First-tier Tribunal Reduces Unreasonable Service Charges for Leaseholders

OUTCOME: Allowed

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FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY) Case Reference : LON/OOAF/LSC/2024/0160 Property : 192 and 192[ADDRESS] [POSTCODE] Applicants : [redacted] Representative : In person Respondent : [redacted] : [NAME_2] of Counsel Type of Application :

For a service charge determination pursuant to Section 27A of the Landlord and Tenant Act 1985

Tribunal Members :

Judge P [NAME_3]

Date of hearing : 19 June 2025 Date of decision : 30 June 2025

DECISION

Description of hearing

The hearing was a face-to-face hearing.

2 Decisions of the tribunal

(1) The following service charge items are not payable at all:

• Key cutting 2023/24. • Alleged outstanding balance of £2,009.48 from prior to 2023/24 in respect of Flat 1 ([ADDRESS]). • Alleged outstanding balance of £2,007.01 from prior to 2023/24 in respect of Flat 2 ([ADDRESS]). • Alleged outstanding balance of £554.29 from prior to 2023/24 in respect of Flat 3 ([ADDRESS]). • Gutter cleaning 2024/25. • Drain services 2024/25. • Fire, health and safety risk assessment 2024/25. • Electric cupboard charge 2024/25. • Fire, health and safety testing, services and repairs 2024/25. • Pumps charge 2024/25.

(2) In respect of the following service charge items, only the reduced amounts set out below are payable:

• Fire, health and safety risk assessment 2023/24 – only £200.00 payable. • Preventative Maintenance Schedule and Survey for insurance purposes 2023/24 – only an aggregate of £1,800.00 payable (£1,500 + VAT). • Common parts electricity 2023/24 – only £471.48 payable. • Fire, health and safety repairs 2023/24 – only £144.00 payable. • Management fee 2023/24 – only £850.00 payable. • Building insurance premium 2023/24 – only £1,179.83 payable. • Secure loose wires and down pipe 2023/24 – only £78.00 payable (£65.00 + VAT). • Common parts electricity 2024/25 – only £350.00 payable. • Building insurance premium 2024/25 – only £1,224.49 payable. • Accounting fee 2024/25 – only £225.00 payable. • Management fee 2024/25 – only £425.00 payable.

(3) The Applicants’ challenge to the value added tax (“VAT”) element of various charges in 2023/24 and 2024/25 is dismissed.

(4) The accounting fee for 2023/24 (in the sum of £420.00) and the repair fund contribution for 2024/25 (in the sum of £2,000.00) are both payable in full, although in relation to the repair fund contribution the observation contained in paragraph 48 below should be noted.

(5) Pursuant to section 20C of the Landlord and Tenant Act 1985 (“the 1985 Act”), the tribunal orders that all of the costs incurred by the Respondent in connection with these proceedings are not to be

3 regarded as relevant costs to be taken into account in determining the amount of any service charge payable by the Applicants.

(6) Pursuant to paragraph 5A of Schedule 11 to the Commonhold and Leasehold Reform Act 2002 (“CLARA”), the tribunal makes an order extinguishing the Applicants’ liability to pay all of the costs incurred by the Respondent in connection with these proceedings.

(7) Pursuant to paragraph 13(2) of the Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013 (“the Tribunal Rules”), the tribunal orders the Respondent to reimburse to the Applicants their application fee of £100.00 and the hearing fee of £200.00.

Introduction 1. The Applicants seek a service charge determination pursuant to section 27A of the 1985 Act. The application concerns various service charge items for the years 2023/24 and 2024/25 in relation to the Property as well as alleged arrears from before the Respondent acquired the freehold interest in the Property. 2. [ADDRESS] comprises three residential flats (known as Flat 1, Flat 2 and Flat 3 respectively) and [ADDRESS] is a separate flat.

