Reasonableness and Payability of Service Charges Determined

OUTCOME: Allowed in Part

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FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY) Case reference : LON/00BG/LSC/2025/0650 Property : 203 and 401 [ADDRESS], [POSTCODE] Applicant: [redacted] [NAME] (401) Representative :

Respondent : [redacted] : Mr [COUNSEL] of application : An application under section 27A [NAME] 1985 Tribunal : Judge Shepherd Louise Crane MCIEH Date of Decision : 12th August 2025

DETERMINATION

1. In this case there was a challenge to the reasonableness and payability of service charges. The challenge was brought pursuant to [NAME] 1985, s.27A. The Applicants are Mr [APPELLANT] and Ms [NAME] (“The Applicants”). They are both [NAME] at [ADDRESS] (“The premises”). The freeholder at the premises is [RESPONDENT] (“The Respondent”). Their representative was Mr [COUNSEL].

2. The Applicants challenged whether service charges were payable for the period 2021,2023, 2024 and 2025. Their challenges contained in a Scott Schedule identified the following issues:

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2021 Communal block repairs - £314.26 [NAME] - £101.66

2023 Communal boiler repairs- £324.39 Communal block repairs- £211.07 [NAME] - £110.95

2024 Communal boiler repairs - £545.83 Communal block repairs - £117.83 [NAME] - £117.86

2025 Communal boiler repairs - £324.39 Communal block repairs - £209.75 Communal estate repairs - £30.01 [NAME] - £113.19

The hearing

3. The hearing took place on 30th June 2025. The Applicants represented themselves and Mr [RESPONDENT] represented the Respondent.

4. In 2021 the block repairs related to charges for replacement of balcony glass. Mr [NAME] said that the balcony glass was defective and was shattering in various blocks. There was a defect that was the responsibility of the [NAME]. Mr [NAME] said it was not clear that the same defect affected all of the blocks.

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He said that until the defect was proven to be the responsibility of the [NAME] repairs would need to be done and charged through the service charge.

5. In relation to the maintenance/admin charge this was 15% of any repairs. Mr [NAME] accepted this cost would be reduced if any of the costs for repairs were adjusted by the Tribunal.

6. The communal boiler repairs were no longer an issue between the parties for 2023. Mr [NAME] said that the cost of £2,024.80 under communal block repairs in 2023 related to an emergency lighting service and the failure of a number of the lighting units and replacement of batteries in 31 units (invoice provided in bundle at page 161).

7. In relation to the boiler repairs in 2024 it was alleged that some of the cost had been used for repairs within a flat and not in the communal area. The Respondents refuted this and said the repairs were to the Heat Interface Units which were part of the communal area. It was accepted that the works cost was capped at £250 per unit because consultation had not taken place.

8. The communal block repairs in 2024 related amongst other things to the bi annual testing of the emergency lighting system and the replacement of 10 emergency lighting units (invoice provided in bundle at page 159).

9. The service charges for 2025 were estimates. It was argued by Mr [NAME] that the block repairs covered unnecessary works. He stated that additional signage had been added next to existing signage indicating the floor and flat numbers and was therefore duplication. Mr [NAME] said the fire safety signage was not to be recharged to the service charge.

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10. Mr [NAME] also stated that costs were being charged for signage in the garden area indicating it was a “play area” when it was a communal garden area for the residents and not accessible by the public. Mr [NAME] explained that the signage was a statutory requirement, due to the fact that the garden area included a wooden bridge and walkway structure it brought the area within the definition of “playground”. Therefore the signs are required not only for the residents but any sub tenants or contractors or a range of people that may use the area. Mr [NAME] did not agree with the health and safety argument particularly when the area was in a state of disrepair.

The law

11. The law applicable in the present case was limited. It was an assessment of the reasonableness and payability of the costs.

12. The [NAME] 1985,s.19 states the following: 19.— Limitation of service charges: reasonableness. (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 provision 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.

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13. The Tribunal’s jurisdiction to address the issues in s.19 is contained in s.27A [NAME] 1985 which states the following:

27A Liability to pay service charges: jurisdiction 1. An application may be made to [the appropriate tribunal]2 for a determination whether a service charge is payable and, if it is, as to—

a. the person by whom it is payable, 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]2 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,

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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.

14. In Waaler v Hounslow [2017] EWCA Civ 45 the Court of Appeal held the following:

Whether costs were “reasonably incurred” within the meaning of section 19(1)(a) of the [NAME] 1985 , as inserted, was to be determined by reference to an objective standard of reasonableness, not by the lower standard of rationality, and the cost of the relevant works to be borne by the [NAME] was part of the context for deciding whether they had been so reasonably incurred; that the focus of the inquiry was not simply a question of the landlord's decision-making process but was also one of outcome; that, where a landlord had chosen a course of action which led to a reasonable outcome, the costs of pursuing that course of action would have been reasonably incurred even if there were a cheaper outcome which was also reasonable; that, further, before carrying out works of any size the landlord was obliged to comply with consultation requirements and, inter alia, conscientiously to consider the [NAME]' observations and to give them due weight, following which it was for the landlord to make the final decision; that the court, in deciding whether that final decision was reasonable, would accord a landlord a margin of appreciation; that, further, while the same legal test applied to all categories of work falling within the scope of the definition of “service charge” in section 18 of the 1985 Act, as inserted, there was a real difference between work which the landlord was obliged to carry out and

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work which was an optional improvement, and different considerations came into the assessment of reasonableness in different factual situations

Determination 15. Some of the charges had been conceded and it was agreed that the maintenance admin charge would be reduced as a result of any reduction in repair costs. We do not consider that the [NAME] should be liable for any of the works to the defective balcony glass and we disallow those costs. This is plainly a defect and liability lies with the [NAME]. It is not reasonable to charge the [NAME] in the interim until it is determined whether it is a defect.

16. The communal boiler repairs, specifically the replacement of the heat replacement unit cost to the Applicants should be capped at £250 as no consultation took place. The fire safety signage cost had not been added to the service charge. The remaining service charges were in our view all reasonable and payable.

17. In summary:

2021 Communal Block Repairs - £314.26 - disallow [NAME] - £101.66- allow

2023 Communal boiler repairs- £324.39 – No longer an issue between parties Communal block repairs- £211.07 - allow [NAME] - £110.95 – allow

2024 Communal boiler repairs - £545.83 – capped at £250 Communal block repairs - £117.83 - allow

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[NAME] - £117.86 – allow

2025 Communal boiler repairs - £324.39- No longer an issue between parties Communal block repairs - £209.75 – allow Communal estate repairs - £30.01 – allow [NAME] - £113.19 - allow

18. The Applicants were largely unsuccessful therefore we disallow their application under s.20C [NAME] 1985. We were told by Mr [APPELLANT] that the Respondents costs would be low as he is an inhouse solicitor.

Judge Shepherd

18th August 2025

Rights of appeal By rule 36(2) of the Tribunal Procedure (First-tier Tribunal) (Property 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 application for permission must be made to the First-tier Tribunal at the Regional Office which has been dealing with the case. The application should be made on Form RP PTA available at https://www.gov.uk/government/publications/form- rp-pta-application-for-permission-to-appeal-a-decision-to-the-upper-tribunal- lands-chamber 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.

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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, the property 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).