Tenant Challenges Service Charges in First-tier Tribunal

OUTCOME: Allowed in Part

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FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY) Case reference : CAM/00KF/LIS/2023/0009 Property : [ADDRESS], Southend on Sea, Essex, [POSTCODE] Applicant : [redacted] : In person Respondent : [redacted] : [COUNSEL] [NAME], of [COMPANY] (Managing Agent) Type of [NAME] : For the determination of the liability to pay service charges under section 27A of the Landlord and Tenant Act 1985 Tribunal members : Judge [NAME], MRICS, FAAV, REV

Venue : Cloud Video Platform (CVP) Date of hearing : 4 June 2024 Date of decision : 1 July 2024

DECISION

2 Decisions of the Tribunal (1) The Tribunal determines that, in respect of disputed service charges items brought to the Tribunal for the year 01/01/2022 to 31/12/2022, the sum of £1,319 is payable, of which £659.50 is payable by the Applicant. (2) The Tribunal determines that, in respect of disputed service charges items brought to the Tribunal for the year 01/01/2023 to 31/12/2023, the sum of £1,480 is payable, of which £740 is payable by the Applicant. (3) The Tribunal does not make an order under section 20C of the Landlord and Tenant Act 1985 or paragraph 5A of Schedule 11 to the Commonhold and Leasehold Reform Act 2002. (4) The Tribunal makes these determinations under the various headings in this Decision.

The [NAME]

1. The Applicant sought a determination pursuant to s.27A of the Landlord and Tenant Act 1985 (“the 1985 Act”) as to the amount of service charges payable by the Applicant in respect of the disputed service charges for the years 01/01/2022 to 31/12/2022 and 01/01/2023 to 31/12/2023. The Hearing 2. The hearing was held remotely using Cloud Video Platform.

3. The Applicant appeared in person and [APPELLANT] [NAME] appeared on behalf of [COMPANY], the managing agent.

4. In accordance with the directions made on 6 November 2023, a bundle of documents consisting of 51 pages was before the Tribunal. In addition, a copy of the lease dated 10 July 1989 was also before the Tribunal, as was a typed schedule for the service charge year 2023 (the 2022 typed schedule being within the 51 page bundle). The Background 5. [ADDRESS] was a terraced house divided into two flats, one flat was on the ground floor and the other on the first floor. The property which was the subject of this [NAME] was the ground floor flat (the Property).

3 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.

7. The Applicant held a long lease of the Property which required the landlord to provide services and the tenant to contribute towards their costs by way of a variable service charge. The relevant lease was dated 10 July 1989 and was made between [NAME] to [NAME].G [NAME] and [NAME].[NAME]. The Issues 8. At pages 30 to 33 of the bundle was a schedule setting out the comments of both parties in relation to the disputed service charges for the year 01/01/2022 to 31/12/2022. For the 2023 service charge year, at page 29 of the bundle, was a copy of the schedule that was completed in handwriting by only the Applicant. Whilst not in the bundle, there was also before the Tribunal a typed schedule for the service charge year 01/01/2023 to 31/12/2023. This version had both the Applicant’s and the [NAME] comments in relation to the issues in dispute. The Tribunal used the schedules containing both the Applicant’s and [NAME] comments to identify the issues in dispute.

9. The items in dispute set out in the schedule for the service charge year 01/01/2022 to 31/12/22 were:  Asbestos Testing  Accountancy Fees  Management Fee  Out of Hours service  Professional Fee  [NAME]  Minor Repairs  Health and safety  [NAME]

10. The items in dispute set out in the schedule for the service charge year 01/01/23 to 31/12/23 were:  Asbestos Testing  Accountancy Fees  Management Fee  Out of Hours service  [NAME]  Minor Repair

4  Health and safety  Door entry repair  Insurance valuation

11. For the 01/01/2022 to 31/12/2022 service charge year, both parties agreed that whilst asbestos testing, minor repairs and health and safety required repairs were listed in the schedule, no work was actually completed under these headings and therefore no charges were made by the Respondent. The Tribunal therefore did not consider these items further.

12. For the 01/01/2023 to 31/12/2023 service charge year, both parties agreed that whilst asbestos testing, insurance valuation, door entry repair and health and safety required repairs were listed, no work was actually completed under these hearings and therefore no charges were made by the Respondent. The Tribunal therefore did not consider these items further.