3. The leaseholders acquired the right to manage the Property on 7 October 2024.

4. The Applicants have submitted a written statement of case, whereas the Respondent has not done so. The Respondent was represented at the hearing by [NAME_2] of Counsel, but he had no instructions on any of the issues in dispute and was unable to enlighten the tribunal as to why the Respondent had not made any written submissions. Nobody from [COMPANY_1] or from its managing agents [COMPANY_1] attended the hearing.

5. The Applicants said at the hearing, having already stated this in written submissions, that they and the Respondent had agreed to mediation and that a date for that mediation had been set but that – without warning or explanation – the Respondent had simply not attended the mediation. Applicants’ case 6. The Applicants’ case is contained partly in the application itself but it is expanded upon in the ‘Scott’ Schedule that they have prepared and is supplemented by various other items in the hearing bundle including alternative quotes, copy accounts, copy correspondence, copies of leases and other miscellaneous items. To avoid duplication, we will

4 leave any comments on the material provided by the Applicants to be addressed in the section of this determination headed “Discussion of disputed costs at hearing and tribunal’s analysis”. Respondent’s case 7. As noted above, the Respondent has not submitted a statement of case. Discussion of disputed costs at hearing and tribunal’s analysis Fire, health and safety risk assessment 2023/24 8. The Applicants’ position is that the extent of the common parts of the Property is very limited, as shown on the photographs in the hearing bundle, and that the charge is disproportionate. In addition, they do not believe that the work was carried out at all, hence their statement that they are not willing to pay anything, although the tribunal pointed out at the hearing that this does not form part of their written case.

9. The Applicants also argued at the hearing that this item is not covered by their leases but [NAME_2] for the Respondent disagreed on this point. Paragraph 1 of Part 2 of Schedule 7 to the leases defines the “Service Costs” as including (in paragraph 1(a)(iv)) “[all of the costs reasonably and properly incurred of] … complying with all laws relating to the Retained Parts” and the carrying out of a fire, health and safety risk assessment (at appropriate intervals) is a legal requirement. We therefore agree with [NAME_2] on this point.

10. After some discussion, having noted the tribunal’s provisional view on whether this item is covered by the leases, the Applicants proposed a figure of £200.00. [NAME_2] for the Respondent did not object but said that he did not have instructions that would enable him to accept the £200.00 offered by the Applicants.

11. We note the evidence provided by the Applicants which has not been countered by the Respondent. We agree that the common parts of the Property appear to be very small and that £420.60 would appear to be a high charge for the work done (if indeed it was done). In the absence of any alternative figure and on the additional basis that £200.00 seems a reasonable amount in the circumstances we determine that only £200.00 is payable. Preventative Maintenance Schedule and Survey for insurance purposes 2023/24 12. The aggregate charge for these items is £3,600.00. The Applicants state that they consider the charge to be too high, and they have

5 referred the tribunal to their alternative quote of £1,500 + VAT. They also feel that it was premature to carry out an insurance survey as the Property was only redeveloped in 2019 and they also submit that neither of these items is covered by their leases, but at the hearing [NAME_2] for the Respondent disagreed on this point.

13. We do not accept the Applicants’ submission that these items are not covered by the leases. In relation to the preventative maintenance schedule, the service charge contains standard provisions covering the recovery of the cost of repair and maintenance of the Property, and in our view preparing a preventative maintenance schedule (at appropriate intervals) is a proper part of the process of carrying out repairs and maintenance in a prudent and professional manner. Also, the leases allow the landlord to charge for “any other service … that the Landlord may in its reasonable discretion … provide for the benefit of tenants and occupiers …”. In our view this is wide enough to cover this head of charge.

14. In relation to the insurance survey, the tenant under each of the leases covenants to pay the “Insurance Rent” which is defined as including (in addition to the insurance premium itself) “any fees and other expenses that the Landlord reasonably incurs, in effecting and maintaining insurance of the Building in accordance with its obligations in paragraph 2 of Schedule 6 including any professional fees for carrying out any insurance valuation of the Reinstatement Cost”. In our view this is wide enough to cover this head of charge.

15. Therefore, we are satisfied that a reasonable sum in respect of both of these heads of charge is recoverable under the leases.

