Tenant Successfully Challenges Service Charges and Administration Charges

OUTCOME: Allowed

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FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY) Case reference : LON/00AU/LSC/2024/0651 HMCTS code : P: PAPERREMOTE Property : [ADDRESS], [POSTCODE] Applicant: [redacted]

[NAME] [COUNSEL] : [NAME] ([COUNSEL]) Respondent: [redacted] : [COUNSEL] [NAME] ([COUNSEL] [NAME]) Type of application : Service charges under section 27A of the Landlord and Tenant Act 1985 Tribunal members : Judge Tueje Mr A Fonka FCIEH CEnvH MSc Venue : 10 [ADDRESS] [POSTCODE] Date of decision : 26th March 2025

DECISION

In this determination, statutory references relate to the Landlord and Tenant Act 1985 unless otherwise stated.

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DECISION OF THE TRIBUNAL (1) The Tribunal makes the determinations set out below under the various headings in this decision. (2) The applications under section 20C and paragraph 5A of Schedule 11 of the Commonhold and Leasehold Reform Act 2002 are granted for the reasons stated at paragraphs 38 to 63 below. THE APPLICATION 1. By an application dated 2nd October 2024, the Applicant seeks a determination pursuant to section 27A regarding the payability of service charges for the years 2023/2024 and 2024/2025 relating to the cost of replacing the windows and doors.

2. He also seeks a determination under Schedule 11 of the Commonhold and Leasehold Reform Act 2002 on whether administration charges are payable for late payment fees.

3. The total sum in dispute is £3,267.07. THE

BACKGROUND 4. The Application is in respect of the property known as [ADDRESS], [POSTCODE] (the “Property”), a purpose-built flat.

5. By a lease dated 10th August 2000, the Applicant’s predecessor was granted a 999-year term starting 12th March 1999. The current parties to the lease are the Respondent, the Landlord, and the Applicant, to whom the leasehold interest was assigned on around 3rd June 2019.

6. Relevant clauses in the lease are detailed below.

7. Clause 1 of the lease includes the following definitions. The Flat 1.3 “the Flat” means the flat described in the Particulars and Part I of the First Schedule

3 The Service Charge 1.6 “the Service Charge” means the fraction proportion appropriate to the Flat as set out in the Particulars hereto (or such other percentage proportion as may be determined pursuant to Part II of the Fourth Schedule) of the aggregate Annual Maintenance Provision for the whole of the Block for each maintenance year (computed in accordance with Part III of the Fourth Schedule)

Special Contribution 1.7 “Special Contribution” means any amount which the Company shall reasonably consider necessary for any of the purposes set out in the Fifth Schedule hereof for which no provision has been made within the Service Charge and for which no reserve provision has been made under the Fourth Schedule, Part III, paragraph 2(ii)

8. By clauses 3.2 to 3.4 of the lease, the lessee covenants to pay to the Respondent the Service Charge, including any balancing charge, and the due proportion of the Special Contribution. And by clause 4.1, the Respondent covenants to carry out the repairs and provide the services set out in the Fifth Schedule.

9. Part I of the First Schedule describes the demise as follows: Part I – Description of the Flat 1. The Flat more particularly described in the Particulars 2. The Flat includes (for the purpose of the obligations as well as grant): (i) the internal plastered coverings and plaster work of the walls bounding the Flat (but not the doors and the door frames and windows and window frames fitted in such walls) and (ii) the plastered coverings and plaster work of the walls and partitions lying within the flat and the doors and door frames fitted in such walls and partitions and (iii) the plastered coverings and plaster work of the ceilings and floorboards and the surfaces of the floors of the of the Flat and any balcony thereof and

4 (iv) all conduits which are laid in any part of the Block and serve exclusively the Flat and (v) all fixtures and fittings in or about the Flat (other than tenants fixtures and fittings) and not hereinafter expressly excluded

but excludes: (a) any part or parts of the Block (other than conduits expressly included) lying above the said surfaces of the ceilings of below the said floor surfaces (b) any of the main timbers and joists or concrete or steel framework of the Block or any of the walls or partitions therein (whether internal or external) except such of the plastered surfaces thereof and the doors and door frames fitted therein as are expressly excluded (c) the windows and window frames (other than glass therein) (d) any conduits in the Block which do not serve exclusively the Flat 10. The Third Schedule deals with the lessee’s covenants, including the obligation to pay the rent and the service charge; paragraph 2 of the Third Schedule impose sanctions for non-payment. Paragraph 2(b) reads:

To pay the Company on a full indemnity basis all costs and expenses incurred by the Company or the Company's Solicitors in enforcing the payment by the Lessee of any Rents Service Charge Maintenance Adjustment Special Contribution or other monies payable by the Lessee under the terms of this Lease

11. The relevant provisions in the Fourth Schedule are as follows.

Part III – Computation of Annual Maintenance Provision

1. …

2. The Annual Maintenance Provision shall consist of a sum comprising: (i) The expenditure estimated as likely to be incurred in the Maintenance Year by the Company for the purposes mentioned in the Fifth Schedule together with

5 (ii) An appropriate amount as a reserve for or towards those of the matters mentioned in the Fifth Schedule as are likely to give rise to expenditure after such Maintenance Year being matters which are likely to arise either only once during the then unexpired term of this Lease or at intervals of more than one year during such unexpired term including (without prejudice to the generality of the foregoing) such matters as the decorating of the exterior of the Block and the repair of the structure and the repair of the Conduits 12. Paragraph 3(a) to 3(c) of Part III of the Fourth Schedule, continues by setting out how the balancing charge will be calculated.

13. The works, services and costs comprising the Service Charge are dealt with in the Fifth Schedule. The relevant provisions are below. THE FIFTH SCHEDULE Purposes for which the Service Charge is to be applied Decoration and repair of the structure 1. (a) As often as may in the opinion of the Company be necessary to prepare and decorate in appropriate colours with good quality materials and in a workmanlike manner all the outside rendering and metalwork of the Block usually decorated

(b) To keep the interior and exterior walls and ceilings and floors of the Block and the whole of the structure roof foundations and main drains boundary walls and fences of the Block (but excluding such parts thereof as are included in the Flat by virtue of the definition contained in Part I of the First Schedule and the corresponding parts of all other flats in the Block) in good repair and condition 14. Paragraph 12 of the Fifth Schedule continues. Other services and expenses 12. To carry out all repairs to any other part of the Block or the Estate for which the Company may be liable and to provide and supply such other services for the benefit of the Lessee and other tenants of the flats in the Block and to carry out such other repairs and such improvements works additions and to such other repairs and such improvements works additions and to defray such other costs (including the modernisation or replacement of plant and machinery) as the Company shall consider

6 necessary to maintain the Block as a block of good class residential flats or otherwise desirable in the general interest of the lessees of the flats in the Block 15. The bundle contains a letter from IPM, the [NAME], to the Applicant, dated 25th August 2023. It refers to a notice of intention issued pursuant to section 20 on 22nd February 2023 in respect of replacing the windows. The 25th August 2023 letter is in the form of a paragraph B statement, which is part of the requirement of the section 20 consultation process. The purpose of a paragraph B statement is to inform [NAME] of the estimates obtained and any observations received in response to the notice of intention. The bundle also contains a revised tender report in respect of these works, which included the cost of the works, scaffolding, a contingency and project management.

16. By a letter dated 10th April 2024, Mr [NAME] wrote to IPM regarding the works. In particular, the letter stated that the works were not necessary, nor were they covered by paragraphs 1(a) and 1(b) of the Fifth Schedule of the lease. Therefore, Mr [NAME] did not consider the cost of these works could be recovered from the Applicant as service charges.

17. By an e-mail sent on 24th April 2024, IPM responded “The lease does provide provision for these works.” However, no provision was specified. This was followed by an e-mail from Mr [NAME] to IPM querying which windows required replacing, and when it was anticipated the other windows would need to be replaced. It also asked which provision in the lease provides for the cost of the works to be recovered through the service charge.

18. IPM wrote to the Applicant on 16th May 2024 explaining its justification for carrying out the intended works. It stated that having received reports from some [NAME] that the windows need to be replaced, it had decided to arrange for the windows and doors to be replaced as a cost effective and proactive step to address these issues. It stated that a pre-condition report was not mandatory, and had not been obtained in respect of the works.

19. This was followed by a reminder from IPM sent to the Applicant on 29th May 2024, which referred to an earlier reminder, and stated the Applicant had not paid £3,268.17 in respect of service charges.

20. By a further letter dated 6th June 2024, Mr [NAME] asked IPM how many [NAME] had reported that their windows needed to be replaced, Mr [NAME] also complained about IPM for not obtaining a pre-condition report before deciding to carry out the works. [NAME] chased for a response on 7th August 2024. IPM responded on 20th August 2024 stating:

7 The decision to replace all windows has been made as part of a comprehensive improvement plan for the building. Our process involves addressing both reported and potential issues, ensuring that all windows meet the highest standards of safety and functionality. This proactive approach ensures that any concerns, whether previously reported or not, are fully addressed during the replacement process. Carrying out a pre-conditioned report will be a further cost for [NAME] of at least another £10k which is not required nor budgeted for.

