Service charges according to floorspace vs lease stipulation

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    #16
    Originally posted by Santa Fe View Post

    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.
    With this being the case, I would think that a tribunal would definitely be willing to listen to arguments from the leaseholder of the bedsit flat (by which I'm assuming that you mean a studio flat) as to why a 25% share is unreasonable if they were to challenge their service charge costs, particularly if the basement flat has it's own entrance and does not have access to communal areas within the property.

    This doesn't mean that equal 25% shares wouldn't necessarily be considered reasonable, but it would come down to what the annual service charges typically include, and how well each side argues their case.
    Having each flat pay 25% regardless of size, etc., could be argued to be reasonable, and if the freeholder can show that this has been how service charges have been split for a long time and that the basement flat leaseholder was clearly told that this is how service charges are split before they bought the property, it becomes more difficult for them to argue that the split is unreasonable (but not necessarily impossible).

    At this point, you cannot be charged more than 25% of the service charges for the block but, if the basement flat does win a ruling that their reasonable proportion of service charge costs is less than 25% this would mean that 100% of costs would no longer be recoverable and the freeholder would then be able to apply to a tribunal to have the leases altered to correct this - and that might mean that you end up having to pay more than 25%.

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      #17
      Originally posted by Santa Fe View Post

      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.
      It feels as though the owner of the basement bedsit has got a moral argument over paying a smaller proportion, even if they might not have a legal case.

      Comment


        #18
        Originally posted by Santa Fe View Post
        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.
        Whether the complaining owner goes to a tribunal or a court, I think that on any assessment a basement bedsit paying the same as a two bedroom flat is not "fair and reasonable". You do not really want to be getting into tribunals or the like. I suggest you propose that the two bedroom flats pay 30%, the one bedroom 25% and the bedsit 15%. That way the two large flats get a small increase and the bedsit a good reduction, while there is no change for the one bedroom flat. Ideally the change should be formalised to fix the percentages for the future and avoid further argument, but you need something in writing.

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          #19
          It's a nonsense, been hearing this for years from ground floor residents who don't want to pay for lift, top floor people not wanting to pay for rising damp treatment and non drivers not wanting to pay for car park etc etc etc
          Never yet had one get it changed by a court.
          A small basement flat may be crammed with more people than the little old lady in the 2 bed and they're all running up and down the stairs wearing out the carpet and filling the bins
          Life ain't fair I'm afraid

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            #20
            Originally posted by Section20z View Post
            It's a nonsense, been hearing this for years from ground floor residents who don't want to pay for lift, top floor people not wanting to pay for rising damp treatment and non drivers not wanting to pay for car park etc etc etc
            Never yet had one get it changed by a court.
            A small basement flat may be crammed with more people than the little old lady in the 2 bed and they're all running up and down the stairs wearing out the carpet and filling the bins
            Life ain't fair I'm afraid
            You missed the one about those on the lower grounds not wishing to contribute towards the cost of maintaining the roof,

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              #21
              I think that we have found 3 possible alternatives already and no doubt we could find more, As Section20z says it is very rare for a court or a tribunal to intervene, The lease appears to allow the freeholder (?) to decide what is fair and reasonable and it has decided that an equal share is reasonable, That appears to have been the intention when the lease for the largest apartment was drawn up stating that the contribution was set at 25%. Splitting costs equally has been accepted as "fair and reasonable" in the past and that should not be ignored.

              Comment


                #22
                Originally posted by eagle2 View Post

                You missed the one about those on the lower grounds not wishing to contribute towards the cost of maintaining the roof,
                Quite, there is also the question here of who the actual freeholder is and whether the whole thing is any concern of the OP who only ever need pay 25% !!

                Comment


                  #23
                  Originally posted by Section20z View Post
                  Life ain't fair I'm afraid
                  Agreed, but the issue here is that the lease that the person complaining has doesn't say that they are required to pay 25%, it apparently says that they have to pay "a fair and reasonable proportion".