16. As for the reasonableness of the cost itself, we note the alternative quotation for £1,500 + VAT which has not been challenged by the Respondent, and in the absence of any better evidence we determine that the aggregate of these charges should be reduced to £1,500 + VAT (i.e. £1,800.00). Common parts electricity 2023/24 17. The Applicants state that the Respondent incurred late payment charges and they do not think that these should be passed on to leaseholders. At the hearing the Applicants were only able to provide one example of a penalty charge in the hearing bundle (for £10.00), and after some discussion they said that they would be prepared to agree to all but £10.00 of this charge.

18. In the absence of any explanation from the Respondent as to why the £10.00 penalty charge should be passed on to leaseholders we agree

6 with the Applicants that it should not be, and accordingly the charge is reduced from £481.48 to £471.48. Fire, health and safety repairs 2023/24 19. On the basis of the information provided by the Applicants, the charge of £432.00 comprises £144.00 for putting up a poster and some fire safety stickers and £288.00 for monthly servicing. In relation to the sum of £144.00, the Applicants argue that this is too high a charge just for putting up a poster and some fire safety stickers. In relation to the sum of £288.00, the Applicants state that no monthly servicing has been carried out.

20. We do not accept the Applicants’ position in relation to the charge of £144.00. Even something as simple as putting up a poster and some fire safety stickers involves labour in addition to the materials and is likely to have involved some travel time, and the sum of £144.00 does not seem unreasonable. In relation to the charge of £288.00, the Applicants state that the service was not provided and the Respondent has not countered this, and therefore on the evidence before us we consider that the charge is not payable. Therefore, the aggregate charge is reduced from £432.00 to £144.00. Key cutting 2023/24 21. The Applicants have referred the tribunal to correspondence in the hearing bundle in which the Respondent stated that leaseholders would not be charged for the key cutting in question. There is also no evidence before us to indicate that the circumstances were such that the Applicants should have been charged for the key cutting.

Accordingly, this sum is not payable at all. Accounting fee 2023/24 22. The Applicants said at the hearing that the accounts contained many errors, although when asked to identify these errors they were only able to offer a couple of examples. The Applicants also said that the Respondent had failed to provide information about the sinking fund, had not explained why certain costs were divided three ways rather than four ways and had also attempted to charge leaseholders in respect of the period after the leaseholders had acquired the right to manage.

23. As noted at the hearing, accounting mistakes sometimes occur, and in our view if those mistakes are few in number and/or are not major errors then the existence of such errors do not by themselves demonstrate that the accounting has been sub-standard such that a reduction in the fee is warranted. As for the other points raised by the

7 Applicants, in our view these are management failings rather than accounting failings (to the extent that the points are valid ones).

24. Therefore, in the absence of any other basis for the challenge, this charge is payable in full. Management fee 2023/24 25. The Applicants have expressed a number of different concerns about the quality of management. These include the erroneous charge for key cutting, accounting errors, incurring a penalty charge for late payment of the electricity bill, failure to notify leaseholders when sending people (such as contractors) over to the Property, selective and unhelpful responses to legitimate queries and frequent use of a threatening tone when responding to concerns or requests for information. The Applicants referred the tribunal to examples of email correspondence from the Respondent’s staff. [NAME_2] for the Respondent said that, whatever the Applicants’ concerns on the above points, it was clear that various services had been provided.

26. We accept that the Applicants have identified various management failings and that the Respondent has not offered any rebuttal within these proceedings. However, the tone in the correspondence to which we were referred and which related to the provision of information, whilst not especially polite, is consistent with the belief (if genuinely held) that the information had already been supplied. In addition, we note that the Respondent kept the Property insured and carried out various other management services, albeit imperfectly at times as per the Applicants’ observations.

