Establishing service charge levels and ensuring their payment, can prove to be a contentious issue between you and your tenant.
If your tenant is contesting the service charge or refusing to pay it, the first step is to carefully review their lease, alongside the RICS Professional Statement for Service Charges.
The tenant only has to pay for items and services when, and as stated in, the lease, so it is important to ensure that payment demands are being made in accordance with the service charge clause. This includes the appointment of the demands and when they are issued.
Once you have established that the demands are reasonable and are in accordance with the lease, reopen communication with your tenant to try and resolve the dispute.
Mediating in this way can reduce legal costs for both parties, whilst helping to salvage the landlord and tenant relationship.
Failing the above, you may need to resort to alternative means to recover the service charge arrears.
Options include litigation (applying to court) or Alternative Dispute Resolution (ADR).
ADR is often cited in the lease and is recommended in the first instance. It is a cost-effective solution which provides resolution through the appointment of a third party via arbitration, expert determination, or mediation.
If you cannot reach an amicable decision on the subject, you can forfeit the lease under the Property Law Act 1925 by instructing solicitors to serve a Section 146 notice.
However, this will forfeit any right to arrears, so legal advice should be taken before pursuing this route.
If you have a service charge dispute, be it dealing your tenant’s agent or are simply struggling to come to an agreement, our team of service charge experts can help.