First-tier Tribunal Rules on Payability of Electricity Service Charges

OUTCOME: Allowed in Part

FIRST-TIER TRIBUNAL

[NAME] CHAMBER

([NAME])

Case reference : CAM/00KA/LSC/2025/0604

[NAME] : [ADDRESS], [POSTCODE]

Applicant: [redacted]

Respondent: [redacted]

Type of [NAME] : For the determination of the liability to pay service charges under section 27A of the Landlord and Tenant Act 1985 and administrative charges under Schedule 11 of the Commonhold and Leasehold Reform Act 2002

Tribunal member : Judge Bernadette MacQueen

Date of hearing : 28 August 2025

Date of decision : 24 September 2025

DECISION

Decisions of the Tribunal

(1) The Tribunal determines that the sum of £423.21 is not payable by the Respondent in respect of the electricity charges for the period 20 January 2022 to 30 June 2022.

(2) The Tribunal determines that the Respondent is liable to pay £139.02 for electricity charges for the period 1 July 2022 to 23 August 2022.

(3) The Tribunal determines that the legal fees are not payable by the Respondent.

(4) The Tribunal makes an order under section 20C of the Landlord and Tenant Act 1985 and paragraph 5A Schedule 11 Commonhold and Leasehold Reform Act 2002.

(5) The Tribunal makes the determinations as set out under the various headings in this Decision.

The [NAME]

1. The Applicant sought a determination pursuant to section 27A of the Landlord and Tenant Act 1985 (“the 1985 Act”) as to the whether £562.23 was payable by the Respondent in respect of the service charge for electricity charges for the period 20 January 2022 to 23 August 2022. The Applicant also sought to recover its legal fees.

2. The Respondent made an [NAME] under section 20C Landlord and Tenant Act 1985 that the landlord’s costs incurred in connection with these proceedings are not included in the amount of any service charge payable. Further, the Respondent made an [NAME] under paragraph 5A of Schedule 11 to the Commonhold and Leasehold Reform Act 2002 for an order which would reduce or extinguish the tenant’s liability to pay an administration charge in respect of litigation costs.

3. The Tribunal made directions dated 6 May 2025, as amended on 29 July 2025, that required each party to prepare their case. The Tribunal also directed that a bundle of documents be prepared by the Applicant for the hearing.

4. The Tribunal was provided with a bundle of documents that consisted of 215 pages which included both the Applicant’s and Respondent’s documentation (the Bundle).

The Hearing

5. The hearing was held via Cloud Video Platform (CVP). The Applicant was represented by [COUNSEL], counsel, at the hearing and the Respondent appeared in person.

6. Neither party requested an inspection and the Tribunal did not consider that one was necessary, nor would it have been proportionate to the issues in dispute.

The Background

7. [ADDRESS], [POSTCODE] ([NAME]) was a two-bedroom [NAME], which was part of a new build [NAME].

8. The Respondent entered into a lease with the Applicant on 20 January 2022 (the Lease). A copy of the Lease was within the Bundle at pages 175 to 215. The Lease required the landlord to provide services and the tenant to contribute towards their costs by way of a variable service charge. The specific provisions of the Lease will be referred to below, where appropriate.

9. It was not disputed that, because of delays to the construction of an electricity sub-station that would serve [NAME], the Applicant had arranged for a generator to be installed to supply electricity. Without this generator, electricity would not have been supplied to the [NAME], including [NAME]. The generator was used to provide electricity to the [NAME] and [NAME] from completion of the [NAME] until November 2022.

10. The Applicant sought the recovery of the cost of electricity that was supplied from a generator provided by the Applicant for the period 20 January 2022 to 23 August 2022, the total cost of which was £562.23. Further, the Applicant sought to recover the legal fees in connection with enforcing payment of the electricity charges. At page 107 of the Bundle, the Applicant confirmed that the Applicant held a fixed fee agreement with their legal representatives and therefore the legal fees incurred were £2,160.

11. The Respondent disputed liability to pay for the electricity charge for the period 20 January to 30 June 2022 and stated that any liability (if any) should be limited to 1 July 2022 to 23 August 2022. The Respondent’s position was that she did not live at [NAME] for the period 20 January to June 2022 and that she had an agreement with the Applicant not to pay for this period.

The Issues

12. At the start of the hearing the parties identified the relevant issues for determination as follows:

(i) The payability and the reasonableness of service charge of £562.23 in respect of electricity supplied to [NAME] for the period 20 January 2022 to 23 August 2022;

(ii) The payability and reasonableness of the Applicant’s legal fees;

(iii) Whether the Respondent should reimburse the Applicant for the [NAME] and hearing fee of £330 that the Applicant had paid to the Tribunal.

