Costs orders are rare in the First-tier Tribunal — each party usually bears their own costs. This makes the Tribunal relatively accessible for leaseholders.

Administration Charges

Administration charges — such as fees for granting consent to alterations, providing references, or processing late payment — are also challengeable through the Tribunal under Schedule 11 of the Commonhold and Leasehold Reform Act 2002. The same ‘reasonableness’ test applies.

Can You Withhold Disputed Charges?

You may withhold charges that are genuinely in dispute through a Tribunal application. However, you should take legal advice before doing so: if you withhold charges and the Tribunal later determines they were reasonable, you may face forfeiture proceedings (though courts are reluctant to grant forfeiture over genuine disputes). A pragmatic approach is to pay the charge under protest and seek repayment through the Tribunal.

Variable vs Fixed Service Charges

Fixed service charges set in the lease cannot be challenged on reasonableness grounds through the Tribunal. They can only be challenged if the charge was not demanded in accordance with the lease, or if the lease itself is varied. This is an important distinction when reviewing a lease before purchase.

Property Passport UK stores service charge history and dispute records for leasehold properties, giving buyers and leaseholders a transparent view of a building’s financial track record.