13. The relevant issues for determination were therefore the payability and reasonableness of service charges under the following headings: 01/01/2022 to 31/12/22:  Accountancy Fee  Management Fee  Out of Hours  Professional Fee  [NAME]  [NAME] 01/01/2023 to 31/12/23:  Accountancy Fee  Management Fee  Out of Hours  [NAME]  Minor repair  [NAME]

14. 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. Accountancy Fee

5 15. The Parties set out their positions in the schedule as follows: Item Cost Tenant’s Comments Landlord’s Comments Accountancy fees £120 (2022) £138 (2023) Irrelevant. Zero Pounds Service charge accounts are to be produced and audited at the end of each service charge year, as per the sixth schedule, Clause 8. (Copy of lease attached). This is a professional fee and to be charged for separately, as per the management agreement in place with the Landlord.

16. The Applicant told the Tribunal that he had not received any receipt for this work and that this fee could not be justified.

17. The Respondent confirmed to the Tribunal that the accounts were audited by [COMPANY] internal accountants and that if the accounts were audited by an external firm, the cost was likely to be much higher. Although not within the bundle, the Respondent confirmed there was an invoice dated 11/01/23 for the preparation of service charge accounts for 2022, and an invoice dated 13/02/24 for the preparation of service charge accounts for 2023. The Tribunal’s Decision – Accountancy Fee 18. The Tribunal accepted the evidence of the Respondent. The Tribunal found that the lease required accounts to be audited (paragraph 8 of the sixth schedule), and that by the Respondent using internal accountants, the amount payable was lower than if an external firm were engaged. Using its professional knowledge, the Tribunal found that £120 for auditing accounts for 2022 (of which the Applicant would pay £60) and £138 for 2023 (of which the Applicant would pay £69) was reasonable.

6 The Tribunal therefore found that this amount was payable by the Applicant. Management Fee 19. The Parties set out their position in the schedule as follows: Item Cost Tenant’s Comments Landlord’s Comments Management Fee £382 (2022) £404 (2023) Zero Pounds As per the Sixth Schedule, Clauses 6 and 7, this is [COMPANY] fee for managing the building on behalf of the Landlord.

20. The Applicant told the Tribunal that the managing company had not completed any work and that they had not completed any inspections or spent any money on the Property.

21. The Respondent told the Tribunal that this management fee covered, amongst other things, four visits to the Property per year, budgeting, (including the [NAME]), billing and collection of monies, responding to queries, long term maintenance and advice on major works.

22. The Applicant told the Tribunal that the Respondent was unable to enter the Property to complete any inspection as he had changed the front door lock and they did not have a key. However, in evidence to the Tribunal, [RESPONDENT] [NAME], on behalf of the Respondent, confirmed that they had been provided with a key by the other flat owner and were able to enter the Property. The Tribunal’s Decision - Management Fee 23. The Tribunal was satisfied that a management fee was payable under the lease (paragraphs 6 and 7 of the sixth schedule). In terms of the amount charged being reasonable, the Tribunal accepted the evidence of [NAME] [NAME] and found her to be a credible witness in the way she described the work that was completed. The Tribunal was satisfied that

7 the Respondent had access to the Property and was satisfied that the work described by the Respondent was completed by them. Using its expert knowledge of the market, the Tribunal found that the management fee for the Property charged by the Respondent was reasonable. Out of Hours 24. At page 45 of the bundle was the invoice for £24 relating to the out of hours service fee for January 2022 to December 2022, and at page 50 of the bundle was the invoice for £30 relating to the out of hours service fee for January 2023 to December 2023.

25. In the schedule, the parties set out their positions in relation to the out of hours fee as follows: Item Cost Tenant’s Comments Landlord’s Comments Out of Hours £24 (2022) £30 (2023) No work been done Irrelevant. Zero pounds An external company has been appointed to provide an emergency service outside of office hours which is available 24 hours, 365 days per year should an emergency occur. This is a professional fee and to be charged for separately, as per the management agreement in place with the Landlord.

26. In evidence, the Applicant told the Tribunal that no work had been completed and that he did not have a telephone number to call the out of hours service on.

