Service charge and 18 month rule
When it comes to issuing service charge demands, landlords must stick to the letter of leases or risk recovering nothing at all – even if that results in tenants receiving an unwarranted windfall.
In the case of Skelton v DBS Homes (Kings Hill) Limited [2017], the Court of Appeal made that point in relieving a residential tenant of liability to pay service charges over a four-year period.
Under the terms of the relevant lease, service charge demands were required to be accompanied by estimates of projected expenditure over the next year. No such estimates were included for four years. That oversight was later corrected, but the tenant argued that was not liable to pay the charges due to the landlord’s failure to comply with the terms of the lease.
The tenant’s arguments did not persuade the First-tier or Upper Tribunals. However, in allowing his appeal, the Court cited Section 20B of the Landlord and Tenant Act 1985. That provision, often called the 18-month rule, requires that costs incurred by landlords more than 18 months prior to the service of demands for payment are not recoverable from tenants.
The Court found that the 18-month rule applies equally to demands for payment on account as to demands in respect of costs that have already been incurred. The purpose of the rule was to ensure that tenants receive proper demands for service charges within 18 months of the relevant costs being incurred.
That had not happened in the current case because the demands had not become valid until the estimates were also served on the tenant. If the outcome of the case resulted in the tenant receiving a windfall, that was a consequence of the landlord’s default.
[edit] Find out more
[edit] Related articles on Designing Buildings Wiki
Featured articles and news
Download your free guide.
Four new types of prior approval for solar developments
Online Planning Portal application types from 5 September.
Election fails to spark construction industry revival
Contract awards and planning; post election.
Making diversity and inclusion easy for SMEs
The CIOB tool for companies with limited resources.
Sustainable Futures: Redefining Retrofit for Net Zero Living
BSRIA Briefing 2024, initial speakers announced.
Looking back at the UK's first Passivhaus leisure centre
Reflections on St Sidwell’s Point with CIAT.
A-Level results and electrical apprenticeships
Electrical Skills Index highlights areas with skills shortages.
One of the world's more unusual drive-throughs.
A quick introduction.
Hadrian's Wall Path and the national trails
The trails are heritage assets in their own right.
Articles on timely advice and hydraulic lime.
Building Designers Association of Australia
CIAT and BDAA sign Memorandum of Understanding.
Built Environment Inclusive partners issue statement committed to inclusion.
Building regulation requirements can have unintended consequences.
CIOB announces 2024/25 vice president
Sustainability champion Professor Saul Humphrey.
Accelerating towards a net-zero built environment.