First-tier Tribunal Rules in favour of Tenants Challenging Service Charges

OUTCOME: Allowed

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FIRST-TIER TRIBUNAL [NAME] (RESIDENTIAL PROPERTY) Case reference : LON/00AK/LSC/2024/0758 Property : [ADDRESS], [POSTCODE] Applicant : [redacted] :

[COUNSEL] represented herself, [COUNSEL], [RESPONDENT] and [COUNSEL] Respondent : [redacted] : [COUNSEL] of application : For the determination of the liability to pay service charges under section 27A of the Landlord and Tenant Act 1985 Tribunal members : Judge N [NAME] Mr M Bailey MRICS Date and venue of hearing and reconvene : 9 June 2025 at 10 [ADDRESS] [POSTCODE] Date of decision : 17 June 2025

DECISION

2 Decisions of the Tribunal

(1) The Tribunal makes the determinations under the various headings below.

(2) The Tribunal makes an order under section 20C of the Landlord and Tenant Act 1985 that all of the costs (if any) incurred by the Respondent landlord 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.

(3) The Tribunal makes an order under paragraph 5A of Schedule 11 to the Commonhold and Leasehold Reform Act 2002 extinguishing the Applicants’ liability, if any, to pay an administration charge in respect of the Respondent’s costs (if any) of these proceedings.

(4) The Tribunal makes an order under Rule 13(2) of Tribunal Procedure (First-Tier Tribunal)([NAME]) Rules 2013 requiring the Respondent to reimburse the Tribunal fees in the sum of £330 paid by the First Applicant in respect of these proceedings. The application 1. The Applicants seek a determination under section 27A of the Landlord and Tenant Act 1985 (“the 1985 Act”) as to the payability of the service charges which have been demanded by managing agents acting on behalf of the Respondent in respect of the service charge years 2023 and 2024.

2. The Applicants hold long leases of flats at [ADDRESS], [POSTCODE] (“[NAME]”) and the Respondent is their landlord. The Tribunal has been informed that [NAME] is a purpose- built block containing seven flats, which was built in around 2019/20.

3. Directions were issued by the Tribunal on 27 January 2025 leading up to a final hearing.

4. No inspection was requested, and the Tribunal did not consider that one was necessary.

The hearing 5. The final hearing took place on 9 June 2025 at 10 [ADDRESS], [POSTCODE]. Katherine Mann attended the hearing in person and the Tribunal confirmed that it had received notice from [NAME] and [NAME] that Ms [COUNSEL] was representing them.

3 6. No representative of the Respondent was attended the hearing, and the Respondent had failed to comply with any of the Tribunal’s directions. The Tribunal asked the Case Officer to make enquires of [COUNSEL], the Respondent’s representative. Mr [COUNSEL] ultimately sent an email to the Case Officer stating that no adjournment of the hearing was sought by the Respondent and that the Tribunal was requested to make a decision on the evidence available.

7.

Accordingly, having considered rule 34 of the Tribunal Procedure (First- tier Tribunal) ([NAME]) Rules 2013 (“the 2013 Rules”), the Tribunal was satisfied that the Respondent had been notified of the hearing and that it was in the interest of justice to proceed with the hearing in the Respondent’s absence.

8. There was some discussion at the hearing concerning the status of any [NAME] of [NAME] who are not represented by Ms [NAME]. The Tribunal notes that [NAME[NAME] and [NAME[NAME] were named as Applicants in the Directions dated 27 January 2025.

Accordingly, they will be bound by this decision and will benefit from the reductions in the service charge set out below. Having considered Rule 24 of the 2013 Rules, the Tribunal is satisfied that they have been notified of the hearing and that it was in the interests of justice to proceed in their absence.

9. The final figures are now available for both of the service charge years in dispute and were included in the Scott Schedule.

Accordingly, at the commencement of the hearing, it was agreed that the Tribunal will make determinations in respect of the actual service charges rather than in respect of the estimated service charges. The Tribunal’s determinations 10. The disputed items are set out in the Scott Schedule as follows:

The Service Charge Year 2023 Cleaning Common Parts 11. Ms [NAME] confirmed that the actual charge, in the sum of £1,098, is not in dispute. This is lower than the budgeted amount. Garden/estate maintenance 12. The estimated charges for the year were £1,224. Ms [NAME] gave oral evidence that the likely cost per visit is £102 (this is based on an

4 anticipated monthly visit) and that there were only four visits in 2023.

Accordingly, Ms [NAME] submits that a reasonable cost for the year is £408.

13. Ms [NAME] explained that it is clear when a visit has taken place because the grass will have been cut and little, if any, other garden/estate maintenance work is carried out. She referred the Tribunal to a colour photograph to demonstrate this. Ms [NAME] also gave evidence that the [NAME] have formed a WhatsApp group and that there are [NAME] who work from home who will inform the group when work is carried out.