8 27. The Respondent confirmed that the landlord had notified the Applicant of the out of hours service in the welcome letter which had been sent to the Applicant at his correspondence address on 7 January 2020. Additionally, the out of hours number was given in all email signatures in emails sent by [COMPANY]. The Tribunal’s Decision – Out of Hours 28. The Tribunal accepted that the out of hours service was payable under the lease (paragraph 5 of the sixth schedule), and accepted the evidence of the Respondent that the landlord wished to provide this service and had given the Applicant details of the service. The Tribunal found that to provide an out of hours service was reasonable in the event of an emergency and that an annual fee of £24 (for 2022) and £30 (for 2023), of which the Applicant was responsible for half, was a reasonable amount for the provision on this service based on the Tribunal’s professional expertise. Professional Fee 29. The parties set out their position in the schedule as follows: Item Cost Tenant’s [NAME] (2022 only) £40

Irrelevant- Zero pounds This is a fee payable to the Landlord in order for them to review the service accounts and budget each year.

The Landlord charged £40 for this during this period and £60 was credited back when the service charge accounts for this period were issued.

30. The Applicant told the Tribunal that no work had been completed to justify this fee.

9 31. The Respondent told the Tribunal that this fee was charged by [RESPONDENT] and was a separate charge for reviewing the accounts and budget. The Tribunal’s Decision – Professional Fee 32. The Tribunal found that this fee was payable under the lease (paragraph 6, sixth schedule) and accepted the evidence of the Respondent that this fee was charged for the review of the service charge accounts and budget. The Tribunal therefore found the professional fee for 2022 payable and reasonable.

33. For the service charge year 2023, the professional fee was not listed by the Applicant as an item in dispute and therefore the Tribunal was not asked to consider this. However, the Tribunal noted that the actual accounts for 2023 recorded a figure of £823 under this heading. The Tribunal would not expect the management fee for 2023 to be significantly higher than the amount charged in previous years. The budget amount for 2023 being £100 and the actual amount for 2022 being £40. [NAME]

34. The parties set out their positions regarding the [NAME] in the schedule as follows: Item Cost Tenant’s Comments Landlord’s [NAME] £500 (2022) £500 (2023) Irrelevant. Zero Pounds The lease allows for a [NAME] to be collected, as per the seventh schedule, clause 2. This is a contribution towards the [NAME] for major works.

The Tribunal’s [NAME] 35. The Tribunal found that the lease allowed for a [NAME] (paragraph 2 of the seventh schedule) and that £500 per year was a reasonable

10 amount for the Property given it was a terraced house of brick and tile construction. The Applicant’s contribution was half, namely £250 for 2022 and £250 for 2023. The Tribunal found that this amount was therefore reasonable. [NAME]

36. The parties’ positions in relation to [NAME] were set out in the schedule as follows: Item Cost Tenant’s Comments Landlord’s [NAME] £253 (2022) £253 (2023) Irrelevant. Zero Pounds This fee is for a fire, health and safety risk assessment to be carried out. This is a professional fee and to be charge for separately, as per the management agreement in place with the landlord.

37. The Applicant’s position was that this charge was unreasonable because no work had been completed.

38. The Respondent told the Tribunal that in both 2022 and 2023 a report for the Property had been completed. This report set out the condition of the Property and, from this report, a list of items that needed action was made. The invoice for this work was at page 49 for 2022 and whilst the invoice was not in the bundle for 2023, the Respondent confirmed that the amount was the same for 2023. The Tribunal’s [NAME]

39. The Tribunal found that this amount was payable under the sixth schedule of the lease. The Tribunal accepted the evidence of the Respondent that a report for 2022 and 2023 had been prepared and this set out the work that was required at the Property. The Tribunal found that the charge was reasonable and accepted the evidence of the

11 Respondent that although there was no invoice for 2023, the amount was the same as the year 2022.

40. The Tribunal noted that the Respondent confirmed that they were not in a position to complete the remedial work identified in the reports because the Applicant had not paid the service charge. Whilst the payments made by the Applicant were not a matter for this Tribunal, the Tribunal recognised the difficulty for the Respondent to commission works if funds were not available. The Tribunal urged parties to communicate to resolve this issue.