27. Taking the management performance as a whole, we consider that it would be appropriate to reduce the fee significantly whilst keeping it at a level which recognises the work that has been done, and accordingly the fee is reduced from £1,200.00 to £850.00. Building insurance premium 2023/24 28. The Applicants were previously paying £1,084.00 and felt that the increase to £1,526.40 was excessive. They have proposed a figure of £1,084.00 plus one year’s inflation based on the Consumer Price Index (“CPI”).

29. The Respondent has not challenged the Applicants’ alternative figure and [NAME_2] conceded at the hearing that their figure was not manifestly unreasonable. The Applicants’ proposed figure is therefore effectively uncontested and is not obviously unreasonable, and therefore the premium is reduced from £1,526.40 to £1,084.00 + CPI. In the absence of any better information and as the service charge year

8 apparently runs from April to March we will use the change in the CPI between April 2022 and March 2023. In April 2022 to CPI figure was 116.5 and in March 2023 it was 126.8, an increase of 8.84%. Therefore, the premium should be £1,084.00 x 108.84% = £1,179.83. VAT 2023/24 30. The leases define the “Service Costs” (which form the basis of the service charges) as including “any VAT payable by the Landlord in respect of any of the items mentioned above [i.e. the various listed service charge items] except to the extent that the Landlord is able to recover such VAT”. The Applicants argue that the Respondent was able to recover the VAT on services provided to it, but they do not have any proof of this point; merely a working assumption that this is the case.

31. In any event, clause 17 of the leases reads as follows: “Any obligation to pay money refers to a sum exclusive of VAT and the amount of any VAT payable in addition (whether by the Landlord or by the Tenant) shall be paid by the Tenant to the Landlord”. It would seem therefore that the relevant tenant/leaseholder covenants to pay all VAT, and therefore in our view any VAT on the service charge is payable by the relevant tenant/leaseholder. Therefore, the Applicants’ challenge to the VAT element of the various service charges is rejected. Secure loose wires and down pipe 32. The Applicants argue that the charge of £300.00 for securing loose wires and the down pipe was disproportionate, and they have obtained an alternative quotation of £65.00 + VAT which is in the hearing bundle. They also express the view that the work was not done at all, but this point does not form part of their statement of case.

33. The Applicants’ alternative quotation has not been challenged by the Respondent.

34. We do not accept the Applicants’ submission that the work was not done at all as this submission has not been put to the Respondent and therefore the Respondent has not had an opportunity to counter it. However, we do accept the Applicants’ alternative quotation as it has been provided to the Respondent and has not been challenged.

35.

Accordingly, the charge is reduced from £300.00 to £65.00 + VAT (total £78.00).

9 Flat 1, Flat 2 and Flat 3 outstanding balances allegedly owed from before 2023/24 36. The leaseholders of Flat 1, Flat 2 and Flat 3 state that they received from the Respondent a demand for an alleged balance of service charges payable to the previous landlord. However, when they queried the payability of the alleged balance they did not receive a satisfactory response from the Respondent. There is also no end of year service charge certificate and no breakdown has been provided.

37. The Respondent has made no attempt in the course of these proceedings or seemingly otherwise to justify or even explain these charges and in the circumstances none of these charges is payable. Gutter cleaning 2024/25 38. The Applicants’ evidence is that this did not take place, that they would have noticed if it had taken place because many of them work from home and that the relevant Applicant would need to be notified in order for the contractor to gain access.

39. The Respondent has not countered the Applicants’ evidence and therefore based on the evidence before us we are satisfied that the service was not provided and therefore that this charge is not payable at all. Drain services 2024/25 40. The Applicants’ evidence is that this did not take place, that they would have noticed if it had taken place because many of them work from home and that the relevant drain is not accessible without the permission of the relevant Applicant.

41. The Respondent has not countered the Applicants’ evidence and therefore based on the evidence before us we are satisfied that the service was not provided and therefore that this charge is not payable at all. Fire, health and safety risk assessment 2024/25 42. The Applicants state that the Respondent has charged them for a fire, health and safety risk assessment for two consecutive years (2023/24 and 2024/25) and the Applicants dispute that this is an annual requirement.