21. The Application was submitted several weeks after that exchange of correspondence; it indicated the Applicant was content for there to be a determination on the papers. The Tribunal issued standard directions dated 24th October 2024, which were amended on 24th January 2025, directing that the matter would be determined on the papers in the week commencing 17th March 2025.

22. The Tribunal was provided with a 290-page electronic bundle pursuant to the amended directions. THE LEGISLATION 23. The relevant legislation is set out in the Appendix.

THE ISSUES 24. It is not expressly argued that the actual cost of the works are unreasonable, or that the standard of works is unreasonable. The Tribunal’s standard Schedule of Disputed Service Charges contains the Applicant’s specific challenges to these works.

25. Issue 1 - The Applicant states: That under the terms of the lease the tenant is not obligated to make a contribution towards the cost and / or replacement of other windows in the building.

26. The Respondent responds as follows: Disagreed. The Applicant is obliged to pay the apportioned service charge cost in accordance with Clause 3.2 of the Headlease. Pursuant to Clause 12 of the Fifth Schedule, the service charge covers all repairs to the Block of Estate for which the Respondent may be liable. The Respondent is entitled to carry out

8 such other repairs and such improvements works additions and to defray such other costs as the Respondent shall consider necessary to maintain the [NAME] as a good class residential flat or otherwise desirable in the general interest of the lessees of the flats in the [NAME].

27. Issue 2 – The Applicant states: In any event the works are not necessary.

28. The Respondent responds as follows: Disputed. The Respondent had received several complaints from the [NAME] within the [NAME] that the windows were deteriorating and were in need of replacement. The primary cause of disrepair was the wooden frames of the windows / doors at the [NAME]. The Respondent refers to paragraphs 33 – 39 of the Statement of Case. The works were necessary and desirable to ensure long-term sustainability of the [NAME] and the continued safety of the residents.

29. Issue 3 – The Applicant states: [NAME] have taken it upon themselves to embark upon major works and the [NAME] in an e-mail dated 28/04/2024 said “the decision to replace all windows has been made as part of a comprehensive improvement plan for the building.” 30. The Respondent responds as follows: Disputed. The Respondent provided consideration as to the cause of action at the [NAME] concluded that the cost of repairs to the framing of the windows and doors would result in longer-term cost requirement as opposed to replacing the units with uPVC. By Clause 4.1 of the Headlease, the Respondent was required to manage the [NAME] in accordance with the relevant legislation, the provisions within the Headlease and the rights and obligations under the Headlease. Following considerations, the Respondent complied with consultation process and requirements set out under Section 20 of the Landlord and Tenant Act 1985.

31. Issue 4 – The Applicant states:

9 [NAME] have made this decision without obtaining a pre-condition Report, as to whether or not such work is necessary.

32. The Respondent responds as follows: The Respondent maintains that it is not a mandatory requirement for a pre- condition report to be commissioned prior to commencing works under Section 20 LTA 1985.

33. Issue 5 – The Applicant complains it is not reasonable to impose an administration charge in respect of these service charge costs because they are disputed, and are the subject of pending proceedings.

34. The Respondent’s response is that under the terms of the lease it is entitled to impose a charge were service charges are demanded, but have not been paid in accordance with the lease. THE DETERMINATIONS

35. The Tribunal reached its determinations in this case after considering the written evidence, including documents referred to in that evidence, and taking into account its assessment of the evidence.

36. This determination does not refer to every matter raised by the parties, or every document the Tribunal reviewed or took into account in reaching its decision. However, this doesn't imply that any points raised, or documents not specifically mentioned, were disregarded. If a point or document was referred to in the evidence that was relevant to a specific issue, it was considered by the Tribunal.

37. The Tribunal has made findings on the disputed service charges and administration charges at paragraphs 38 to 63, including its reasons for the decisions reached. Issue 1 - The Provisions of the Lease The Tribunal’s Decision 38. In our judgment, the lease provides for the cost of the replacement windows and doors to be recovered through the service charge. Reasons for the Tribunal’s Decision

10 39. By paragraph 1(b) of the Fifth Schedule, the cost of keeping the whole of the structure of the Block in good repair and condition covers the cost of repairing the windows and doors. There is an exception to this provision, which excludes those parts of the Block which are included in the definition of the Flat, as stated in Part 1 of the First Schedule.