14. We found Ms [NAME] to be a measured, reliable, and credible witness and we have no hesitation in accepting the entirety of her evidence of fact on the balance of probabilities. The Respondent has not sought to dispute her submission that the likely cost per visit is £102, and we accept this submission.

Accordingly, we find that the sum of £408 is reasonable and payable under this heading. General repairs 15. The Respondent has sought to charge the [NAME] £1,789.68 under this heading. Ms [NAME] gave evidence, which the Tribunal accepts, that the then managing agents repeatedly instructed a company to repair the handle of the external door to [NAME]. However, this work was never carried out to a reasonable standard and the door handle remained in disrepair.

16. In the Scott Schedule, Ms [NAME] states that leaseholders are not willing to pay an additional £789.68 above the estimated service charge costs for general repairs. She explained that she has not received disclosure of invoices and so does not know what general repair works the Respondent claims to have carried out.

17. The Respondent has failed to provide the Tribunal with invoices showing that costs in the sum of £1,789.68 were incurred and showing what repairs were undertaken. As there are no invoices to justify any charges above the figure of £1,000 (which has been agreed) the Tribunal is not satisfied that any additional charges are reasonable and payable.

Accordingly, the amount recoverable by the Respondent under this heading is limited to the agreed sum of £1,000. Audio visual entry system 18. A charge in the sum of £250 was included under this heading in the 2023 service charge budget. However, the actual figure is zero, and Ms [NAME] confirmed that the figure of zero is agreed. Refuse bin hire

5 19. Ms [NAME] confirmed that the actual figure in the sum of £210.79 is agreed. This is lower than the budgeted amount. [NAME]

20. The sum claimed by the Respondent under this heading is £5,250. In the Scott Schedule, Ms [NAME] has challenged this amount on the grounds that no consultation under section 20 of the 1985 Act was carried out. The charge per flat is £750 and the Respondent has not sought to dispute Ms [RESPONDENT] assertion that these are qualifying works. The Respondent has also failed to file and serve evidence, in accordance with the Tribunal’s Directions, demonstrating that a statutory consultation was undertaken.

21. Section 20 of the 1985 Act provides for the limitation of service charges in the event that statutory consultation requirements are not met. The consultation requirements apply where the works are qualifying works and only £250 can be recovered from a tenant in respect of such works unless the consultation requirements have either been complied with or dispensed with.

22. As there is no evidence before the Tribunal that the statutory consultation requirements have been complied with or dispensed with, the sum recoverable by the Respondent under this heading is limited to £250 per flat.

The Service Charge Year 2024 Cleaning common parts 23. Ms [NAME] confirmed that the actual charge in the sum of £246 is agreed. This is less than the budgeted amount. Garden/estate maintenance 24. Ms [NAME] gave evidence, which the Tribunal accepts, that garden/estate maintenance work was only carried out on two occasions in 2024. We also accept her evidence, summarised above, that it is easy to ascertain whether or not garden/estate maintenance work has taken place.

25. The Tribunal accepts Ms [NAME] undisputed submission, which is based on the budget, it is likely that the cost per visit is £102. The Tribunal therefore finds that the sum of £204 is reasonable and payable under this heading.

6 General repairs 26. The sum charged by the Respondent under this heading is £1,244. In this service charge year, Ms [NAME] has challenged the full amount.

27. Ms [NAME] gave oral evidence that no repairs were carried out other than an unsuccessful attempt to fix a door handle, in respect of which nothing should be payable because the work was not carried out to a reasonable standard and was wholly unsuccessful.

28. The Respondent has failed to produce any invoices showing that the relevant costs were incurred and showing what, if any, work was carried out. We accept Ms [NAME] evidence and find that nothing is payable under this heading. [NAME] repairs 29. The sum charged by the Respondent under this heading is £809. Ms [RESPONDENT] case is that, so far as the [NAME] are aware, the pump was not repaired or maintained in 2024. She explains that the [NAME] are not willing to pay in the absence of evidence that work was carried out at a cost of £809.

30. The Respondent has not responded by producing an invoice in the sum of £809 and an explanation of what work was carried out and why it was considered to be necessary.

Accordingly, the Tribunal is not satisfied on the balance of probability that the sum of £809 was incurred and we find that nothing is payable under this heading.

Building insurance 31. Ms [NAME] challenges the cost of building insurance in the sum of £6,101. She submits that the increase from the previous year (when the cost of the building insurance was £3,893.03) is sufficiently high to raise an apparent or “prima facie” case that the cost of the insurance falls outside the reasonable range, as does the fact that the budgeted cost for 2025 then reduced to £4,950.

