company's right to vary service charge

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    company's right to vary service charge


    I have had advice from a few posters, particularly Jeffrey over the pasy year and I am very grateful. I have just been appointed a director of the management company that owns the freehold of my property (a freehold house) to try and sort some of the issues out - easier to fight from within.

    I have been advised on this forum in the past that the only way to change a leaseholders % service charge is by either deed of variation or court order. Before I go to the first directors meeting I want to be sure of the facts.

    1. The original leases only add up to 98%. Over the last 20 years it seems 100% has been collected by some leaseholders paying more than there lease states - I don't have the background for how this was agreed. Those leaseholders have now revolted and so we all back to our lease % - so back in the situation where only 98% is collected.

    The directors response to this was to refer to the wording of the lease which states:

    "[the leaseholder is required] to pay the Company on demand x% or such other fair proportionate part to be determined by the Company"

    The company in question is owned by the leaseholders and the directors are all leaseholders. The directors decided this clause means they can change the lease % as they see fit and have added an additional 2% on to my neighbours charge to make up to 100%. Does the wording of the lease allow them to do this? They are threatening her (86 years old) with court action if she doesn't pay.

    2. I have been advised by this forum that I could go to the LVT to seek to vary my lease. Is it sufficient grounds to go to the LVT if the leases don't add up to 98% and I don't think my lease % is fair? If so, what happens if the LVT award in my favour and the leases then add up to even less than 98%?

    Just a little PS - I am not doing this just for my own benefit. The original lease % were based on rateable values which is a bit out of date now. Based on a simple calculation using floor area, 6 of the properties would see a reduction, four would remain the same and only four would increase.

    Originally posted by Helen C View Post
    "[the leaseholder is required] to pay the Company on demand x% or such other fair proportionate part to be determined by the Company"

    There has to be a doubt about whether the provision to increase the percentage is enforceable. The usual way to provide for this is for the question to be referred to a third party. Assuming the provision is enforceable, the important word there is "fair". Simply picking on one tenant (appearently vulnerable) and increasing her share does not on the face of it seem acceptable.

    I do not think that the proportions can be changed simply because they were apparently miscalulated. However, there is no doubt that they can be changed if they do not add up to 100%.


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