Service charge disputes can be disruptive to your business whether you are a landlord or a commercial tenant. They can draw focus and resources away from your commercial endeavours and risk damaging the landlord/tenant relationship.

The terms of the lease will almost certainly allow the landlord to impose a service charge on tenants where work has been carried out for the leasehold property’s benefit. However, there remains a wide scope for dispute; for example, over issues such as whether a particular piece of work should be chargeable, and whether the service charges imposed are reasonable in the circumstances.

Landlords facing service charge disputes

If your tenant is disputing a service charge, you should check the terms of the lease and seek specialist legal advice before taking any action.

When a service charge is disputed, the burden will be upon you to establish that the charge was reasonable. Having clear, documented processes in place for arranging the work and calculating the service charge can help with this. If you are able to establish that your service charge is in line with equivalent charges in the market, this can also assist in supporting your position.

Tenants/leaseholders disputing a service charge

As a tenant or leaseholder disputing a service charge, your first inclination may be to withhold payment of the charge. However, you should always seek specialist legal advice before doing so; if the dispute is decided against you, it could give your landlord the right to take legal action against you.

A tenant should check the terms of the lease to determine the full extent of their rights and obligations with respect to the service charge.

What is a reasonable service charge?

Assessing whether a service charge is reasonable will usually involve consideration of many different factors. These include:

  • The size of the property
  • The standard of the work carried out
  • How frequently work is conducted
  • Whether work carried out benefits the tenants as a whole
  • The history of maintenance standards at the property

Furthermore, it is important to be aware that reasonable expenditure does equate to the minimum expenditure possible. Where a greater service charge has been imposed on tenants (due to expenditure above the absolute minimum), this can still be justified if doing so was reasonable in all the circumstances.

Instructing Luscombe Gray

Luscombe Gray is a boutique property litigation firm, providing a legal service tailored to the needs of our clients. We believe first-class legal advice should be available to all.

If you need legal support in relation to service charge disputes, contact Luscombe Gray for clear and expert advice. Your case will be handled by an experienced property litigation solicitor.

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