43. The Respondent has not countered the Applicants’ arguments, and we agree that in the absence of any specific compelling justification a

10 landlord should not be carrying out such an assessment in consecutive years. In our view it also leads to concerns as to what the Respondent’s motivation was for arranging assessments in two consecutive years, assuming that those assessments both took place. In any event, as it is not reasonable to carry out assessments in consecutive years it is not reasonable to charge leaseholders for the second assessment, and accordingly this charge is not payable at all. Common parts electricity 2024/25 44. The Applicants state that the service charge year started at the beginning of April 2024 and that the [COMPANY_4] acquired the right to manage the Property at the beginning of October 2024, therefore they should only be charged for those first 6 months of the service charge year (i.e. for half of the year). They should therefore only pay 50% of the total charge of £700.00.

45. The Respondent has offered no challenge to this analysis and in the absence of any competing arguments we agree with it. The figure of £700.00 is considerably higher than the figure for 2023/24 and so there is also no reason to think that it just relates to the first 6 months. The period between the beginning of the service charge year and the date on which the right to manage was acquired is not exactly 6 months, but the Applicants and [NAME_2] for the Respondent confirmed that it was close enough that they were content for the tribunal to treat this period as being 6 months for this and any other relevant apportionment purposes.

46. According, to reflect the fact that the service was only provided for 50% of the year, the charge is reduced from £700.00 to £350.00. Repair fund 2024/25 47. Leaseholders had been asked to contribute £2,000.00 between them to what the Respondent had described as a ‘repair fund’. When one of the Applicants asked the Respondent how this differed from a ‘reserve fund’ he was told by [NAME_5] that “a reserve fund accumulates from year to year, whilst this is refunded at the end of any accounting year if not spent”. The Applicants state that the money was not spent and therefore that it should have been (and should still be) returned to leaseholders.

48. We note that the Applicants’ challenge is not to the payability of the contribution to the repair fund. Instead, they state that it should now be returned to them as it has not been spent. As this is not a challenge to payability it is not open to the tribunal to determine that it was not payable. In addition, the tribunal does not have the jurisdiction to order its repayment, and in any event it is not clear that this sum would

11 be repayable to individual leaseholders. It is arguable that – if the money has not been spent – it constitutes uncommitted service charges, in which case the Applicants may wish to take legal advice as to whether it is transferable to the [COMPANY_4]. However, on the basis of the evidence before us the repair fund contribution is payable in full and is not refundable to individual leaseholders. Electric cupboard charge 2024/25 49. The Applicants’ evidence is that this did not take place, and they have provided copy photographs which they say show that nothing has changed.

50. The Respondent has not countered the Applicants’ evidence and therefore based on the evidence before us we are satisfied that the service was not provided and therefore that this charge is not payable at all. Building insurance premium 2024/25 51. The Applicants were paying £1,084.00 in 2022/23 and feel that the increase to £1,526.40 in 2023/24 and then to £1,602.72 in 2024/25 is excessive. They propose a figure for 2024/25 of £1,084.00 plus two years’ inflation based on the CPI.

52. The Respondent has not challenged the Applicants’ alternative figure and [NAME_2] conceded at the hearing that their figure was not manifestly unreasonable. The Applicants’ proposed figure is therefore effectively uncontested and is not obviously unreasonable, and therefore the premium is reduced from £1,602.72 to £1,084.00 + two years’ CPI. In the absence of any better information and as the service charge year apparently runs from April to March we will use the change in the CPI between April 2022 and March 2024. In April 2022 the CPI figure was 116.5 and in March 2024 it was 131.6, an increase of 12.96%. Therefore, the premium should be £1,084.00 x 112.96% = £1,224.49. Fire, health and safety testing, services and repairs 2024/25 53. The Applicants’ evidence is that this did not take place.

54. The Respondent has not countered the Applicants’ evidence and therefore based on the evidence before us we are satisfied that the service was not provided and therefore that this charge is not payable at all.

