How to dispute a service charge as a leaseholder

Service charges in leasehold properties are one of the most common sources of dispute between leaseholders and landlords. The law gives leaseholders strong protections, including the right to challenge unreasonable charges before an independent tribunal. This guide explains those rights and the procedure for challenging a service charge.

What is a service charge?

A service charge is the amount a leaseholder pays towards the cost of services and works performed by the landlord (or management company) on the building. Service charges typically cover:

• Buildings insurance
• Cleaning and maintenance of common parts
• Gardening
• Lift maintenance
• Repairs and renewals
• Major works (replacement roof, redecoration)
• Management fees
• Reserve funds for future works

The lease defines what can be charged and how it is apportioned between leaseholders.

The legal framework

The main legislation governing service charges is:

Landlord and Tenant Act 1985

Sections 18 to 30. This is the foundational regime. Key provisions include:

• Section 19: charges must be reasonable
• Section 20: consultation requirements for major works
• Section 21: rights to demand summaries of costs
• Section 22: rights to inspect supporting documents

Commonhold and Leasehold Reform Act 2002

This introduced significant protections including requirements for transparency in demands.

Section 27A of the Landlord and Tenant Act 1985

This gives leaseholders the right to apply to the First-tier Tribunal (Property Chamber) to determine the reasonableness of any service charge.

What can be challenged?

Almost any aspect of a service charge can be challenged including:

• Whether the charge is payable under the lease at all
• Whether the work was actually done
• Whether the cost is reasonable
• Whether the work was carried out to a reasonable standard
• Whether the consultation requirements were complied with for major works
• Whether the apportionment between leaseholders is correct
• Whether reserve funds are being used properly

The reasonableness test

Section 19(1) of the 1985 Act provides that costs are only payable as service charge if they are:

• Reasonably incurred
• For works or services of a reasonable standard

"Reasonably incurred" looks at whether the decision to spend was reasonable. "Reasonable standard" looks at whether the work performed met that standard.

Consultation requirements for major works

Section 20 of the 1985 Act requires consultation with leaseholders where the cost would exceed £250 per leaseholder for works or £100 per leaseholder per year for long-term contracts.

The consultation involves multiple stages:

• A Notice of Intention to leaseholders
• A 30-day period for observations
• Consideration of nominees for contractors
• A Notice of Estimates
• Further 30-day period for observations
• Notification of the award

Where the consultation has not been followed, the landlord can only recover up to the threshold amount (£250 per leaseholder for works) unless dispensation is granted by the tribunal.

Procedure for challenging a service charge

Step 1: Request information

Section 21 of the 1985 Act gives leaseholders the right to require a summary of relevant costs. This is the starting point for any challenge. Write to the landlord (or managing agent) asking for:

• A summary of the costs included in the service charge
• Supporting invoices and receipts
• Information about how the charge has been apportioned

Step 2: Pay under protest

Continue to pay service charge demands while disputing them. Mark the payment as "without prejudice" or "under protest" to preserve your position. Non-payment can lead to forfeiture proceedings against you.

Step 3: Negotiate

Many disputes can be resolved by negotiation. Set out clearly what you are challenging and why, and ask for a response.

Step 4: Apply to the tribunal

If negotiation fails, apply to the First-tier Tribunal (Property Chamber) under section 27A. This is a specialist tribunal that decides service charge disputes.

How the tribunal application works

The application

You apply on the tribunal's form, specifying which charges are challenged and on what grounds. The fee is modest (around £100, though it changes from time to time).

Directions

The tribunal will give directions setting out a timetable for evidence, witness statements and a bundle.

Hearing

Most service charge disputes are decided at a hearing, though some can be dealt with on paper. The hearing usually takes a few hours, occasionally a full day for complex cases.

Decision

The tribunal gives a written decision setting out its findings and the reasoning. The decision is binding and enforceable.

What evidence to prepare

The lease

The starting point for any challenge. The lease defines what can be charged.

The service charge accounts

Annual statements showing what has been spent on what.

Supporting invoices

Invoices for individual items of expenditure. Where these have been refused, this in itself can be relevant.

Comparable quotes

Quotes for similar work from alternative contractors, demonstrating that the costs charged are too high.

Photographs

Photographs of work that was supposedly done, or of poor quality work.

Correspondence

Letters and emails between you and the landlord or managing agent.

Consultation documents

For major works disputes, the consultation notices issued (or not issued).

Tribunal costs

Generally, parties bear their own costs in the First-tier Tribunal. The tribunal has limited power to make costs orders, usually only where one party has behaved unreasonably.

However, the tribunal can make an order under section 20C of the 1985 Act preventing the landlord from passing on the landlord's costs of the proceedings to the leaseholders through the service charge. This is an important protection.

Common service charge challenges

Excessive management fees

Management fees that are out of line with the market are a common issue.

Insurance premiums

Landlords sometimes charge inflated insurance premiums. The leaseholder may have a right to challenge the premium and, in some cases, to nominate alternative insurers.

Reserve fund contributions

Whether the lease permits reserve funds, and whether the amounts charged are reasonable.

Quality of work

Where work has been done but to a poor standard.

Failure to consult on major works

Where the consultation procedure was not followed, charges may be capped.

Apportionment errors

Where the way costs have been divided between leaseholders does not match the lease.

What the tribunal cannot do

The tribunal has limited jurisdiction. It cannot:

• Order the landlord to pay damages
• Order the landlord to do specific works
• Decide disputes that are not about service charges (for example, ground rent or rent itself)
• Decide disputes outside the leasehold relationship

For broader disputes, separate court proceedings may be needed.

Right to Manage and other options

Leaseholders dissatisfied with the management of their building have options beyond service charge challenges:

Right to Manage

Leaseholders can take over management of the building through a Right to Manage company under the Commonhold and Leasehold Reform Act 2002.

Appointment of a manager

The First-tier Tribunal can appoint a manager where management has been seriously inadequate.

Enfranchisement

Leaseholders may have the right to collectively buy the freehold.

Common mistakes

Not paying

Withholding the disputed charge can lead to forfeiture proceedings. Always pay under protest.

Vague challenges

Identifying specifically which charges are challenged and why, with evidence, is essential. General complaints rarely succeed.

Not asking for information first

The right to a summary of costs is one of the most useful tools. Use it before challenging.

Acting alone

Where multiple leaseholders are affected, acting together is often more effective and economical.

When to take legal advice

For straightforward disputes, leaseholders often deal with them directly with the help of LEASE (the government's free leasehold advisory service). For more complex or higher-value disputes, specialist barrister advice can make a significant difference.

A direct access barrister with leasehold experience can advise on the merits, draft the application and represent you at the tribunal on a fixed fee.

Talk to a specialist barrister about your matter

If the issues in this guide apply to your situation, our team can match you with a barrister who works on cases like yours every week. The enquiry is free and you will receive a clear fixed-fee quote before any work begins. Start your enquiry here.