The First-Tier Property Tribunal is seeing an increasing number of tenants challenging the reasonableness of their service charges. To avoid a dispute and to avoid losing in the First-Tier Tribunal you need to make sure your services charges fits the courts definition of reasonable, and that you can prove they are reasonable.
What is reasonable?
There are a number of factors the court looks to when deciding if a service charge was reasonable. These include:
- Size of the property
- Maintenance history
- Frequency with which work is carried out
- If the work charged for is for the benefit of the leaseholders collectively
- Standard of the work
The landlord really needs to be able to show that repairs are being carried out, those repairs are necessary and they are for the benefit of all leaseholders. If a high level of upkeep is not required, the maintenance charges can be reduced.
Proving your charges are reasonable
Once a case has been taken to the First-Tier Tribunal, it is for the landlord to prove that the charges are reasonable. Here are some tips to help you prove the charges are reasonable:
- Allow feedback from your leaseholders
- Get quotes from several suppliers
- Clearly specify everything you are charging for
- Be ready to explain how you select suppliers and why you chose that particular supplier
- Ensure your leaseholders understand your level of service, and stick to it
- Carry out checks on your service providers
- Keep a full record