40. Paragraph 2(i) of Part 1 of the First Schedule defines the boundary of the Flat to be limited to the internal facing wall plaster of the bounding walls, but expressly excludes the doors, door frames, windows or window frames fitted in those walls. Furthermore, paragraph 2(c) of the First Schedule also expressly excludes the windows and window frames from coming within the definition of the Flat.

41. Therefore, reading paragraph 1(b) of the Fifth schedule alongside Part 1 of the First Schedule indicates that the windows and window frames and doors and door frames do not form part of the Flat. In our judgment these are all part of the structure, which according to paragraph 1(b) of the Fifth Schedule the cost of keeping the structure in good repair and condition is a cost that is met through the service charge.

42. Our conclusion is supported by the decision in Irvine’s Estate v Moran (1992) 24 HLR 1, which held that external windows and doors are part of the structure of a building. We consider the terms of the lease in this case are consistent with the definition of the windows and doors being part of the structure. Consequently, under the terms of the lease, the cost of repair and replacement is payable through the service charge. Issue 2 – The Necessity of the Works The Tribunal’s Decision 43. In our judgment, it was reasonable for the Respondent to arrange for the replacement windows and doors. Reasons for the Tribunal’s Decision 44. Section 19(1) limits the cost of recovering service charges to costs which are reasonably incurred for the cost of works that are carried out to a reasonable standard. We do not consider this requires the Respondent to establish that the works were necessary: we need to be satisfied that the works were reasonable.

45. Based on the information provided by the managing agent we consider it was reasonable to arrange for the replacement doors and windows to be fitted. The [NAME] state that complaints were received from [NAME] that some

11 windows needed repairs and/or some required replacement. The Respondent’s position would have been stronger if it had addressed those queries raised by Mr [NAME]. In particular, the queries regarding how many [NAME] had complained about the condition of the windows, how many windows did it consider needed to be replaced, and when it was anticipated the other windows would require replacement. Nonetheless, the Respondent has consistently maintained that it has received complaints from [NAME] regarding the condition of the windows; this is set out in correspondence and its statement of case dated 19th February 2025, which is signed by its solicitor. In a witness statement also dated 19th February 2025 from [NAME], a director of IPM, which contains statement of truth, its averred the Respondent’s statement of case is accurate.

46. The bundle contains two witness statements on behalf of the Applicant. The First is the Tribunal’s Schedule of Disputed Service Charges, which has been completed by or on behalf of the Applicant. The second statement is dated 28th February 2025, and is provided by Mr [NAME]. At paragraph 7 of Mr [NAME] witness statement he states “there is substantial resistance by the vast majority of the tenants to the works.” However, none of those tenants have provided a witness statement, nor are any details given regarding the identity of any of those tenants. We note Mr [APPELLANT] is attesting to what the Applicant has told him, which would make this evidence double or multiple hearsay.

47. We find it is more likely than not that multiple [NAME] have complained about the condition of their windows, as the Respondent maintains. That is the position of the Respondent’s property manager who was in correspondence with Mr [NAME]. That position is supported by the evidence in [NAME] witness statement, a director of the [NAME]. We note Mr [NAME] witness statement, but without evidence from the other tenants he refers to, we do not find it is a sufficient basis to conclude the service charge costs are unreasonable. In any event, the fact that a majority of [NAME] are resistant to the works does not necessarily make the works unreasonable.

48. Although we were provided with photographs supplied by each of the parties, it was not possible to tell from the photographs provided by either party what the condition of the windows and window frames were. However, as the window frames are wooden, we take into account that defects may arise that may not be easily identifiable in a photograph.

49. Judging from the date of the lease, and noting that the original freeholder was the developer, it appears that the windows are approximately 25 years old. In our judgment that is at the lower end of the typical life expectancy of wooden framed windows, but it is nonetheless on the balance of probability likely that some of the window frames may have required repairs and/or replacement as the [NAME] report. That being the case, the Respondent had different options available to them. They could have repaired and or replaced only those

12 windows which were in need of such work. However the Respondent embarked on a different course, namely to repair all of the windows and doors.