13. Having heard evidence and submissions from the parties and considered all of the documents provided, the Tribunal made determinations on the various issues as follows.

Electricity Supplied for Period 20 January 2022 to 23 August 2022

The Applicant’s Position

14. At page 93 of the Bundle, the Applicant set out the breakdown of the electricity charge for the Respondent for the period 20 January 2022 to 23 August 2022, and confirmed that the total amount due for this period was £562.33.

15. The Applicant submitted that the Respondent was contractually obligated to pay for electricity supplied to [NAME] by virtue of Clause 6.1 of Schedule 4 of the Lease. It was the Applicant’s position that by this clause the Respondent covenanted to pay all costs in connection with the supply of electricity to or from [NAME].

16. The Applicant stated that the electricity charges applied on a pro-rata basis as soon as the Respondent became the legal proprietor of [NAME], and the obligation to pay did not depend on whether or not the Applicant was living at [NAME].

17. The Applicant provided the relevant invoices at pages 109 to 151 of the Bundle. The Applicant confirmed that the demands for payment were properly made, and were accompanied by a summary of rights and obligations of the tenants as required by section 21B of the Landlord and Tenant Act 1985.

18. The Applicant did not accept that an agreement had been made between the parties to waive electricity charges for any period when the Respondent was not living at [NAME]. Further, the Applicant stated that the Respondent had not proved the existence of such an agreement.

19. In terms of reasonableness of the cost of electricity, the Applicant confirmed that they had capped the cost of the electricity at 21.5 pence per kilowatt-hour (kWh). They had then taken an average usage for a two-bedroom [NAME] and calculated an electricity charge for [NAME] of £950 per year (£79.16 per month). At pages 91 and 92 of the Bundle the Applicant produced a newsletter that confirmed how the amount had been arrived at. The Applicant confirmed that they had based their calculations on a recent report from “[NAME]” regarding utility usage in flats, specifically those with an electricity-only power source (such as [NAME]).

20. The Applicant further confirmed that they had not been able to source a fixed-term contract which had a price which was below the rate of 21.5 pence per kWh. Further, the Applicant confirmed that when the sub-station serving [NAME] was operational, the electricity provider ([NAME]) would be offering a fixed rate which was above the 21.5pence kWh. Within the newsletter, the Applicant explained that they had received several estimated quotes from leaseholders which appeared to show that a lower price than 21.5 pence per kWh was available; however, the Applicant submitted that as these quotes were for both electricity and gas they were not comparable. This was because the [NAME] did not have gas and the cost for electricity was significantly higher than gas.

21. It was therefore the Applicant’s position that the electricity charges were payable and reasonable.

The Respondent’s Position

22. The Respondent asserted that the electricity charges were not payable under the Lease. The Respondent stated that this was because the service charges related to the “Retained Part” which was defined in the Lease as all parts of the Building and Estate other than [NAME] and the Flats. It was the Respondent’s position that the tenant was responsible for arranging and paying the cost for the supply of utilities to and from [NAME]. The Respondent therefore stated that the Applicant could not recover the electricity that was generated to [NAME] as a service charge.

23. The Respondent submitted that even if the cost of the electricity was payable under the Lease, the charge was not reasonably incurred. The Respondent told the Tribunal that although she had signed the Lease on 20 January 2022, she did not move into [NAME] until July 2022 due to the repairs that were being carried out by the Applicant. The Respondent’s evidence was that she had handed the keys to [NAME] to [COMPANY] for the period 14 February 2022 to 7 June 2022 (page 99 of the Bundle) so that snagging issues could be rectified.

24. The Respondent’s evidence to the Tribunal was that she had not wished to complete in January 2022 as she had been aware that [NAME] was not ready; however, she had purchased [NAME] through the “help to buy” scheme, and her “help to buy” offer would have expired and she would have lost her deposit. The Respondent therefore believed that she had had no option but to complete in January 2022.

25. The Respondent stated that she had not moved into [NAME] in January 2022 because of the work that still needed to be completed. The Respondent told the Tribunal that she had arranged with [COMPANY] to move out of [NAME] so the snagging could be completed.

26. The Respondent stated that she had moved into [NAME] in July 2022. Her evidence was that MCR had taken possession of the keys to [NAME] from 14 February 2022 to 7 June 2022 and that during this period the Respondent had not occupied [NAME]. The Respondent stated that she had an agreement with [RESPONDENT] of [COMPANY] that she would not be charged for electricity for the period before she moved into [NAME] in July because of the snagging work that needed to be completed at [NAME]. The Respondent told the Tribunal that after the snagging had been completed at [NAME], [COMPANY] had changed the locks because several contractors had had access to [NAME] whilst the Respondent was away. The Respondent stated that the fuse box was turned off in [NAME] as no one was living there and therefore no electricity was used.

