Assured Shorthold Tenancies and service charges

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  • Assured Shorthold Tenancies and service charges

    Thanks, in anticipation, and please be kind: this is my first posting on this forum!

    Does anyone have a suitable clause which could be inserted into a shorthold tenancy agreement for a purpose built flat, which would enable the landlord to recover any increase in the annual service charge (currently payable quarterly) without otherwise increasing the rent?

    As the leaseholder, I know and accept the reasons for a hike of over £500 pa in the service charge this year but wondered if a future tenancy agreement might have a clause added to incorporate the recovery of a significant increase in charges which directly relate to the property and common parts.

    Up till now, I have not increased the rent because I have a good tenant whom I would not wish to lose. So for the past three years I have absorbed any increase in the service charge and don't regret having quietly done so.

    However, market rents have collapsed in the area so the tenant and I have negotiated what we both consider to be an equitable rent. This has been agreed before the annual service charge was increased, but service charge increase would not and could not have impacted on what seems to be a fair rent.

    OTOH I can't now afford to be as generous as I was, hence my query about the best way for the landlord to be entitled to pass this aspect of direct overheads on to the tenant.

    If you think I'm being unreasonable, please let me know. Another landlord - albeit a notoriously bad one - already does this with other flats in the block, but I don't know exactly how he does it (I understand that his tenants pay rent and service charge separately: the rent remains unchanged, but his tenants know that the service charge can and does increase).

    Finally, apologies if there already is a thread on this topic and, if so, please direct me to it.

  • #2
    Originally posted by WickedLandlord View Post
    Thanks, in anticipation, and please be kind: this is my first posting on this forum!

    Does anyone have a suitable clause which could be inserted into a shorthold tenancy agreement for a purpose built flat, which would enable the landlord to recover any increase in the annual service charge (currently payable quarterly) without otherwise increasing the rent? Unfortunately you're not allowed to do this.

    As the leaseholder, I know and accept the reasons for a hike of over £500 pa in the service charge this year but wondered if a future tenancy agreement might have a clause added to incorporate the recovery of a significant increase in charges which directly relate to the property and common parts. No again.

    Up till now, I have not increased the rent because I have a good tenant whom I would not wish to lose. So for the past three years I have absorbed any increase in the service charge and don't regret having quietly done so.

    However, market rents have collapsed in the area so the tenant and I have negotiated what we both consider to be an equitable rent. This has been agreed before the annual service charge was increased, but service charge increase would not and could not have impacted on what seems to be a fair rent.

    OTOH I can't now afford to be as generous as I was, hence my query about the best way for the landlord to be entitled to pass this aspect of direct overheads on to the tenant.

    If you think I'm being unreasonable, please let me know. Another landlord - albeit a notoriously bad one - already does this with other flats in the block, but I don't know exactly how he does it (I understand that his tenants pay rent and service charge separately: the rent remains unchanged, but his tenants know that the service charge can and does increase).

    Finally, apologies if there already is a thread on this topic and, if so, please direct me to it.
    You can only normally increase rent every 53rd week minimum using a S.13 Notice on form 4B when a tenancy becomes periodic, otherwise you need to draft a new agreement.
    The advice I give should not be construed as a definitive answer, and is without prejudice or liability. You are advised to consult a specialist solicitor or other person of equal legal standing.

    Comment


    • #3
      Originally posted by Paul_f View Post
      You can only normally increase rent every 53rd week minimum using a S.13 Notice on form 4B when a tenancy becomes periodic, otherwise you need to draft a new agreement.
      No, L can increase rent whenever desired BUT only in accordance with an explicit rent increase mechanism stated in the Letting Agreement.
      Section 13 is available:
      a. if there is no such mechanism; and
      b. the tenancy is periodic.
      JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
      1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
      2. Telephone advice: see http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
      3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
      4. *- Contact info: click on my name (blue-highlight link).

      Comment


      • #4
        Thank you - I suppose I should have guessed that if said dubious but very experienced landlord was doing this (and seems to be the only one I know of, and who has been doing it for years), that it would be outside the rules.

        That said, I will bear in mind your follow up advice regarding form 4B and S.13 Notices and look into this well in advance of either the renewal of the Agreement, or when starting a new tenancy agreement with another tenant.

        Comment


        • #5
          Yes I should have said all that but because it was mainly about service charges, I didn't.
          The advice I give should not be construed as a definitive answer, and is without prejudice or liability. You are advised to consult a specialist solicitor or other person of equal legal standing.

          Comment


          • #6
            OK, slate wiped clean here.

            Where might I locate Section 13 explicit clause that might be used to invoke the right to recover a significant increase in service charges?

            The new Agreement is not periodic, so it won't be affected this year's service charge increase and that's fair enough. But when I've just dropped the annual rent by four times the scheduled increase, you'll understand that both I and my bank account look rather sad.

            Comment


            • #7
              Originally posted by WickedLandlord View Post
              Where might I locate Section 13 explicit clause that might be used to invoke the right to recover a significant increase in service charges?
              Eh? Procedures re (i) an explicit rent-increase clause and (ii) s.13 are mutually exclusive! Try an LZ search for s.13, if that's what you need.
              JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
              1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
              2. Telephone advice: see http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
              3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
              4. *- Contact info: click on my name (blue-highlight link).

              Comment


              • #8
                You'll have realised that it's not just in this forum that I'm a noob.

                I'll look into S.13 (thanks for the tip) and also check the Agreement that's about to go for signature, although I do know that there is no mention of anything other than the agreed monthly rent, the due date for payment and the deposit - apart from tenant and landlord obligations, break clause, forfeiture etc: certainly no mention of review dates, rent-increase clauses or S.13.

                Not a problem, I have been addressing a specific point and the replies I've received do not refer to anything that is in either the existing, or the proposed, lease so I need to look into it all.

                Thanks for your input, and patience.

                Comment


                • #9
                  Hi

                  It seems to me that you have two choices:

                  a) include a rent increase clause in your tenancy agreement allowing you to increase the rent in line with changes in your service charges.
                  b) have variable service charges which are not defined as rent in your agreement (and so not constrained by the rent increase provisions in your agreement or by section 13). The purpose of such charges must be clearly defined; their level is challengeable by the tenant by application to a leasehold valuation tribunal on the grounds (amongst others) of reasonableness; and, as they are not rent, failure to pay them is only a breach of contract rather than a rent arrear (and so may restrict, slightly, your mechanisms for achieving possession should arrears arise).

                  Both options have disadvantages and must be very carefully drafted.


                  Preston

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