32. Ms [RESPONDENT] explained that the Respondent has failed to disclose copies of the insurance policy documents, making it impossible for her to obtain like for like alternative quotations. She submitted that a reasonable charge would be £4,500 but explained that she had simply had to choose a figure between £3,893.03 and £4,950, in the absence of the policy documents which would have enabled her to test the market.

33. We accept Ms [NAME] submission that the nature and extent of these fluctuations raises a prima facie case that the cost of building insurance

7 in the year 2024 falls outside the reasonable range. The Tribunal is aware that the cost of buildings insurance increased over the relevant period. Doing our best on the extremely limited evidence available and applying our general knowledge and experience as an expert Tribunal, we find that the sum payable under this heading is limited to £4,800. Guttering repairs 34. The sum charged under this heading is £1,380. Ms [NAME] gave oral evidence, which the Tribunal accepts, that no guttering repairs were carried out in 2024. Further, the Respondent has failed to produce any invoices demonstrating that the relevant service charge costs were incurred.

Accordingly, the Tribunal finds that nothing is payable under this heading. Window cleaning 35. The sum charged under this heading is £381. Ms [NAME] gave evidence that only four visits took place and that the window cleaning was not carried out to a satisfactory standard because no soap was used, only water. She stated that leaseholders are willing to pay £212.33 for this service.

36. The figure of £212.33 was based on an estimated cost of £53.33 per visit which Ms [NAME] had obtained by divided the budgeted figure of £640 by twelve. However, she also stated that there are around 26 or 27 windows to be cleaned. Given the amount of work involved, the Tribunal considers it more likely that the window cleaning was intended to take place every two months at a cost of £95.25 per visit. However, we also find that a 20% reduction should be applied to take account of the fact that the work was not carried out to a reasonable standard.

Accordingly, the Tribunal finds that the sum of £304.80 is payable under this heading. Managing agents’ fees

37. Whilst considerable complaint is made of the managing agents’ conduct, managing agents’ fees are not listed as an item in the Scott Schedule specifying the amount charged; the amount which the Applicants represented by Ms [NAME] are willing to pay; and the reasons for the proposed reduction. The Respondent has therefore not been sufficiently put on notice that they are in issue in these proceedings.

Accordingly, whilst there as some discussion concerning the managing agents’ fees at the hearing, we are not satisfied that this is a matter before the Tribunal. Orders concerning costs 38. Section 20C of the 1985 Act provides that a tenant may make an application for an order that all or any of the costs incurred, or to be

8 incurred, by the landlord in connection with proceedings before a residential property 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 or any other person or persons specified in the application.

39. Paragraph 5A of Schedule 11 to the 2002 Act provides that: (1) A tenant of a dwelling in England may apply to the relevant court or tribunal for an order reducing or extinguishing the tenant's liability to pay a particular administration charge in respect of litigation costs. (2) The relevant court or tribunal may make whatever order on the application it considers to be just and equitable.

40. The question for the Tribunal under both section 20C and paragraph 5A is what is “just and equitable”. These provisions provide the Tribunal with a wide discretion to exercise having regard to all the circumstances of the case.

41. Having considered all the circumstances, including the high degree of success of the Applicants and the Respondent’s failure to participate in these proceedings (whilst also failing to concede the Applicants’ case), the Tribunal is satisfied that it is just and equitable to make orders under section 20C of the 1985 Act and under Paragraph 5A of Schedule 11 to the 2002.

42. For the same reasons, the Tribunal makes an order under Rule 13(2) of the 2013 Rules requiring the Respondent to reimburse the Tribunal fees in the sum of £330 paid by the Applicant in respect of these proceedings.

43. It should be noted the Tribunal is not suggesting that any legal costs are likely to have been incurred by the Respondent in connection with these proceedings and that the Tribunal not considered the issue of whether any legal costs are potentially be recoverable under the Applicants’ leases.

Name: Judge N [NAME]: 17 June 2024

Rights of appeal By rule 36(2) of the Tribunal Procedure (First-tier Tribunal) ([NAME]) Rules 2013, the tribunal is required to notify the parties about any right of appeal they may have.

9 If a party wishes to appeal this decision to the Upper Tribunal (Lands Chamber), then a written application for permission must be made to the First- tier Tribunal at the regional office which has been dealing with the case. 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. If the application is not made within the 28-day time limit, such application must include a request for an extension of time and the reason for not complying with the 28-day time limit; the tribunal will then look at such reason(s) and decide whether to allow the application for permission to appeal to proceed, despite not being within the time limit. The application for permission to appeal must identify the decision of the tribunal to which it relates (i.e. give the date, [NAME] and the case number), state the grounds of appeal and state the result the party making the application is seeking. If the tribunal refuses to grant permission to appeal, a further application for permission may be made to the Upper Tribunal (Lands Chamber).