Reasonableness of Service Charges and Administration Fees Judged

OUTCOME: Allowed

FIRST – TIER TRIBUNAL

[NAME] CHAMBER

([NAME])

__________________________________________________________

Case Reference CAM/33UF/LIS/2024/0009

[NAME] 1, 39 [ADDRESS] [POSTCODE]

Applicant [NAME] [COUNSEL] of [NAME]

assisted by [RESPONDENT], paralegal.

Respondent [RESPONDENT] [COUNSEL] of [COMPANY]

[NAME] [NAME] pursuant to s27A of the Landlord & Tenant Act 1985 to

determine the liability to pay and reasonableness of service charges

(section 18 of the Landlord and Tenant Act 1985) and

administration charges (Schedule 11 to the Commonhold and

Leasehold Reform Act 2022)

Tribunal Members Judge Stephen Reeder

Sarah Redmond MRICS (valuer member)

Date of hearing 15 July 2025 (convened remotely by CVP)

Date of Decision 15 July 2025

__________________________________________________________________________________

DECISION

© CROWN COPYRIGHT

DECISION

1. The tribunal determines that the following sums are payable and reasonable as service charges (adopting the item descriptions in the certified accounts for the relevant year) -

2019

 Gardening - £723.66

2021

 EICR fixed wire test - £240

 Management fee - £640 (plus £7.50 per unit for the out of hours emergency service)

 Cleaning - £211.56

2022

 End of year balancing charge - £468.71

2023

 Ground maintenance - £810

 Cleaning - £402.78

 General maintenance - £1,497.24

2. The [NAME] includes an [NAME] pursuant to s20C of the Landlord & Tenant Act 1985 and/or paragraph 5A in Schedule 11 to the Commonhold and Leasehold Reform Act 2002 which reduces or extinguishes the tenants’ liability to pay an administration charge in respect of litigation costs as contractual costs under the lease. The Respondent has expressly stated to the tribunal that it will not seek to recover its costs of and occasioned by these tribunal proceedings as a service or administration charge pursuant to the lease or otherwise. The tribunal has not therefore considered the [NAME] further.

3. The Applicant has paid both an issue fee of £100 and a hearing fee of £200. Having regard to Rule 13(2) of The Tribunal Procedure (First-tier Tribunal) ([NAME] Chamber) Rules 2013, and to the tribunal’s determinations and the outcome of the proceedings, the tribunal does not make any order requiring the Respondent re-imburse those costs to the Applicant. Every one of the service charge items challenged has been determined by the tribunal to be reasonable and payable in the sum demanded.

4. In considering whether to exercise its power to make any party costs order the Tribunal has careful regard to section 29(2) of the Tribunals, Courts and Enforcement Act 2007 and Rule 13(1)(b) of the Tribunal Procedure (First-tier Tribunal)([NAME] Chamber) Rules 2013 read against the overriding objective in Rule 3 of the 2013 Rules and the guidance given by the Chamber President and Deputy President in [ADDRESS] [COMPANY] v [NAME], [NAME] v [NAME], [NAME] v [NAME] Rd Management [COMPANY] [2016] UKUT 0290 (LC). Having regard to the tribunal’s determinations, the outcome of the [NAME] and the conduct of the parties the tribunal does not make any party costs order.

REASONS

The [NAME], [NAME] and parties

5. The applicant is [APPELLANT] (‘the Applicant’). She is the lessee and occupier of [ADDRESS] [POSTCODE] (‘the [NAME]’). The [NAME] is [RESPONDENT] (‘the Respondent’).

6. Flat 1 is on the ground floor of [ADDRESS] (‘the block’) which is a small block comprising 4 flats with 2 on the ground floor and 2 on the first floor. The block has communal grounds comprising some lawn and hard-standing parking to the front, and a rear garden laid to grass. A bin area is located to one side of the block. A shed and bike storage is located to the other side of the front garden. One allocated parking space is provided for and demised with each flat. A further two visitor spaces are provided.

7. The [NAME] challenges specific services charge items for 2019 (gardening), 2021 (EICR fixed wire test, cleaning, and management fee), 2022 (the end of year balancing charge), and 2023 (grounds maintenance, cleaning, gutter & gulley clearance, and general maintenance).

