A recent judgement by the Court of Appeal in the case of No 1 West India Quay (Residential) Ltd v East Tower Apartments Ltd has clarified vital points concerning the recovery of service charges and costs by landlords from tenants of long residential leases.
In terms of service charges, the Court ruled that the 18 month time limit imposed by section 20B(1) of the Landlord & Tenant Act 1985 (LTA 1985) is a strict one, furthermore, any demand for service charges must comply with the contractual provisions of the lease. Given this, Landlords must be aware that in demanding service charges, they must comply with all statutory and legislative requirements. Conversely, tenants must be alert to their ability to challenge service charges demanded out of time and contrary to the terms of the lease.
In terms of costs, the Court ruled that the provisions of the lease meant that previous litigation costs incurred by the landlord were not recoverable from the tenant. Landlords must therefore take careful note of the contractual provisions of the lease in respect of such costs before making any demands in respect of the same. Tenants on the other hand should always consider such costs carefully before deciding whether or not to accept or challenge liability accordingly.
In summary, service charges must always be properly demanded within 18 months of those costs being incurred in order to be payable. Furthermore, tenants are not automatically liable for the litigation costs of the landlord.
If you are a Landlord or Tenant and would like further advice regarding these issues, please contact the Dispute Resolution team on 01245 493939.
This is not legal advice; it is intended to provide information of general interest about current legal issues.