Interim Service Charge Demands
1st March 2017 by Mark Timberlake
Most leases require a sum to be paid on account of service charges for costs that will be incurred in the future. These are commonly called ‘interim demands’.
Unless the lease specifies that the amount is fixed in a particular sum, the amount that can be demanded is limited by section 19 (2) Landlord and Tenant Act 1985 to …”no greater amount than is reasonable…and after the relevant costs have been incurred any necessary adjustment shall be made by repayment, reduction or subsequent charges or otherwise.”
There have been two recent Upper Tribunal cases which have clarified how this cap works.
In the case of Dollis v Vezdani it was made clear that the cap of £250 from any individual flat owner that applies if there has been a failure to follow the consultation requirements does not apply to an interim demand. However failure to comply with the consultation requirements is one of the factors to be taken into account as to whether the interim demand is reasonable.
In Knapper v Francis it was decided that when the Tribunal came to look at this it should only take into account circumstances that existed at the time of the demand and should disregard matters which became known only after that date. A sum that was reasonable at the time of the demand did not retrospectively become an unreasonable sum once it became clear that the anticipated expenditure could be avoided.
For further advice in relation to recovery of service charges, please contact:
Mark Timberlake: email@example.com or 01202 755200