Service Charges Determined Payable by First-tier Tribunal

OUTCOME: Allowed

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FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY) Case Reference : LON/OOBE/LSC/2025/0770 County Court Claim Number : L9QZ9490 Property : 195b [ADDRESS] [POSTCODE] Applicant : [redacted] Representative : [COUNSEL], in-house litigation officer Respondent : [redacted] : In person Type of Application :

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

Tribunal Members :

Judge P [NAME] [NAME] of hearing : 8 August 2025 Date of decision : 1 September 2025

DECISION

2 Description of hearing

The hearing was a face-to-face hearing. Decisions of the tribunal

(1) The service charges which form part of the County Court claim (Claim Number L9QZ9490) are payable in full. (It is noted that the estimated ‘revenue’ charge of £203.55 has been paid in full since the issuing of the claim and had ceased to be in dispute by the date of the tribunal proceedings.)

(2) This case is now transferred back to the County Court to deal with the other elements of the County Court claim including interest and costs.

Introduction 1. The Applicant seeks, and following a transfer from the County Court, the tribunal is required to make, a service charge determination pursuant to section 27A of the Landlord and Tenant Act 1985 (“the 1985 Act”) in relation to the Property. The claim relates to estimated service charges for the year 2023/24.

2. The Respondent is the leaseholder of the Property pursuant to a lease (“the Lease”) dated 25 November 2002 and originally made between the Applicant (1) and [APPELLANT] (2). The Applicant is the freehold owner of the building of which the Property forms part and is the Respondent’s direct landlord.

3. On 24 January 2024 the Applicant issued proceedings in the County Court for alleged non-payment of service charges in the sum of £5,256.46 plus interest and costs. The Respondent filed a defence on 26 February 2024. The claim was transferred to this tribunal on 14 March 2025 by District Judge Bell and the wording of the order was “Transfer to First Tier Tribunal (Property Chamber)”.

4. With the agreement of the parties (to the extent that it is needed) the tribunal is just dealing with the service charge element of the County Court claim and is then transferring the other elements of the claim (in particular interest and costs) back to the County Court for a determination on those points. Applicant’s written case 5. The Applicant states that the service charge claim comprises two separate elements, an estimated ‘revenue’ service charge of £203.55 and an estimated major works charge of £5,052.91. Both of these sums represent the amount that was already in arrears at the time of issue of

3 the claim. The sum of £203.55 has since – together with another sum – been paid in full and it was common ground between the parties that this element of the claim was no longer in dispute.

6. The dispute therefore relates solely to the estimated major works charge of £5,052.91 relating to the 2023/24 service charge year. In its statement of case the Applicant sets out the relevant lease clauses relating to the Respondent’s service charge payment obligations, including in relation to estimated service charges. The Applicant also provides details of the invoices that it has issued and which relate to the disputed charges, and it states that it complied with the relevant pre- action protocol before issuing proceedings.

Relevant copy correspondence is included within the hearing bundle.

7. The Applicant notes that the Respondent filed a defence to the County Court claim, that the Respondent expressed dissatisfaction with the amount of the estimate for the major works, and that he tried to deal with his concerns about the estimate by carrying out some of the works himself. However, the carrying out of those works by him was itself a breach of covenant as he did so without obtaining the necessary landlord’s consent.

8. The Applicant states that it complied with the consultation requirements set out in section 20 of the 1985 Act in relation to the major works, and it provides details of the notices served and of the consultation correspondence.

9. In addition to relevant section 20 notices, section 20B notices and other relevant correspondence and information, the Applicant’s written case includes witness statements from [APPELLANT] [NAME] (Capital Works Consultation Officer) and [NAME] (Interim Design & Delivery Manager). Respondents’ written case 10. In his defence to the County Court claim the Respondent stated that the estimated prices appeared to be well above market rates and that he raised his concerns online, asking which specifications were being worked to so that he could provide a competitive quote. His queries were acknowledged but the specifications were not provided. In view of the sums being demanded he decided that the most practical way forward was to carry out the works himself. He added that the Applicant’s allocated contractors acknowledged his work as being satisfactory.

11. The Respondent made some other points in his defence and concluded that, in his opinion, the total cost of the works should have been nearer £2,000.00, leaving him liable to pay half of that (£1,000.00) plus fees

4 and interest. He accepted that he was liable to pay towards the cost of these works but added that under section 19 of the 1985 Act the cost had to be reasonable and that under section 18 of the 1985 Act the cost must be incurred or be due to be incurred.

