Reasonableness of service charges

Serving notice of a decision on leaseholders

The background

In Hyslop v 38/41 CHG Residents Co Ltd, Re Craven Hill Gardens [2017], the landlord of a development containing 36 flats made an application to the First-tier Tribunal, asking it to determine the reasonableness of service and administration charges it intended to demand from leaseholders to cover the costs of major works. The FTT asked the landlord to serve a copy of the application on leaseholders, which the landlord subsequently confirmed had been done.

On conclusion of the First-tier Tribunal proceedings, which held that the charges were reasonable, the Tribunal ordered that the landlord should send copies of the reasons for its decision to leaseholders. One leaseholder appealed the FTT’s decision six months later on the basis that she had not received a copy of the landlord’s application or the FTT’s decision.

The decision

The appeal was heard in the Upper Tribunal, which held that the FTT was outside the boundaries of its responsibilities in asking the landlord to serve copies of its decision on leaseholders.

The Upper Tribunal concluded that the original decision by the FTT should be set aside, and the reasonableness claim to be heard again by a different Tribunal.

Advice and action for landlords

This case carries the practical point for landlords that, where it is to serve copies of an application or other notice on leaseholders, it is wise to do so by means which can be recorded.

Whether this is in person, with a signature on delivery, or by ‘signed for’ post, landlords can help to prevent claims based on lack of notice or procedure by utilising means which will give them an all-important paper trail for each leaseholder. It is also crucial for landlords to ensure that contact addresses for all leaseholders are kept up-to-date and reviewed regularly.