© 2025 News On The Block. All rights reserved.
News on the Block is a trading name of Premier Property Media Ltd.
© 2025 News On The Block. All rights reserved.
News on the Block is a trading name of Premier Property Media Ltd.
[extra:quotes:boxoutcopy=1]
Recovery of residential service charges is a minefield, particularly for unwary landlords who do not demand or give details of sums due by way of service charge within time limits set by the Landlord and Tenant Act 1985. Section 20B of the 1985 Act provides that a landlord has 18 months from incurring a service charge expense to demand or notify the leaseholders of payment. Otherwise, a landlord will be prevented from recovering any sums incurred outside the time limit. There have been a number of cases concerning the construction of Section 20B and what constitutes a valid demand.
In Brent Borough Council v Shulem B Association Ltd 2011 the High Court decided that a freeholder’s letter which notified tenants of the estimated, rather than the actual, cost of major works did not constitute a valid demand or a relevant notification for the purposes of Section 20B.
In March 2004, Brent Council, the owners of a number of residential blocks in Willesden, served their tenants with a Section 20 notice of intended major works together with details of the proportion of their liability for the estimated cost of the works. The works were completed by March 2005 at a total cost of £640,000. It was not until December 2006 that an invoice based on the actual costs was served. Shulem B, a major leaseholder, refused to pay the charges because they were incurred more than 18 months previously. The landlord tried to rely on a letter and invoice sent out in February 2006 seeking payment of the likely costs.
The Judge held the February 2006 letter and invoice was not a valid demand because the leases required the landlord to demand a proportion of “actual” expenditure incurred and the letter was unclear whether the works had been carried out. Further, the letter was not a notification within S.20B of a future charge because the letter made clear the sum claimed was estimated and not based on actual costs. As a result, because the leases did not provide for advance payments, and the landlord failed to serve any valid demand or notification based on the “actual” cost incurred, the landlord was unable to recover any of the cost. A very substantial penalty for a purely technical fault.
This case highlights the importance of demanding service charges in accordance with the lease terms, or notifying leaseholders within 18 months of the costs incurred. If costs have been incurred on major works but a final figure not ascertained, then, to protect its position under Section 20B a landlord must ensure its demand is based on actual costs as far as then calculated. It will not matter if the actual costs are overstated as the Judge made clear that landlords can correct the figures later.
Natasha Rees is a Partner at Forsters solicitors.