27. The Respondent submitted that if she was liable to pay the electricity charges, the amount must be limited to the period 1 July 2022 to 23 August 2022. However, in relation to this period, the Respondent submitted that the Applicant must show that the amounts were reasonably incurred and reasonably apportioned on the basis of actual or justly-estimated consumption.

The Tribunal’s Decision – Electricity Charges

28. The Tribunal is satisfied that the electricity charges are payable under the Lease. Clause 1.1 of the Lease defines Service Charge as “a fair and reasonable proportion determined by the Landlord (acting reasonably) of the Service Costs”.

29. Service Costs are defined as:

“the costs listed in The Building Services and The Estate Services are:

1.1.1 …

1.1.10 any other service or amenity that the Landlord may in its reasonable discretion (acting in accordance with the principles of good estate management) provide for the benefit of the tenants and occupiers of the Building and Estate.”

30. Schedule 7 of the Lease makes provision for Services and Service Costs. Part 1 states that “Services” shall mean both the Building Services and Estate Services. Part 1 defines Building Services and specifically at 1.1.13 of Schedule 7, Building Services are defined as:

“1.1.13. any other service or amenity that the Landlord may in its reasonable discretion (acting in accordance with the principle of good estate management) provide for the benefit of the tenants and occupiers of the Building.”

31. Part 2: 1.1 of Schedule 7 states that the Service Costs are the total of:

“1.1.1 all of the costs reasonably and properly incurred or reasonably and properly estimated by the Landlord to be incurred of:

(a) providing the Services…”

32. Schedule 4 sets out the Tenant Covenants. Clause 2.1 provides:

“The Tenant shall pay the estimated Service Charge for each Service Charge Year in two equal instalments on each of the Rent Payment Dates” [namely 25 March and 29 September in each year].

Clause 2.2 provides:

“In relation to the Service Charge Year current at the date of this lease, the Tenant’s obligations to pay the estimated Service Charge and the actual Service Charge shall be limited to an apportioned part of those amounts, such apportioned part to be calculated on a daily basis for the period from the date of this lease to the end of the Service Charge Year. The estimated Service Charge for which the Tenant is liable shall be paid in equal instalments on the date of this lease and the remaining Rent Payment Days during the period from the date of this lease until the end of the Service Charge Year.”

Clause 6.1 provides:

“To pay all costs in connection with the supply and removal of electricity, gas, water, sewage, telecommunications, data and other services and utilities to or from [NAME].”

33. The Tribunal finds that the Respondent is liable to pay the electricity charges under the Lease. Clauses 2.1 and 2.2 of Schedule 4 state that the Tenant is liable to pay the Service Charge. Clause 1.1 of Part 2 of Schedule 7 and Clause 1.1.13 of Part 1 of Schedule 7 provide that costs reasonably and properly incurred by the Landlord in providing services for the benefit of the tenants can be recovered as service charges. Clause 6.1 states that the Respondent is liable to pay all costs in connection with the supply of electricity to and from [NAME].

34. Further, the Tribunal accepts the Applicant’s position that payment of service charge is not dependent on the Respondent living at [NAME].

35. The issue for the Tribunal is whether the electricity charge was reasonable in amount. The Tribunal accepts the evidence of the Applicant as to how the price and usage was calculated and finds that this was reasonable. The Tribunal accepts the Applicant’s evidence that they tested the market and were unable to source a fixed-term contract under the price-cap of 21.5 pence.

36. The Tribunal does not find, however, that the charge was reasonably incurred. The Tribunal accepts the Respondent’s evidence that she did not want to enter into the Lease in January 2022, but she believed that if she did not she would lose her “help to buy” offer and her deposit. The Tribunal further accepts the Respondent’s evidence that because of the outstanding snagging issues she handed the keys to MCR so that contractors could complete the necessary work. The Tribunal accepts the Respondents’ evidence that the fuse box in [NAME] was switched off and that she did not use any electricity for this period. On this basis, the Tribunal does not find that the electricity charges for the period 20 January 2022 until 30 June 2022 were reasonable. The Tribunal therefore finds that the following charges are not payable:

Period Amount

20/01/2022 – 31/01/2022 £31.23

01/02/2022 – 28/02/2022 £79.16

01/03/2022 – 31/03/2022 £79.16

01/04/2022 – 30/04/2022 £79.16

01/05/2022- 31/05/2022 £79.16

01/06/2022-30/06/2022 £79.16

Balancing Charge Credit £3.82

Total £423.21

37. Regarding the period 1 July 2022 to 23 August 2022, the Tribunal finds this amount payable. The Tribunal accepts that, once the snagging was completed, the Respondent was living at [NAME]. The Tribunal accepts the basis on which the Applicant has calculated the monthly payments. In the absence of meters showing precise consumption, the Tribunal finds that the Applicant ascertained a reasonable price cap and calculated the electricity charge at £79.16 per month. The Tribunal therefore finds the charge of £139.02 for the period 1 July 2022 to 23 August 2022 payable.