12. The Respondent has not added to his County Court defence during these tribunal proceedings. Inspection 13. The tribunal members inspected the Property prior to the hearing in the presence of the Respondent. Discussion at hearing 14. The Respondent said at the hearing that the estimated cost was astronomical compared to the amount of work proposed, although he now accepted that he had not been entitled to carry out the works himself. 15. [NAME], a colleague of [NAME] [NAME], was available to answer questions on her witness evidence in her absence, and he provided a generalised overview of how the Applicant deals with major works costing issues. [APPELLANT] added some further generalised observations on cost. 16. [APPELLANT] for the Applicant submitted that it had been reasonable to issue County Court proceedings. The Applicant was obliged to provide a cost estimate to [NAME], which it duly did, and it sent out consultation notices and replied to the Respondent’s observations. The works contract did not just relate to the Respondent’s property but also to hundreds of other properties. He added that the estimate will be adjusted once the final accounts are available and if the actual amount is less than the estimated amount then a refund will be due to the Respondent anyway. He also noted that the Respondent had been in breach of covenant by carrying out works himself without obtaining landlord’s consent, and he added that the Respondent had offered little in the way of evidence. Tribunal’s analysis 17. The Applicant has provided an analysis of the Lease and has supplied copy notices and other relevant correspondence and information as well as two witness statements. The Applicant also asserts that it complied with the consultation requirements set out in section 20 of the 1985 Act. In addition, it takes issue with the Respondent’s defence and states that in choosing to carry out the works himself the Respondent committed a breach of the Lease.

5 18. The Respondent for his part has not taken the opportunity to add to his County Court defence by making further specific submissions or relying on any specific documentation and/or correspondence as he was entitled to do under the tribunal’s directions. It was apparent from discussion at the hearing that it had not occurred to him that it might be a good idea to submit a more detailed defence, but we accept that this was probably due to his lack of experience of the litigation process.

19. The Respondent came across at the hearing as a person of integrity. He now appreciates that he should not have carried out the works himself without obtaining the Applicant’s express written consent, but we accept that he was motivated by the belief that it would be more cost- effective for him to carry out the works himself.

20. In his brief County Court defence, the Respondent complained that the Applicant had failed to meet his request for information as to which specifications were being worked. In response the Applicant has simply asserted that it complied with the consultation requirements, albeit that there are copy notices and copy correspondence which provide some more detail and context. This does leave a possible concern that the Applicant may not fully have complied with the consultation requirements, as arguably the Applicant has not properly addressed the Respondent’s point about the specifications.

21. However, first of all the Respondent’s main point in his County Court defence is not that there was a failure to consult properly but rather his belief that the estimated charges were too high. He does not seek the reduction of the charge to £250.00, this being the maximum recoverable where the consultation requirements have not been complied with and where no dispensation has been sought and given. Instead, he seeks a reduction in the estimated charges to what he considers to be a reasonable amount. Secondly, his comment about specifications is a brief comment in his County Court defence which has not been substantiated or evidenced in these tribunal proceedings (or in the County Court proceedings). Thirdly, given that it is at best unclear whether any failure to comply with the consultation requirements was being formally relied on by the Respondent in this case so as to argue that he should not be obliged to pay more than £250.00, in our view the Applicant has not been alerted to the need to address this point in more detail and/or to apply for dispensation.

22. As regards the Respondent’s assertion that the estimate was unreasonably high, again his case consists merely of the brief comments contained in the County Court defence, but in addition much of his focus is on the actual value of the works themselves. The correct legal test for the reasonableness of estimated costs is whether the estimate was reasonable at the time when the estimate was made. The Applicant’s own evidence on this point is quite generalised, but because the Respondent’s own written case is so brief and because it is not

6 supported by any expert evidence (such as evidence from a surveyor) or supported by any alternative quotes, we are not persuaded – on the evidence before us – that the estimated cost can properly be adjudged to have been unreasonable at the time when the estimate was given.

23. As discussed at the hearing, if some of the estimated works were not in fact carried out and as the Respondent has carried out some of the works himself, there is a good chance that the actual cost will in practice be significantly lower than the estimated amount and the Respondent will then be entitled to a refund of the difference. Furthermore, if when the actual cost has been calculated the Respondent considers that it is higher than is reasonable it will be open to him to make a fresh challenge to the reasonableness of the actual amount if he wishes to do so.

24. In conclusion, on the basis of the evidence and information before us, we consider that the service charges which formed the basis of the Applicant’s County Court claim are reasonable and are therefore payable in full.

Name:

Judge P [NAME]:

1 September 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.

7 APPENDIX

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,

8 (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.