12 Accounting fee 2024/25 55. Again, the Applicants state that the service charge year started at the beginning of April 2024 and that the [COMPANY_4] acquired the right to manage the Property at the beginning of October 2024 and so should only be charged for those first 6 months of the service charge year (i.e. for half of the year). They should therefore only pay 50% of the total charge of £450.00.

56. The Respondent has offered no challenge to this analysis and in the absence of any competing arguments we agree with it.

Accordingly, the charge is reduced from £450.00 to £225.00. Management fee 2024/25 57. For similar reasons as for 2023/24 the Applicants argue that the management service was poor and that the fee should be reduced substantially. They also argue – as with the accounting fee and the common parts electricity charges – that the service was only provided for half a year.

58. Based on the evidence provided by the Applicants, we agree that the management has been poor. Many but not all of the same arguments as were employed by the Applicants in respect of 2023/24 (see above) apply here, and in addition there is the Respondent’s unco-operative behaviour in relation to the handover to the [COMPANY_4]. The Respondent has not countered any of the Applicants’ arguments. However, for the same reasons as we have given in relation to 2023/24, we do not agree with the Applicants that the fee should be reduced quite so drastically to reflect poor management and therefore, subject to the point made below, we again consider that the fee should be reduced to £850.00.

59. However, the Applicants also argue that the service was only provided for half a year. In the absence of any arguments from the Respondent we agree with the Applicants’ analysis, and therefore the management fee is further reduced by 50% to £425.00. VAT 2024/25 60. For the same reasons as for 2023/24 the Applicants’ challenge to the VAT element of the various service charges is rejected.

13 Pumps charge 2024/25 61. The Applicants’ evidence is that this did not take place, and at the hearing they referred the tribunal to correspondence in the hearing bundle which indicated that the work had not been done.

62. The Respondent has not countered the Applicants’ evidence and therefore based on the evidence before us we are satisfied that the service was not provided and therefore that this charge is not payable at all. Costs 63. The Applicants have applied for (a) a cost order under section 20C of the 1985 Act (“Section 20C”), (b) a cost order under paragraph 5A of Schedule 11 to CLARA (“Paragraph 5A”) and (c) an order for the reimbursement of the application and hearing fees pursuant to paragraph 13(2) of the Tribunal Rules.

64. The relevant parts of Section 20C read as follows: (1) “A tenant may make an application for an order that all or any of the costs incurred, or to be incurred, by the landlord in connection with proceedings before … the First-tier Tribunal … are not to be regarded as relevant costs to be taken into account in determining the amount of any service charge payable by the tenant …”.

65. The relevant parts of Paragraph 5A read as follows: “A tenant of a dwelling in England may apply to the relevant … tribunal for an order reducing or extinguishing the tenant’s liability to pay a particular administration charge in respect of litigation costs”.

66. The Section 20C application is therefore an application for an order that the whole or part of the costs incurred by the landlord in connection with these proceedings cannot be added to the service charge. The Paragraph 5A application is an application for an order that the whole or part of the costs incurred by the landlord in connection with these proceedings cannot be charged direct to the Applicant as an administration charge under his lease.

67. The Applicants’ main application has been largely successful, and the Respondent’s only engagement with these proceedings (except in relation to an early procedural point) has been to send a barrister to the hearing but without giving him any instructions. In the circumstances it is appropriate to make a Section 20C Order that all of the costs incurred by the Respondent in connection with these proceedings are not to be regarded as relevant costs to be taken into account in determining the amount of any service charge payable by the Applicants. For the same reasons it is appropriate to make a Paragraph

14 5A Order extinguishing the Applicants’ liability to pay all of the costs incurred by the Respondent in connection with these proceedings.

Accordingly, we hereby make both of these Orders.

68. The relevant part of paragraph 13(2) of the Tribunal Rules reads as follows: “The Tribunal may make an order requiring a party to reimburse to any other party the whole or part of the amount of any fee paid by the other party which has not been remitted by the Lord Chancellor”. Again, the Applicants’ main application has been largely successful and the Respondent has hardly engaged with these proceedings, and therefore it is appropriate to make an order requiring the Respondent to reimburse to the Applicants the application fee and hearing fee (£300.00 in aggregate).

