Service Charge vs. Subscription

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    Service Charge vs. Subscription

    Hello All,

    First post here . I live in a 1960s block and our lease talks to an "annual subscription" instead of a service charge. There is some debate between us on whether legislation which specifically reference "service charges" is therefore relevant as the landlord determines how to raise and spend the "subscription". I suspect this is substance over form, but appreciate any sage advice on the matter.

    "The Lessee HEREBY COVENANTS with the Society and separately with the Lessor that during the subsistence of the said term the Lessee will pay to the Society an annual subscription of £40 or a proportion calculated as provided in the preceding sub-clause of such other annual sum as may be determined in accordance with the Rules of the Society"


    What does the lease say that the 'annual subscription' is for?
    If this is money that is used to pay towards insurance, maintenance of the block, or the landlords costs of managing the block, it will be a service charge.
    If the block is managed by a company that leaseholders are members of, and this sum is to pay costs incurred by that company, such as directors insurance, it might not be a service charge (if this is the case the lease should make provision for service charges elsewhere).

    It is possible, I suppose, that the 'subscription' might include both a proportion to pay for company costs and a proportion to cover service charge. If that is the case it should be made clear how much is for service charges.

    Service charges are anything that meet the definition given section 18 of the Landlord And Tenant Act 1985:


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