The procedural history

8. The [NAME] was made by pro forma ‘Leasehold 3’ form dated 17 July 2024. On 12 March 2025 Judge David Wyatt made a detailed case management and directions order. The tribunal has before it an [NAME] bundle comprising 47 pages and a final hearing bundle comprising 178 pages. Within the latter bundle the parties have included a fully completed ‘disputed charges schedule’ as directed by the order made on 12 March 2025. No party has applied to rely upon expert evidence as required by paragraph 2 of that order. No party has filed any witness statements of fact as provided for by paragraphs 10 and 12 of that order or seeks to rely upon witness evidence. No party has requested that the tribunal inspect the [NAME] or the building. Given the charges challenged the tribunal does not consider it necessary to inspect.

The hearing

9. The hearing has been convened remotely by CVP on 15 July 2025. The Applicant has been represented by [APPELLANT] of [NAME]. The respondent has been represented by [RESPONDENT] of [COMPANY] which has been the appointed [NAME] agent for the Respondent for each of the relevant service charge years. The tribunal is grateful for the assistance of both at the hearing.

10. During the hearing the Applicant has confirmed that she was residing in the [NAME] throughout 2019, the [NAME] was let, and she was living elsewhere throughout 2021, and that she returned to occupation in March 2022 and remained in occupation for the remainder of 2022 and throughout 2023.

The lease

11. The parties have filed a copy of the lease for the [NAME] dated 31 March 2017. It provides the relevant definitions in clause 1, the lessor’s covenants at clause 4 and schedule 5 (pages 143 & 164), the lessee’s covenants at clause 3, schedule 4 and schedule 6. The service charge provisions are set out in schedule 6. A hatched plan of the building in its plot and the surrounding site is provided.

12. Clause 1.1.27 provides that the individual due proportion for the [NAME] is 14.28%. However, it is clear and is accepted by the parties that in the relevant service charge years the service charge for the relevant costs for flats 1-4 in the building have been apportioned at ¼ or 25%. The tribunal notes that paragraph 1 of schedule 2 gives the lessor the power to “reasonably vary such percentages in consequence of any alteration or addition to the lessor’s development or any other relevant circumstances”. The lease is dated 31 March 2017 and refers to flat 1 as plot 47 and is clearly the lease demised whilst the development continued. The completed block at [ADDRESS] comprises 4 flats and the due proportion applied post completion is ¼ or 25%. The tribunal considers that this arrangement is permissible and indeed envisaged by the lease terms. Neither party has argued to the contrary.

13. The Applicant does not challenge the liability to pay any of the service charges demanded and disputed, nor the apportionment. Her dispute relates to the reasonableness of the amount demanded having regard to the service provided for that charge.

The law

14. The Landlord & Tenant Act 1985 as amended by the Commonhold & Leasehold Reform Act 2002 (hereafter ‘the LTA 1985’) sets out the Tribunal’s jurisdiction to determine liability to pay service charges. Section 27A(1) of 1985 Act provides as follows –

An [NAME] may be made to a leasehold valuation tribunal 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 is payable.

15. Section 18 sets out the meanings of ‘service charge’ and ‘relevant costs’.

16. Section 19 sets out that jurisdiction to limit service charges to those relevant costs which are reasonably incurred and to those which arise from works and services of a reasonable standard.

17. Section 20C LTA 1985 sets out the jurisdiction, where the tribunal considers that it is just and equitable to do so, to grant an order providing that all or any of the costs incurred by the landlord in connection with proceedings before this 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 lessee or any other person or persons specified in the [NAME]. Paragraph 5A of Schedule 11 to the Commonhold and Leasehold Reform Act 2002 provides jurisdiction for the Tribunal to make an order to reduce or extinguish the tenant’s’ liability to pay an administration charge in respect of litigation costs.

18. Part 1 of Schedule 11 to the Commonhold & Leasehold Reform Act 2002 (hereafter ‘CLARA 2002’) sets out the Tribunal’s jurisdiction to determine the payability and reasonableness of administration charges. Section 5(1) of Part 1 to Schedule 11 provides –

An [NAME] may be made to a leasehold valuation tribunal for a determination whether an administration 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.

19. Section 1 provides a definition of ‘administration charge’. Sections 2 & 3 provide that a variable administration charge is payable only to the extent that the charge specified in lease is reasonable, that the formula specified for determining the charge is reasonable, and that amount of the charge is reasonable.

Discussions & determinations

2019

Gardening

20. The [NAME] form and schedule of issues in dispute challenges a service charge stated to be £810 demanded in respect of gardening for the grounds to the block. That is in fact the budgeted amount. As the schedule and service charge account makes clear, the actual relevant cost recharged is £723.66. At the hearing the Applicant has argued that the figure of £732.66 is itself unreasonably high on the basis that the gardener only worked on the grounds 3 times that year. She suggests a reasonable charge would be £500 for the year. The Applicant does accept that the gardener “does a good job”.