Minor Repair – 2023 only 41. The parties’ positions in relation to minor repairs were set out in the schedule as follows: Item Cost Tenant’s Comments Landlord’s Comments Minor Repair (2023) £155 Total lie – Zero pounds A provision for general minor repairs to be carried out, as per the sixth schedule, clause 2 and 15. A total cost of £155.00 was spend during 01/01/2023- 31/12/2023 in respect of a lighting repair and upgrade, and £345.00 was credited back when the service charge accounts for this period were issued. Please see service charge accounts for this period.

12 42. At page 43 of the bundle was an invoice from [COMPANY] for £154.80. This was for attending site to conduct an emergency light survey and to send the report to the building manager, as well as a £4 parking charge. The Respondent told the Tribunal it was their view that parking was provided for under the lease. Tribunal Decision - Minor Repairs - 2023 43. The Tribunal found that this amount was payable under the lease (paragraph 2 of the sixth schedule, with paragraph 6 allowing for travel costs to be claimed). Further the Tribunal noted the responsibility on the landlord for this emergency light survey work to be completed. The Tribunal considered the invoice at page 43 and accepted that this survey work was completed and that, using its professional judgement, the amount charged was reasonable. Roof Repair - 2023 44. Although this did not form part of the service charge items that were disputed by the Applicant in his schedule, the Tribunal had the benefit of the actual accounts for 2023 and noted that roof repairs had been completed at a cost of £480 (the Applicant’s share for this work would be £240). The Tribunal was told by the Respondent that this was for the removal of ridge and eave tiles and eave battens and replacement with breathable felt, new battens and tiles. The invoice for this work was dated 16 February 2023. As this was not a disputed item, the Tribunal made no findings; however, for completeness, the Tribunal noted that the cost of £480 for work of this nature was a reasonable charge. Tribunal Decision for Items in Dispute 2022 45. For the disputed items for the service charge year 2022, the amounts that the Tribunal determined were as follows: Service Charge Year 1 January 2022 to 31 December 2022 Item Amount Applicant’s Share Accountancy Fee £120 £60 Management Fee £382 £191 Out of Hours £24 £12 Professional Fee £40 £20

13 [NAME] £500 £250 [NAME] £253 126.50 TOTAL £1,319 £659.50

46. The Tribunal therefore determined that, in respect of disputed service charges items brought to the Tribunal for the year 01/01/2022 to 31/12/2022, the sum of £1,319 was payable, of which £659.50 was payable by the Applicant. Tribunal Decision for Items in Dispute 2023 47. The amounts that the Tribunal determined for the items that were in dispute for the service charge year 2023 were as follows: Service Charge Year 1 January 2023 to 31 December 2023 Item Amount Applicant’s Share Accountancy Fee £138 £69 Management Fee £404 £202 Out of Hours £30 £15 [NAME] £500 £250 [NAME] £253 £126.50 Minor Repair £155 £77.50 TOTAL £1,480 £740

48. The Tribunal therefore determined that, in respect of disputed service charges items brought to the Tribunal for the year 01/01/2023 to 31/12/2023, the sum of £1,480 was payable, of which £740 was payable by the Applicant.

14 49. Although not disputed items in the schedule before the Tribunal, the parties’ attention is drawn to the comments of the Tribunal made at paragraph 33 in relation to professional fees for 2023, and at paragraph 44 in relation to roof repairs for 2023.

50. The Tribunal has made determinations for the service charges that were disputed. To ensure good property management, the Tribunal would expect that the service charges payments due are made promptly. [NAME] under s.20C and paragraph 5A of Schedule 11 51. In the [NAME] form, the Applicant applied for an order under section 20C of the 1985 Act and paragraph 5A of Schedule 11 to the Commonhold and Leasehold Reform Act 2002. The Tribunal did not make these orders as it found it would not be just and equitable given that the findings the Tribunal made confirmed the amounts charged by the Respondent.

Name: Judge Bernadette MacQueen Date: 1 July 2024

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 [NAME] for permission must be made to the First- tier Tribunal at the [NAME] which has been dealing with the case. The [NAME] for permission to appeal must arrive at the [NAME] 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, the property and the case number), state the grounds of appeal and state the result the party [NAME] the [NAME] is seeking.

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