fairness
📖 What is fairness? Meaning and definition
In UK tenancy law, particularly concerning service charges and administration charges, 'fairness' means that the amounts tenants are required to pay must be reasonable and justifiable. This principle often comes into play when a lease states that a tenant must pay a 'fair proportion' of the landlord's expenses. Historically, some leases gave landlords absolute discretion to decide what constituted a fair proportion, but this is now considered to infringe upon Section 27A(6) of the Landlord and Tenant Act 1985.
When a dispute arises regarding the fairness of such charges, a First-tier Tribunal (Property Chamber) has the authority to determine what a fair proportion should be. This means the Tribunal can override the landlord's discretion and decide for itself if the charges are reasonable. Tenants, known as leaseholders, can apply to the Tribunal to challenge charges they believe are unfair or unreasonable.
The Tribunal's role is to assess the evidence and circumstances to ensure that the charges levied are indeed fair. This can involve examining the annual expenditure incurred by the landlord, the basis for calculating the proportion payable by the tenant, and the overall reasonableness of administration charges, such as those for ground rent collection. The aim is to protect tenants from arbitrary or excessive charges.
📋 Requirements
- The charge in question must be a proportion of annual expenditure or an administration charge.
- The lease agreement may state that the proportion payable is to be a 'fair one'.
- The landlord's discretion in determining the 'fair proportion' may be challenged.
- The matter must be brought before a First-tier Tribunal (Property Chamber) for determination.
📝 Procedure
- An applicant (leaseholder) submits an application to the First-tier Tribunal (Property Chamber) to challenge the liability to pay service charges or administration charges.
- The Tribunal invites other lessees in the same buildings who wish to carry out a similar exercise to join the proceedings.
- The Tribunal considers the application and evidence, determining for itself what constitutes a fair proportion or whether charges are reasonable.
- The Tribunal issues a decision based on its findings.
💡 Examples
- A tenant challenges their service charge, arguing that the proportion they are asked to pay for building maintenance, based on the property's floor size, is not fair.
- Multiple leaseholders from the same block of flats apply to the Tribunal to determine if the service charges levied by their landlord are reasonable and fairly calculated.
- A tenant disputes an administration charge for collecting ground rent, asking the Tribunal to assess if the fee is fair and justifiable under the Commonhold and Leasehold Reform Act 2002.
- The Tribunal rules that a landlord's absolute discretion in setting a 'fair proportion' of expenditure infringes legal provisions, allowing the Tribunal to set the fair amount itself.
📚 Legal basis
- Landlord and Tenant Act 1985
- Commonhold and Leasehold Reform Act 2002
❓ Frequently asked questions
What does 'fairness' mean for my service charges?
For your service charges, 'fairness' means that the amount you are asked to pay should be reasonable and justifiable, not simply whatever the landlord decides. The First-tier Tribunal can assess whether the charges are fair, even if your lease gives the landlord discretion.
Can my landlord decide what is 'fair' without challenge?
No, not absolutely. While your lease might state that a proportion payable is at the landlord's discretion, settled law indicates that such a provision infringes Section 27A(6) of the Landlord and Tenant Act 1985, allowing the Tribunal to decide what is fair.
What if I think my administration charge for ground rent collection is unfair?
You can apply to the First-tier Tribunal (Property Chamber) under Schedule 11 to the Commonhold and Leasehold Reform Act 2002 to determine your liability to pay the administration charge and assess its fairness.
How does the Tribunal determine what is a 'fair proportion'?
The Tribunal will consider the landlord's annual expenditure, the terms of your lease, and all relevant circumstances to decide what proportion of the costs is reasonable and fair for you to pay.
Do I need a solicitor to challenge unfair charges?
While you can represent yourself, the process can be complex. Consulting a qualified solicitor specialising in residential property law can help you understand your rights and navigate the Tribunal proceedings effectively.
Can other tenants join my application to the Tribunal?
Yes, the Tribunal may invite other leaseholders in the same building who wish to have a similar exercise carried out in respect of their leases to join in the proceedings, which can sometimes strengthen a case.