21. The extent of the grounds can be seen in the photos before the tribunal as described earlier in this decision. The contractor specification is in the documents bundle. It was sent to the Applicant under cover of a letter dated 1 April 2019 which states “we have amended the frequency for the cleaning and the gardening visits following queries from the leaseholders regarding the costs”. The specification describes the works to be done and the schedule of visits twice a month between April and September and once per month between October and March.

22. The Respondent states that the quarterly inspections each year (three by the [NAME] manager and one by the [NAME]) would have identified any problems with the gardening service and did not do so, and further that no complaints were received from the other occupiers of the block about the gardening service being inadequate or not conforming to the April 2019 specification which had reduced the service to reduce the costs following feedback from the lessees. It is also said that the contractor ‘[NAME] [NAME]’ is a reliable and trusted [NAME] contractor who is also engaged to maintain the adjacent gardens and grounds across the estate beyond this building and does so without complaints from those surrounding lessees.

23. The tribunal considers that the specification is reasonable having regard to the nature and extent of the gardens and grounds to the block. The tribunal considers that the actual costs incurred to provide the specified service is reasonable. The tribunal considers that, on the evidence before it, the service was provided to a reasonable standard. The Applicant’s proposed charge of £500 is not based on any evidential comparable. The tribunal determines that the sum of £732.66 claimed is reasonable and payable.

2021

EICR fixed wire test - £240

24. The Applicant challenges the charge of £240 in respect of an EICR fixed wire test on the basis that she does not know what it is and why it is necessary and suggests that it would not have been carried out due to the Covid-19 restrictions in force in 2021.

25. The Respondent has explained in some detail that this is the safety certification of the [NAME] in the block and is a mandatory legal requirement to be completed every 5 years unless an assessment directs the next to be follow in a shorter timescale. The cost is for an appropriately qualified professional to inspect and test the [NAME] and provide safety certification for the same. This was carried out by [RESPONDENT] [NAME] in 2021 and the Respondent has the resulting certificate. The Respondent states that this remained a mandatory requirement even during the Covid-19 restriction period.

26. During the hearing the Applicant has pursued a further argument, being that the certificate was not needed in 2021as it was premature because block completion was in 2018 which is less than 5 years. The Respondent stated that there was no earlier assessment and certificate and so it was an essential management task to rectify this.

27. The tribunal considers that this is mandatory [NAME] safety certification which was necessary. It clearly was completed despite the Covid-19 restrictions and is a good example of the type of essential management which was permitted during such periods. The cost is typical for such a certification process. The tribunal determines that the sum of £240 charged is reasonable and payable.

Cleaning

28. The Applicant challenges the cleaning charge of £211.56 on the basis that this occurred during a period of Covid-19 restrictions. She asks in the issue schedule “is there evidence of it having been carried out?”. She stated that she made complaints to the Respondent. She confirmed that was not living in the flat throughout this year and had let it. At the hearing she suggested that she was relaying complaints by her tenant and her [NAME] agent. The tribunal treats this with caution as it is the first time the Applicant has stated this. Further, she has not filed any witness statements of fact as directed by the case management order made on 12 March 2025.

29. The Respondent states that the cleaning service continued during those periods and throughout the year. Cleaning and sanitization was considered to be an important service. The contractor was East Anglian Cleaning Services. The specification provides for cleaning to the internal communal areas to the block by one visit every 2 weeks at a cost of £6.78 + VAT per visit. The Respondent states there were no complaints in relation to the lack of a cleaning service from any of the three other flats in the block, and indeed no recorded complaints from the Applicant.

30. The tribunal is satisfied on the evidence that the cleaning service continued throughout 2021. The tribunal considers that the specification delivered and the cost of the same are reasonable. The tribunal determines that the cleaning charge of £211.56 is reasonable and payable.

Management fee

31. The Applicant challenges the management fee of £640 (and so presumably the additional out of hours emergency service charge of £7.50 per unit) in the belief that “no management duties were carried out due to the pandemic”. The Respondent confirmed that the management service continued albeit working remotely where necessary. The only difference was that quarterly in person inspections of the block were suspended and only one could be made in that year due to the periods of Covid-19 restrictions. The Respondent stated that it is a fixed charge per unit and that no ‘deduction’ was made as the Covid-19 challenges required additional equipment and other overheads including for remote working to ensure that management tasks continued. The Respondent further argued that its standard management fee per unit was £195 + VAT, and that the lessees of the block already benefited from a discounted charge as the agent managed a number of other properties on the same development for the same freeholder which provided economies of scale.

