Service charges according to floorspace vs lease stipulation

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    Service charges according to floorspace vs lease stipulation

    Hello. I own a flat in a block of four. The new owner of the smallest flat is disputing their contribution to service charges based on floor size. All four flats have historically paid 25% each, but of the four leases only mine states that I pay 25%. I have spoken with a solicitor about this and he has stated that the current system of 25% division per flat is workable, legal and does not need to be altered. He also mentioned that determining division of costs according to floor space was outdated. The new owner has been made aware of this but continues to dispute the issue and is proposing to go to a tribunal on the matter, claiming that there have been other similar cases where floor space has prevailed over what a lease states at tribunal. I'm not averse to going to tribunal but would like to know if anyone has heard of these cases that have been cited? What is the likelihood of floor space 'winning' over a lease at tribunal? Thanks.

    #2
    Originally posted by Santa Fe View Post
    What is the likelihood of floor space 'winning' over a lease at tribunal? Thanks.
    Zero chance, unless there is something else problematical (the percentages don't add up to 100% etc).



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      #3
      But are you saying that the leases don't actually say 25% each? Confusing

      Comment


        #4
        The relevant legislation provides that the percentages can only be changed if they do not add to to 100% or if there has been some change which justifies an adjustment. Apart from that, you are stuck with what was agreed when the lease was granted. That is only reasonable, first because you know hat the percentage is when you take the lease and secondly because no one should be required to pay more than he had bargained for.

        You do though say: "All four flats have historically paid 25% each, but of the four leases only mine states that I pay 25%." If the complaining owner's lease says he should pay less than 25% then that is what he should pay and anyone whose lease says he should pay more than 25% should pay the percentage specified in his lease. If the complaning owner goes to a tribunal asking that each owner pays according to his lease I do not see how he can lose.

        Comment


          #5
          What does the lease of the new owner actually say regarding his share of the costs?

          Comment


            #6
            Originally posted by AndrewDod View Post
            But are you saying that the leases don't actually say 25% each? Confusing
            That appears to be correct. Only my lease states I pay 25%; the other leases refer to a 'fair and reasonable' proportion clause. Until now all leasee's have paid 25% each without question.

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              #7
              Originally posted by Lawcruncher View Post
              The relevant legislation provides that the percentages can only be changed if they do not add to to 100% or if there has been some change which justifies an adjustment. Apart from that, you are stuck with what was agreed when the lease was granted. That is only reasonable, first because you know hat the percentage is when you take the lease and secondly because no one should be required to pay more than he had bargained for.

              You do though say: "All four flats have historically paid 25% each, but of the four leases only mine states that I pay 25%." If the complaining owner's lease says he should pay less than 25% then that is what he should pay and anyone whose lease says he should pay more than 25% should pay the percentage specified in his lease. If the complaning owner goes to a tribunal asking that each owner pays according to his lease I do not see how he can lose.
              The complaining owner's lease, along with the other two leases, seem to only refer to paying a 'fair and reasonable' proportion of costs. Strangely, mine is the only lease that specifies 25%.

              Comment


                #8
                Originally posted by eagle2 View Post
                What does the lease of the new owner actually say regarding his share of the costs?
                I believe it states 'fair and reasonable' cost apportionment, which is the same as the other two flats, but not mine.

                Comment


                  #9
                  So your position is that allocating costs equally is a fair and reasonable proportion and the new owner will be unable to prove that is unreasonable. Allocating costs according to floor space is an alternative way of allocating the costs which would also be fair and reasonable but that does not mean that you are required to use that method.

                  Comment


                    #10
                    Originally posted by Santa Fe View Post

                    That appears to be correct. Only my lease states I pay 25%; the other leases refer to a 'fair and reasonable' proportion clause. Until now all leasee's have paid 25% each without question.
                    The fact that you are required to pay 25% strengthens your argument because if costs were allocated according to floor space, your share may not be 25% and the total may not add up to 100%

                    Comment


                      #11
                      A Tribunal would not normally amend the existing system unless it is fundamentally unfair and unreasonable. It will take into account the fact that charging equally has been accepted historically and the new owner ought to have been aware of that when he purchased. The Tribunal will also take into account that you cannot be charged more than 25% and it will not allow a system which would not permit 100% of costs to be recovered,

                      Comment


                        #12
                        Originally posted by eagle2 View Post
                        A Tribunal would not normally amend the existing system unless it is fundamentally unfair and unreasonable. It will take into account the fact that charging equally has been accepted historically and the new owner ought to have been aware of that when he purchased. The Tribunal will also take into account that you cannot be charged more than 25% and it will not allow a system which would not permit 100% of costs to be recovered,
                        Thank you Eagle2.

                        Comment


                          #13
                          Given that only perhaps 1/3 of what typical service charges involve is related to floor area I can't see FTT saying that equal contributions is not fair and reasonable. How different are the floor areas? - if one flat is three times the size of another then maybe.

                          Comment


                            #14
                            Originally posted by Santa Fe View Post
                            The complaining owner's lease, along with the other two leases, seem to only refer to paying a 'fair and reasonable' proportion of costs. Strangely, mine is the only lease that specifies 25%.
                            Give the draftsman a wooden spoon! That's unfortunate and a bit of a head scratcher. The legislation says that:

                            ...a lease fails to make satisfactory provision with respect to the computation of a service charge payable under it if—

                            (a) it provides for any such charge to be a proportion of expenditure incurred, or to be incurred, by or on behalf of the landlord or a superior landlord; and

                            (b) other tenants of the landlord are also liable under their leases to pay by way of service charges proportions of any such expenditure; and

                            (c) the aggregate of the amounts that would, in any particular case, be payable by reference to the proportions referred to in paragraphs (a) and (b) would
                            either exceed or be less than the whole of any such expenditure.

                            The question is whether "proportion" means "fixed proportion". If it does, then conditions (a) and (b) are not met and all three conditions must be met. If it does not, it gets complicated. If all four leases provided for a fair proportion then if the proportions are calculated they must add up to 100% and condition (c) would not be met. What we have though is one flat with a fixed proportion and three with a fair proportion. What is a fair proportion for each flat would have to be assessed without reference to the fixed proportion. That leaves the possibility that the assessed proportions and the fixed proportion do not add up to 100% and if the Act applies another assessment would have to be done which might involve the amounts assessed as being fair being changed.

                            Apart from the Act, any leaseholder required to pay a fair proportion can ask a court (? tribunal) to determine what it is. You do not want this to go to court. If the complaining tenant's flat is significantly smaller, say a one bedroomed rather than two bedroomed, he is probably right that a fair proportion is less than 25%.



                            Comment


                              #15
                              Originally posted by AndrewDod View Post
                              Given that only perhaps 1/3 of what typical service charges involve is related to floor area I can't see FTT saying that equal contributions is not fair and reasonable. How different are the floor areas? - if one flat is three times the size of another then maybe.
                              The complaining flat is a basement bedsit. My flat has two bedrooms, while the other two flats are a one bed and a two bed.

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