Accordingly, we hereby make this Order as well.

Name:

Judge P Korn

Date:

30 June 2025

RIGHTS OF APPEAL

A. If a party wishes to appeal this decision to the Upper Tribunal (Lands Chamber) a written application for permission must be made to the First-tier Tribunal at the regional office dealing with the case.

B. The application for permission to appeal must arrive at the regional office within 28 days after the Tribunal sends written reasons for the decision to the person making the application.

C. If the application is not made within the 28 day time limit, such application must include a request for extension of time and the reason for not complying with the 28 day time limit; the Tribunal will then look at such reason and decide whether to allow the application for permission to appeal to proceed despite not being within the time limit.

D. The application for permission to appeal must identify the decision of the Tribunal to which it relates (i.e. give the date, the property and the case number), state the grounds of appeal, and state the result the party making the application is seeking.

15 APPENDIX 1

List of Applicants

[NAME_6] and [NAME_6] (former leaseholders of [ADDRESS]) [NAME_8] (current leaseholders of [ADDRESS]) [NAME_9] (leaseholder of [ADDRESS]) [NAME_11] (leaseholder of [ADDRESS]) [NAME_9] (leaseholder of [ADDRESS])

16 APPENDIX 2

Appendix of relevant legislation

Landlord and Tenant Act 1985 (as amended) Section 18 (1) In the following provisions of this Act "service charge" means an amount payable by a tenant of a dwelling as part of or in addition to the rent - (a) which is payable, directly or indirectly, for services, repairs, maintenance, improvements or insurance or the landlord's costs of management, and (b) the whole or part of which varies or may vary according to the relevant costs. (2) The relevant costs are the costs or estimated costs incurred or to be incurred by or on behalf of the landlord, or a superior landlord, in connection with the matters for which the service charge is payable. (3) For this purpose - (a) "costs" includes overheads, and (b) costs are relevant costs in relation to a service charge whether they are incurred, or to be incurred, in the period for which the service charge is payable or in an earlier or later period. Section 19 (1) Relevant costs shall be taken into account in determining the amount of a service charge payable for a period - (a) only to the extent that they are reasonably incurred, and (b) where they are incurred on the provisions of services or the carrying out of works, only if the services or works are of a reasonable standard; and the amount payable shall be limited accordingly. (2) Where a service charge is payable before the relevant costs are incurred, no greater amount than is reasonable is so payable, and after the relevant costs have been incurred any necessary adjustment shall be made by repayment, reduction or subsequent charges or otherwise. Section 27A (1) An application may be made to the appropriate tribunal for a determination whether a service charge is payable and, if it is, as to - (a) the person by whom it is payable,

17 (b) the person to whom it is payable, (c) the amount which is payable, (d) the date at or by which it is payable, and (e) the manner in which it is payable. (2) Subsection (1) applies whether or not any payment has been made. (3) An application may also be made to the appropriate tribunal for a determination whether, if costs were incurred for services, repairs, maintenance, improvements, insurance or management of any specified description, a service charge would be payable for the costs and, if it would, as to - (a) the person by whom it would be payable, (b) the person to whom it would be payable, (c) the amount which would be payable, (d) the date at or by which it would be payable, and (e) the manner in which it would be payable. (4) No application under subsection (1) or (3) may be made in respect of a matter which - (a) has been agreed or admitted by the tenant, (b) has been, or is to be, referred to arbitration pursuant to a post-dispute arbitration agreement to which the tenant is a party, (c) has been the subject of determination by a court, or (d) has been the subject of determination by an arbitral tribunal pursuant to a post-dispute arbitration agreement. (5) But the tenant is not to be taken to have agreed or admitted any matter by reason only of having made any payment (6) An agreement by the tenant of a dwelling … is void in so far as it purports to provide for a determination – (a) in a particular manner, or (b) on particular evidence.