32. The tribunal is satisfied on the evidence that the management service continued throughout 2021. The tribunal considers that management delivered and the cost of the same are reasonable. The tribunal determines that the management charge of £640 and the additional out of hours emergency service charge of £7.50 per unit are reasonable and payable.

2022

End of year balancing charge

33. The Applicant challenges the end of year balancing charge of £468.71 on the basis that “it is unclear why the actual expenditure was so significantly higher than budgeted”. The budgeted annual service charge was £5004.00. The actual relevant cost recharged was £6879.25. The difference was £1,874.84, with the Applicant’s due proportion at ¼ being £468.71.

34. The Respondent fairly accepted that this may have been opaque in that the lessees did not get a break down of the additional relevant costs with the service demand or in the certified accounts that year. The tribunal was told that this has since been changed so that a full breakdown of the relevant costs recharged as service charge is provided with the ‘pack’ of information provided with the end of year accounts. The bundle provided to the tribunal includes correspondence between the Applicant and Respondent in April 2024 which explains how the balancing charge has arisen and provides a schedule of the budgeted and the actual expenditure. That correspondence pre-dates the [NAME] to the tribunal.

35. A large component of the balancing charge relates to the block insurance which was budgeted at £652 whereas the actual cost was £2,048. The Respondent stated that the insurance is arranged by the freeholder who looks for value for money from the market.

36. The Respondent has included in the ‘items in dispute schedule’ details of each unbudgeted relevant cost (with date, description of job, and cost) which gave rise to the balancing charge. The Respondent has explained the context for each. They are the result of lessee requests/reports or agent inspections. None is remarkable in nature or cost. Several are the result of the Applicant’s own complaints pursued via her [NAME] who visited the block with the agent and wrote by email requesting some of these items to be carried out.

37. The tribunal is satisfied on the evidence that the balancing charge of £468.71 related to properly incurred relevant costs which it was reasonable to incur in addition to the budgeted items. The tribunal determines that the balancing charge is reasonable and payable.

2023

Grounds maintenance

38. The sum of £810 charged is challenged by the Applicant on the basis that the maintenance was “insufficient despite the high costs”, that the bin storage area was not cleaned regularly causing a risk of falls, that a drain cover in the pathway in front of the Applicant’s flat caused a trip hazard, and that there was ‘moss’ to the outside sills of the window in the rear of the ground floor communal hallway.

39. The Applicant argued that a trip hazard was created by a metal drain or utilities cover placed in the external communal pathway in such a way that approximately a quarter of its width falls outside of the paved pathway adjacent to the wall of the block. As a result of the involvement of the [NAME] advocating on the Applicant’s behalf stones/gravel has been placed in the gap between the block wall and the paved pathway so as to level up that gap. Photos of the cover and its location are in the documents bundle provided to the tribunal. The Respondent pointed out that it had not been identified as a hazard in any of quarterly inspections carried out each year (one of which is by the Respondent’s [NAME]) nor any other safety related inspection or assessment, since completion of the block. Is it is not clear to the tribunal that it did in fact objectively cause a trip hazard to someone walking on that pathway exercising reasonable attention and caution. Nonetheless, it was raised as a hazard by the Applicant, pursued as a hazard by the [NAME], and remedied by the Respondent. The tribunal does not consider that this establishes that the grounds maintenance charge is unreasonable. The tribunal determines that the grounds maintenance charge of £180 is reasonable and payable.

40. The applicant argued that there was a failure to adequately clean the bin storage area to the rear of the block which caused a risk of falls. The Respondent stated that the cleaning of this area was not included within the cleaning specification at that time but was carried out if the need to do so was identified by a quarterly inspection or if notified of a need by lessees. The Respondent stated that it is now scheduled for cleaning every 6 months for an additional cost which is recharged following consultation with the lessees. The tribunal does not consider that this establishes that the cleaning charge is unreasonable. The tribunal determines that the cleaning charge of £402.78 is reasonable and payable.

