London Assembly’s proposed Review of Service Charges in London – PLA response

 

The Property Litigation Association has over 1,000 members, all of whom are lawyers who deal at least 50% of the time with property disputes.  As such, we can only comment on issues involving service charge disputes, rather than give a balanced view as to service charges as a whole.

We have pooled together our London-based members to compile a list of the kinds of disputes we are seeing, in the hope that this may provide you with useful material for discussion at the public meeting (which, we understand, is likely to take place in late October). These disputes are as follows:

  1. Disputes following the landlord adding to his retained part (e.g. the landlord adding a penthouse), then allocating the costs of some improvements to the common parts (e.g. the lifts), so that the existing lessees bore additional costs by way of service charges;
  2. Disputes over the reallocation of percentages of service charges payable by each lessee following the landlord adding additional residential flats to the block (see 1 above);
  3. Allegations that insurance premiums are too high and/or agreed with connected insurers or brokers, possibly with commissions being passed back to the landlord;
  4. Allegations that management fees, professional fees and legal fees are not reasonable;
  5. Disputes over the level of service provided (e.g. to what extent the cleaning of common parts was covered by service charges);
  6. Disputes over whether a resident caretaker should be provided;
  7. Failures to produce or delay in producing accounts / information / receipts – this can lead to difficulties in respect of the sale and purchase of residential flats;
  8. On assignment of a lease, disputes between the assignor and assignee regarding the apportionment of service charges following completion of the assignment;
  9. Failures to abide by the terms of the lease regarding accounts etc.; informal arrangements made then not being adhered to;
  10. Landlords’ failures to comply strictly with statutory rules on consultation relating to major works and service contracts (under the Landlord and Tenant Act 1985), leading to the irrecoverability of service charges (from a landlord’s perspective, large amounts can become irrecoverable following a small and trivial departure from the regulations) (see Daejan v Benson [2011] EWCA
    Civ 38);
  11. Excessive or unreasonable administration charges for letters from managing agents, e.g. those stating that the tenant has not paid service charges;
  12. Items that should already have been present or works that should already have been done at the time of construction of a block of flats which are then added by the landlord, but instead of the landlord paying for these items they are claimed from lessees through the service charge; and
  13. Disputes between flat owners / shareholders in self-managed companies that manage the service charges and regulations in respect of a block of flats.

If you wish the PLA to take part further in the consultation or in any meetings, please contact the Chairman of the PLA Law Reform Committee, Keith Conway, on 0207876 4298 or by email at keith.conway@clydeco.com. If practical, this may be a possibility.