50. The Respondent’s justification for that is that it was a proactive measure which would be cost-effective in the long term and benefit the continuing functionality of all the windows in the building. We note that scaffolding is required in order to carry out these works. Taking that into account as well, we consider that while there were other options potentially available to the Respondent, the option the Respondent has elected is a reasonable course of action to take. We also consider it is a cost-effective way of dealing with the situation they were faced with. That is because if, as we have accepted, some of the window frames had started to deteriorate, it seems likely that other windows or window frames in due course and possibly in the short or medium term would have also started to deteriorate. The cost of incremental repair to the windows responding as and when complaints were raised or faults were detected could be a more costly way of dealing with this matter, particularly if on those future occasions it would be necessary to hire scaffolding again.

51. Therefore, in the circumstances, we find it was reasonable for the Respondent to arrange for the replacement of the windows and doors. Issue 3 – The Works as Improvements The Tribunal’s Decision 52. We find it was reasonable for the Respondent to carry out these works as part of an improvement plan for the building Reasons for the Tribunal’s Decision 53. It seems the works were carried out as part of a comprehensive improvement plan, but the only aspect of that plan which we are asked to consider is the replacement of the doors and windows.

54. Having regard to the terms of the lease, the Fifth Schedule makes provisions for works of repair and improvement. Therefore, to the extent that these works amount to an improvement, we consider that the cost may be recovered through the service charge.

55. As is typical with such repairing covenants, paragraph 1(b) of the Fifth schedule confers a broad discretion on the Respondent regarding maintenance, repairs, and improvements. We note that includes carrying out works and improvements to maintain the Block as a block of good class residential flats. We consider the Respondent’s proactive approach to replacing all windows, even though only

13 some were reported to be in a poor condition, to be within this provision. Once window frames show visible signs of deterioration, it is likely to jeopardise the appearance of the Block as a block of good class residential flats. Issue 4 – Obtaining a Pre-Condition Report The Tribunal’s Decision 56. In our judgment, it was reasonable for the Respondent to proceed with these works even though it had not obtained a pre-condition report to assess whether or not the works were necessary. Reasons for the Tribunal’s Decision 57. As previously stated, the legal test is whether the works were reasonable, therefore a pre-condition report to identify whether the works were necessary would not be determinative.

58. Having regard to the overall cost of these works it may be that other freeholders in the Respondent’s position may well have obtained a pre-condition report before embarking on these works. The Respondent states that the cost of obtaining such a report would have been around £10,000. Mr [NAME] argues that obtaining a report would therefore have been cost-effective. That is because the Applicant’s proportion of those costs would amount to around £295, compared to thousands of pounds the Applicant is now required to pay as a contribution towards the cost of these works.

59. Nonetheless, we do not find it unreasonable that the Respondent proceeded with these works without first obtaining a pre-condition survey. The decision to carry out the works was based on the complaints received, and the anticipated further deterioration of the windows. The manner in which the Respondent chose to address this falls within its property management discretion, provided the actions taken are reasonable. We have determined that the Respondent’s course of action was cost-effective, and consequently, we find it was a reasonable course of action to take. Although the cost of a pre-condition report was relatively modest compared to the cost of works, if the pre-condition report had confirmed the Respondent’s view that replacement of the windows and doors was appropriate that would simply have increased the [NAME]’ expenses. Again, this was a judgment call, and we consider the Respondent exercised reasonable judgment. Issue 5 – Late Payment/Administration Charges The Tribunal’s Decision

14 60. We find both administration charges, at £42 each, are reasonable. Reasons for the Tribunal’s Decision 61. The Applicant’s position is that it is unreasonable to impose administration charges for the late payment of service charges when those service charges are being disputed and are the subject of a tribunal application to determine their reasonableness.

62. In our judgment, the Applicant’s outstanding challenge in respect of these costs does not justify the Applicant failing to pay the disputed service charges. The provisions of the lease set out at paragraph 10 above confirm the Applicant is obliged to pay his service charges. That obligation is not suspended on the grounds that the Applicant is seeking to challenge the payability of the service charges themselves. The appropriate course for a leaseholder seeking to challenge service charges which have already fallen due, is to pay those service charges under protest.