41. The Applicant argued that there was a failure to adequately clean the outside sills of the window in the rear of the ground floor communal hallway so that ‘moss’ built up. A photo of that window is in the document bundle before the tribunal. It does show some decolourisation and ‘greening’ to the lower frame and bottom sill consistent with an external window facing a rear garden. The Respondent stated that the communal windows were cleaned internally and externally on one occasion each year at a cost of £48 which is seen in the service charge account and is separate from the recharges for grounds or general maintenance or general cleaning. The Respondent stated that the lessees remained concerned about costs and had not requested a more frequent window cleaning service. Having regard to that situation the tribunal considers that the actual cost recharged is both reasonable and payable

Cleaning

42. The sum of £402.78 charged is challenged by the Applicant on the same basis as for the grounds maintenance charge. The tribunal repeats that determination, that the cleaning charge of £402.78 is reasonable and payable.

General maintenance

43. The sum of £1,497.24 charged is challenged by the Applicant on the same basis as for the grounds maintenance charge, in particular in relation to the cleaning of the bin store area and moss to the outside sills of the window in the ear of the ground floor communal hallway. The tribunal repeats that determination. Further, two of the component charges relate to the provision of lighting to the bin store area. This and others are the result of the Applicant’s own complaints and requests pursued via her [NAME] by email correspondence following her visit. The tribunal determines, that the general maintenance charge of £1,497.24 is reasonable and payable.

Gutter & gulley clearance

44. Any charge for gutter and gulley clearance is challenged by the Applicant at the hearing on the basis that any such works were not effective and such that rainwater was able escape and cause dampness to the rear exterior wall of her [NAME]. The Respondent raises the issue that this is not part of the [NAME] and that whilst it is included in the ‘issue in dispute’ schedule no details are given. The Respondent is correct. The Applicant relies upon a photo in the documents bundle before the tribunal which she says shows the dampness. That photo does not appear to show any dampness. The photo relied upon is from an inspection report by the agent [NAME] dated October 2023. The narrative of that report describes that same photograph as showing that the vent on the front wall requires refixing. When the photograph is reviewed it can be seen that this is indeed what it shows. The Respondent confirms that this report is the result of the annual inspection by its [NAME]. The tribunal notes that in that report the [NAME] has identified a defect requiring attention and includes this photograph to identify that defect. It is not the defect alleged by the Applicant.. There is no sign of the defect alleged by the Applicant in that photograph and no other evidence of such a defect. Further, it is clear that the [NAME] did not consider that there was any need for gutter and gulley clearance that year.

Accordingly, the service charge account for 2023 makes very clear that the sum of £180 was budgeted for gutter and gulley clearance but that no actual charge was made. There is no charge to challenge.

Fees and Costs

45. The [NAME] includes an [NAME] pursuant to s20C of the Landlord & Tenant Act 1985 and/or paragraph 5A in Schedule 11 to the Commonhold and Leasehold Reform Act 2002 which reduces or extinguishes the tenants’ liability to pay an administration charge in respect of litigation costs as contractual costs under the lease. The Respondent has very fairly expressly stated to the tribunal that it will not seek to recover its costs of and occasioned by these tribunal proceedings as a service or administration charge pursuant to the lease or otherwise. The tribunal has not therefore considered the [NAME] further.

46. The Applicant has paid both an issue fee of £100 and a hearing fee of £200. Having regard to Rule 13(2) of The Tribunal Procedure (First-tier Tribunal) ([NAME] Chamber) Rules 2013, and to the tribunal’s determinations and the outcome of the proceedings, the tribunal does not make any order requiring the Respondent re-imburse those costs to the Applicant. Every one of the service charge items challenged has been determined by the tribunal to be reasonable and payable in the sum demanded.

47. In considering whether to exercise its power to make any party costs order the Tribunal has careful regard to section 29(2) of the Tribunals, Courts and Enforcement Act 2007 and Rule 13(1)(b) of the Tribunal Procedure (First-tier Tribunal)([NAME] Chamber) Rules 2013 read against the overriding objective in Rule 3 of the 2013 Rules and the guidance given by the Chamber President and Deputy President in [ADDRESS] [COMPANY] v [NAME], [NAME] v [NAME], [NAME] v [NAME] Rd Management [COMPANY] [2016] UKUT 0290 (LC). Having regard to the tribunal’s determinations, the outcome of the [NAME] and the conduct of the parties the tribunal does not make any party costs order.

Stephen Reeder

Judge of the First Tier Tribunal, [NAME] Chamber

July 2025

ANNEX - RIGHTS OF APPEAL

a. This annex notifies the parties of any right of appeal pursuant to Rule 36(2) of the (First-tier Tribunal) ([NAME] Chamber) Rules 2013.

b. 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.

c. 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].

d. 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.

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

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