NEWS

Landlords are creating service charge accounts and billing leaseholders at times and in amounts not permitted by leases

 

The standard service charge clause in many leases provides for the landlord to estimate service charges in advance each year. The leaseholder pays the amount estimated, usually in two instalments six months apart

 

At the beginning of the next year, the landlord takes into account the actual cost of services for the previous year, to assess the amount payable for the next year

 

This process is repeated every year, so there is always certainty at the beginning of each service charge year how much the leaseholder will pay that year. That is why many landlords permit leaseholders to pay by direct debit and standing order

 

The practice of some landlords is to create a separate service charge account for each leaseholder and to add costs to that account as they are incurred. These added costs are not then taken into account when the landlord sets the next annual estimate

 

If the leaseholder doesn’t pay the added costs, the landlord serves a demand on the leaseholder for the balance outstanding on the separate service charge account, with the threat of legal action if the demand is not paid

 

If the leaseholder has set up a direct debit to pay the instalments, the landlord increases the direct debit by an amount to clear the balance on the separate service charge account by the year end, without the leaseholder’s consent