63. Furthermore, the express terms of the lease, in particular paragraph 2(b) of the Third Schedule, makes provision for charges being imposed where there has been a failure to pay sums that have fallen due. In the circumstances we consider imposing the administration charge and the amount of the administration charge are reasonable. THE APPLICATIONS FOR COSTS The Tribunal’s Decision on Costs 64. The Tribunal makes orders under 5A of paragraph 11 of the Commonhold and Leasehold Reform Act 2002, and under section 20C so that none of the Landlord’s costs of the tribunal proceedings may be passed to the Applicant through any service charge. Reasons for the Tribunal’s Decision 65. Although the Respondent has successfully opposed this Application, we nonetheless make the order under section 20C, and 5A of paragraph 11 of the Commonhold and Leasehold Reform Act 2002, as sought by the Applicant. Our reasons are as follows: The Applicant made legitimate inquiries of the managing agent prior to bringing this Application. In particular, Mr [RESPONDENT] asked the Respondent to specify which clauses within the lease it relied on to recover the disputed service charge costs. The response received merely referred to the lease in general terms to justify the disputed service charges. The Respondent did not specify the terms of the lease being relied on until after the Application was

15 brought. Additionally, Mr [RESPONDENT] made other legitimate inquiries of the Respondent regarding the number of windows requiring repairs and or replacement, the anticipated timeline for replacing the remaining windows, and the number of [NAME] who had complained about their windows. The Respondent did not adequately address these inquiries either at the time they were made, nor to date. The Respondent has not explained its failure to address these inquiries. Although we consider the Respondent acted reasonably in proceeding with the works, it has not explained its failure to address the Applicant’s legitimate inquiries. It is understandable that a leaseholder, faced with a bill for thousands of pounds of repairs, may have inquiries regarding those costs, and we consider the leaseholder is entitled to expect and receive an adequate response to those inquiries. Name: Judge Tueje Date: 26th March 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 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. 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).

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APPENDIX

Extracts from the Landlord and Tenant Act 1985

18.— Meaning of “service charge” and “relevant costs” (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.

19.- Limitation of service charges: reasonableness (1) Relevant costs shall be taken into account in determining the amount of 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.

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(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.

27A Liability to pay service charges: jurisdiction (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, (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, ….

(5) But the tenant is not to be taken to have agreed or admitted any matter by reason only of having made anu payment.

66. Schedule 11 of the Commonhold and Leasehold Reform Act 2002 deals with administration charges, and includes the following provisions:

Extracts from Schedule 11 of the Commonhold and Leasehold Reform Act 2002

Paragraph 1 – Meaning of Administration Charge

18 (1) In this Part of this Schedule “administration charge” means an amount payable by a tenant of a dwelling as part of or in addition to the rent which is payable, directly or indirectly— (a) for or in connection with the grant of approvals under his lease, or applications for such approvals, (b) for or in connection with the provision of information or documents by or on behalf of the landlord or a person who is party to his lease otherwise than as landlord or tenant, (c) in respect of a failure by the tenant to make a payment by the due date to the landlord or a person who is party to his lease otherwise than as landlord or tenant, or (d) in connection with a breach (or alleged breach) of a covenant or condition in his lease.

(2) But an amount payable by the tenant of a dwelling the rent of which is registered under Part 4 of the Rent Act 1977 (c. 42) is not an administration charge, unless the amount registered is entered as a variable amount in pursuance of section 71(4) of that Act.

(3) In this Part of this Schedule “variable administration charge” means an administration charge payable by a tenant which is neither— (a) specified in his lease, nor (b) calculated in accordance with a formula specified in his lease.

(4) An order amending sub-paragraph (1) may be made by the appropriate national authority.

Paragraph 2 – Reasonableness of Administration Charges A variable administration charge is payable only to the extent that the amount of the charge is reasonable.

Paragraph 4 – Notice in Connection with Demands for Administration Charges (1) A demand for the payment of an administration charge must be accompanied by a summary of the rights and obligations of tenants of dwellings in relation to administration charges.

(2) The appropriate national authority may make regulations prescribing requirements as to the form and content of such summaries of rights and obligations.

(3) A tenant may withhold payment of an administration charge which has been demanded from him if sub-paragraph (1) is not complied with in relation to the demand.

19 (4) Where a tenant withholds an administration charge under this paragraph, any provisions of the lease relating to non-payment or late payment of administration charges do not have effect in relation to the period for which he so withholds it.

Paragraph 5 – Liability to Pay Administration Charges (1) An application may be made to the appropriate 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.

(2) Sub-paragraph (1) applies whether or not any payment has been made.

(3) The jurisdiction conferred on the appropriate tribunal in respect of any matter by virtue of sub-paragraph (1) is in addition to any jurisdiction of a court in respect of the matter.

(4) No application under sub-paragraph (1) 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 (other than a post-dispute arbitration agreement) is void in so far as it purports to provide for a determination— (a) in a particular manner, or (b) on particular evidence, of any question which may be the subject matter of an application under sub- paragraph (1)