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Challenging service charges

Challenging service charges. Shabnam Ali-Khan. Statutory authority. Landlord and Tenant Act 1985 Landlord and Tenant Act 1987 Commonhold and Leasehold Reform Act 2002 Housing and Regeneration Act 2008. Crucial questions. Are the costs payable ? Are the costs reasonable ?

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Challenging service charges

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  1. Challenging service charges Shabnam Ali-Khan

  2. Statutory authority • Landlord and Tenant Act 1985 • Landlord and Tenant Act 1987 • Commonhold and Leasehold Reform Act 2002 • Housing and Regeneration Act 2008

  3. Crucial questions • Are the costs payable ? • Are the costs reasonable ? • LVT vs. County Court • Section 27A LTA 1985

  4. The Service Charge Demand • Sections 47 and 48 Landlord and Tenant Act 1987 • Must be accompanied by the summary of rights and obligations, since October 2007 • Administration charges must also be accompanied by similar summary

  5. Construction of Lease • Entitled to recover? • Improvements vs. repairs • Management costs • Legal costs • Section 20C LTA 1985 • Sinking fund • Sweeper clause

  6. Machinery in the lease • Advance payments? • And when due? • Certification? • And by whom ? • Audited accounts required ? • Inspection of documents? • Sections 21 and 22 of Landlord and Tenant Act 1985, 2002 Act changes not coming into force. Superceded by Housing and Regeneration Act changes regarding statement of accounts.

  7. Historic service charges • Section 20B of the LTA 1985 • ("City of Westminster vs. Hammond") • Limitation Act 1980: rent- 6 years, service charges- 12 years

  8. Statutory Consultation • Section 20 LTA 1985 • (as amended by Section 151 of the CLRA 2002) • 3 stage process now. • Applicable to QLTA • LVT can determine

  9. Right to Buy • Section 125 notice • Payment options • Various Public Sector landlords will have payment options

  10. "Continental vs. White" • Historic neglect • Set-off?

  11. Quantum • Reasonably incurred? • Reasonable standard? • Advance payments reasonable?

  12. Decent Homes • National strategy for renewal of local authority housing designed to deal with disrepair issues • Certain requirements to be met by 2010:”All property owned and managed by the council must meet the Decent Homes Standard. To meet the standard, property must have reasonably modern facilities, be warm and weatherproof.” (DirectGov website)

  13. Decent Homes • Huge service charge demands for local authority lessees • Huge number of enquiries for LEASE • LVT applications • Limited if within reference period for RTB leases • Has to be recoverable under the lease

  14. Assistance for Decent Homes • Landlord may provide a loan • Mandatory and Discretionary Directions • Buy-back • Exchange sale scheme

  15. 31 Worship Street Tel: 020 7374 5380 Fax: 020 7374 5373 Email: info@lease-advice.org Website: www.lease-advice.org

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