                  With this being the case, they are fully entitled to challenge an equal split where all four leaseholders pay 25% regardless of all other variables - and they may have a reasonable chance of winning in a court or tribunal if they challenge service charge costs that are demanded.
                  If the leases all specified that costs were to be shared equally between all four flats, or all leases stated a 25% percentage, there would be no argument and they would have to accept that life isn't fair.



                  Originally posted by eagle2 View Post
                  As Section20z says it is very rare for a court or a tribunal to intervene...
                  That depends on what is argued.
                  Tribunals can, and do, make rulings where they determine that the the way that a freehold has decided is a 'fair and reasonable' split is not fair, and can reduce a leaseholder's service charges accordingly.
                  I would agree that courts/tribunals will typically side with the freeholder on this, but it will depend on the individual circumstances and how well both sides argue their position.



                  Originally posted by Section20z View Post

                  Quite, there is also the question here of who the actual freeholder is and whether the whole thing is any concern of the OP who only ever need pay 25% !!
                  Again I agree - but only in part.

                  Who the freeholder is will definitely be relevant.
                  If the OP is the freeholder, or if the freeholder owned the OP's flat at the time that the lease that specifies 25% (despite being one of the largest flats) was granted, this might make the 25% split look less reasonable.

                  Regardless, if a court/tribunal does determine that a 25% share of service charges isn't reasonable for the basement flat, I would suspect that they would be unlikely to rule that the OP's flat should pay more than 25% (although it is possible). More likely the freeholder would have to pay any difference (their fault for not ensuring that all leases contained the same arrangements regarding service charge contributions).

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                    #24
                    Macromia,

                    Any examples please of tribunal increasing a percentage specified in a lease ? Thank you.

                    Comment


                      #25
                      Originally posted by Section20z View Post
                      Any examples please of tribunal increasing a percentage specified in a lease ?
                      If there are any I would like to see them as the legislation seems only to allow a change if the contributions do not add up to 100% or there has been some significant change which justifies an adjustment. Otherwise, everyone is fixed with the proportion specified in their lease. I think that that is right because when you buy a lease you know what the contribution will be.

                      As mentioned above, there is always going to be someone who thinks he is paying more than he should. No method is going to please everyone. Some method is needed which produces certainty otherwise there will be endless disputes. This web page sets out the main methods.

                      Providing for the contribution to be "fair and reasonable" does not produce certainty. I am at a loss to see why anyone thought that was a good idea. No conveyancer should have allowed a client to buy a lease with such a provision, at least not without dire warnings. In 30 years of conveyancing I never saw such a provision.

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                        #26
                        In my experience it is quite normal for a lease to state that the freeholder or management company may allocate charges in a fair and reasonable manner. I agree that it does not produce certainty and it makes it extremely difficult for a Tribunal to decide which method should be used when there are different options and that is probably why they tend to duck the question.

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                          #27
                          Originally posted by eagle2 View Post
                          I think that we have found 3 possible alternatives already and no doubt we could find more, As Section20z says it is very rare for a court or a tribunal to intervene, The lease appears to allow the freeholder (?) to decide what is fair and reasonable and it has decided that an equal share is reasonable, That appears to have been the intention when the lease for the largest apartment was drawn up stating that the contribution was set at 25%. Splitting costs equally has been accepted as "fair and reasonable" in the past and that should not be ignored.
                          All four flats share the freehold.

                          Comment


                            #28
                            Originally posted by Section20z View Post

                            Quite, there is also the question here of who the actual freeholder is and whether the whole thing is any concern of the OP who only ever need pay 25% !!
                            All four owners share the freehold.

                            Comment


                              #29
                              Originally posted by Section20z View Post
                              Macromia,

                              Any examples please of tribunal increasing a percentage specified in a lease ? Thank you.
                              I'd be interested to know this too.

                              Comment


                                #30
                                Originally posted by eagle2 View Post
                                In my experience it is quite normal for a lease to state that the freeholder or management company may allocate charges in a fair and reasonable manner. I agree that it does not produce certainty and it makes it extremely difficult for a Tribunal to decide which method should be used when there are different options and that is probably why they tend to duck the question.
                                I share this experience and I have always interpreted it to mean divide total service charge by number of flats.
                                In 30 years I've never had a tribunal tell me that's not fair and reasonable.

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