Avoid making these common service charge errors

Landlords should take care to avoid these common service charge errors to prevent non-payment and disputes with leaseholders.

If you want to avoid time-consuming disputes it’s important to ensure that you are issuing service charge demands that are fair, ‘reasonably incurred’, legally recoverable and good value for money.

Here are five common mistakes that landlords make when issuing service charge demands.

Ignoring the 18 month rule

According to Section 20B of the Landlord and Tenant Act 1985, once a landlord receives an invoice, they should either bill leaseholders or notify them of the cost within the next 18 months for it to be valid for service charge.

Charging for unnecessary work

Landlords should only bill for work that is ‘reasonably incurred’ according to Section 19 of the Landlord and Tenant Act 1985. Valid charges include those that for maintenance, repairs or improvements that are necessary and that tenants will benefit from.

Not keeping supporting documentation

It is very important to keep organised and comprehensive documentation and evidence of all services and work that is undertaken. This includes invoices, receipts, and information about the individuals or businesses that carried out the work. Documentation is extremely important evidence if a leaseholder challenges the service or work that has been carried out.

Failing to consult tenants

Landlords should make sure that they understand the rules regarding Section 20 notices inside out before issuing one to ensure that they get it right. Section 20 notices are used to consult leaseholders on proposed work and the associated costs that would be incurred before it is carried out.

Not maintaining the property

Failing to carry out regular maintenance on a property can result in it falling into disrepair and suffering serious and expensive damage and problems. If a leaseholder feels that the property was neglected and that is why expensive repair work is required, then they may argue that the cost of the repairs was not ‘reasonably incurred’ and that they should not be charged for it.

For help and advice with collecting service charge arrears, get in touch with our team of SCAR experts at Clearway