Legal Fees

38. The Applicant relied upon Schedule 4 of the Lease to recover legal fees as follows:

Schedule 4: Tenant Covenants

“7 Costs

7.1 To pay on demand the costs and expenses of the Landlord (including any solicitors’, surveyors’ or other professionals’ fees, costs and expenses and any VAT on them) assessed on a full indemnity basis incurred by the Landlord (both during and after the end of the Term) in connection with or in contemplation of any of the following:

7.1.1 the enforcement of any of the Tenant Covenants.”

39. The Applicant submitted that their legal representatives had made all the necessary and reasonable efforts to resolve this matter and that the legal fees were payable and reasonable.

40. The Respondent told the Tribunal that the legal fees should not be paid by her given that she had spent a significant amount of time trying to communicate with MCR to resolve the issue. Further the Respondent relied on the submissions she had made in relation to the electricity charge not being reasonable meaning that legal costs arising from this should not be paid by her.

Tribunal Decision - Legal Fees

41. The Tribunal is satisfied that legal fees are payable under Schedule 4 of the Lease as set out above. However, for the reasons set out above, the Tribunal has found that the electricity charges are not payable for the period January 2022 to June 2022 and therefore the Tribunal does not find that the legal fees to enforce this amount are reasonable.

42. Although the Tribunal has found that the electricity charges for the period July and August 2022 are payable, the Tribunal does not find that it is reasonable for legal fees to be paid in respect of this period. The Respondent in her witness statement stated that “any electricity liability (if any) should be limited to July – August 2022”. Further, the Tribunal accepts the Respondent’s evidence that she had tried to resolve the payment of the electricity charges with the Applicant. The Tribunal therefore does not find that legal fees are payable.

[NAME] under section 20C, Paragraph 5A and refund of fees

43. The Respondent made an [NAME] under section 20C of the 1985 Act for the limitation of the Applicant’s costs in the proceedings, and an order under paragraph 5A of Schedule 11 of the Commonhold and Leasehold Reform Act 2002 to reduce or extinguish the tenant’s liability to pay an administration charge in respect of litigation costs.

44. The Applicant submitted that an order under section 20C should not be made as the legal fees were incurred reasonably and were necessary to obtain settlement of an outstanding debt.

45. Further, the Applicant submitted that an order under paragraph 5A should not be made. At page 107 of the Bundle the Applicant stated that the legal fees were not administrative charges and as such they requested that an order under paragraph 5a be not granted.

46. Having heard the submissions from the parties and taking into account the determinations above, the Tribunal determines that it is just and equitable in the circumstances for an order to be made under section 20C of the 1985 Act and paragraph 5A of Schedule 11 of the Commonhold and Leasehold Reform Act 2002. The Tribunal reaches this decision because it has found in favour of the Respondent.

[NAME]

47. The Applicant made an [NAME] for costs of the [NAME] fee paid by the Applicant to the Tribunal to be repaid to the Applicant by the Respondent. Rule 13(2) of the Tribunal Procedure (First-tier Tribunal) ([NAME] Chamber) Rules 2013 (the Rules) provides that a Tribunal can order a party to reimburse another party; however, on the basis of the findings made, the Tribunal does not make this order.

Name: Judge Bernadette MacQueen Date: 24 September 2025

Rights of appeal

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

If a party wishes to appeal this decision to the Upper Tribunal (Lands Chamber), then a written [NAME] for permission must be made to the First-tier Tribunal at the regional office which has been dealing with the case.

The [NAME] for permission to appeal must arrive at the regional office within 28 days after the tribunal sends written reasons for the decision to the [NAME].

If the [NAME] is not made within the 28-day time limit, such [NAME] 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 [NAME] for permission to appeal to proceed, despite not being within the time limit.

The [NAME] 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 [NAME] the [NAME] is seeking.

If the tribunal refuses to grant permission to appeal, a further [NAME] for permission may be made to the Upper Tribunal (Lands Chamber).