Service Charge Disputes: A Complete Guide
Know your rights and how to challenge unreasonable service charges
Last updated: January 2026
What Are Service Charges?
Service charges are payments made by leaseholders to cover the costs of services, repairs, maintenance, and management of the building and common areas. They are usually paid on top of ground rent and are specified in your lease.
The amount you pay is typically based on a percentage of the total costs, determined by factors like the size of your flat or the number of units in the building.
What's Typically Included
The exact items covered depend on your lease terms. Always check your lease to understand what services your landlord or management company is obliged to provide and what they can charge you for.
Your Rights as a Leaseholder
The law gives leaseholders significant rights when it comes to service charges. Understanding these rights is the first step to ensuring you are not overcharged.
Right to information
You have the right to request a summary of service charge costs for the previous accounting year. The landlord must provide this within 21 days of your written request.
Right to inspect accounts
You can inspect the accounts, receipts, and other documents supporting the summary. You can also take copies (at reasonable cost). This must be facilitated within 21 days of your request.
Right to reasonable charges
Service charges must be reasonable. Costs must reflect the actual expense incurred, and services must be of a reasonable standard. You only need to pay for what is reasonably incurred.
Right to be consulted
For major works or long-term contracts, your landlord must consult you before proceeding. Failure to do so limits what they can charge you.
Statutory Protections
The Landlord and Tenant Act 1985 provides crucial protections for leaseholders regarding service charges. Two sections are particularly important:
Section 19: Reasonableness
This section states that service charges are only payable to the extent that they are reasonably incurred and, where costs relate to works or services, only if the works or services are of a reasonable standard. This is your primary protection against inflated or poor-quality work.
Section 20: Consultation Requirements
Before carrying out qualifying works costing more than £250 per leaseholder, or entering into qualifying long-term agreements (over 12 months costing more than £100 per leaseholder per year), landlords must follow a formal consultation process.
If they fail to consult properly, they can only recover £250 per leaseholder for qualifying works, regardless of the actual cost. This gives leaseholders significant leverage.
The Section 20 Consultation Process
For major works, the landlord must:
Notice of intention
Describe the proposed works and invite leaseholders to submit observations and nominate contractors within 30 days.
Obtain estimates
Get at least two estimates, including from any contractor nominated by leaseholders.
Statement of estimates
Provide a statement with at least two estimates and invite observations within 30 days.
Award the contract
Consider all observations before awarding the contract. If not choosing the lowest estimate, explain why.
18-Month Time Limit
Service charge demands must be made within 18 months of the costs being incurred, unless the leaseholder has been notified that the costs were incurred and they will be demanded later (Section 20B).
How to Challenge Service Charges
If you believe your service charges are unreasonable or incorrectly calculated, there are steps you can take to challenge them. It is best to start informally and escalate if necessary.
Step 1: Gather Information
Before raising a challenge, collect all relevant information:
- Request a summary of service charge costs
- Inspect the supporting accounts and invoices
- Review your lease for service charge provisions
- Document any issues with service quality
Step 2: Raise Concerns Informally
Write to your landlord or managing agent setting out your concerns. Be specific about which charges you are questioning and why you believe they are unreasonable. Keep copies of all correspondence.
Tips for Effective Complaints
- Be factual and avoid emotional language
- Reference specific invoice numbers or costs
- Set a reasonable deadline for response (e.g., 14 days)
- Send by email and recorded post for evidence
Step 3: Use the Landlord's Complaints Process
If informal correspondence does not resolve the issue, use any formal complaints procedure your landlord or managing agent has. Many managing agents are members of professional bodies with their own dispute resolution schemes.
Step 4: Apply to the First-tier Tribunal
If you cannot resolve the dispute, you can apply to the First-tier Tribunal (Property Chamber) for a determination on whether the charges are reasonable. This is covered in detail in the next section.
Section 27A Applications to the Tribunal
Section 27A of the Landlord and Tenant Act 1985 gives any party (leaseholder, landlord, or managing agent) the right to apply to the First-tier Tribunal (Property Chamber) for a determination on service charges.
What the Tribunal Can Decide
- Whether costs were reasonably incurred
- Whether services are of a reasonable standard
- Whether charges are payable at all
- Whether consultation was properly carried out
Application Fees
- Application fee: typically £100-£300
- Hearing fee: typically £100-£200
- Much cheaper than court proceedings
- Each party usually pays own costs
The Tribunal Process
Submit your application
Complete the application form (available from GOV.UK) and pay the fee. Include all relevant documents and a clear statement of the issues.
Case management
The Tribunal will issue directions setting out the timetable and what documents each party must provide.
Exchange of statements
Both parties submit written statements and evidence. This is your chance to set out your case in full.
Hearing
Most cases have an oral hearing (in person or video). Some straightforward cases may be decided on paper.
Decision
The Tribunal issues a written decision, usually within a few weeks of the hearing. This is legally binding.
No Requirement to Pay First
You can apply to the Tribunal even if you have not paid the disputed charges (s.27A(5) Landlord and Tenant Act 1985). However, if you do pay while a dispute is ongoing, some practitioners suggest stating in writing that payment is made "without prejudice" to your right to apply to the Tribunal. Your landlord may also take separate action to recover unpaid charges, so seek legal advice if you're unsure how to proceed.
Common Service Charge Issues
Certain problems recur frequently in service charge disputes. Understanding these can help you identify issues in your own building.
Inflated Management Fees
Some managing agents charge excessive fees for their services. Industry benchmarks vary, with management fees often ranging from 10-15% of expenditure or a fixed fee per unit. Fixed fees are generally preferable to percentage-based fees, which can create conflicts of interest – the higher the spending, the higher the fee. Question percentage-based fees on major works in particular.
Insurance Commissions
Landlords or agents may receive undisclosed commissions on building insurance. They must tell you about any commission received. If your insurance seems expensive, get comparative quotes. Leaseholders can sometimes arrange their own insurance or appoint a broker.
Poor Maintenance and Repairs
You may be charged for work that was done poorly or not done at all. Document any defects with photographs and written records. Remember, you can challenge the standard of work as well as the cost.
Failure to Consult
If your landlord failed to follow the Section 20 consultation process for major works, they can only recover £250 per leaseholder. Check whether proper notices were served and whether the required timescales were followed.
Lack of Transparency
Some landlords make it difficult to access accounts and supporting documents. This is a breach of your statutory rights. Persist in making formal requests in writing, and consider a Tribunal application if access is consistently denied.
How OpenCourtyard Helps
OpenCourtyard empowers leaseholder communities to tackle service charge issues together. Our platform provides the tools to organise, document, and coordinate effectively.
Track issues systematically
Log maintenance problems, service failures, and charge queries in one place. Build a comprehensive record that shows patterns over time and strengthens your case if you need to escalate.
Document concerns transparently
Upload and share photos, invoices, and correspondence. When multiple leaseholders document the same issues, it creates powerful evidence of systemic problems that are harder to dismiss.
Coordinate with neighbours
Service charge disputes are more effective when leaseholders work together. Use our platform to find neighbours with the same concerns, share knowledge, and potentially make joint Tribunal applications.
Create a clear record
All discussions and decisions are logged with timestamps. If you ever need to show what was agreed or what concerns were raised, you have an accessible, organised history to draw on.
Further Resources
Important: This guide provides general information and is not legal advice. Laws and procedures change – always verify current rules with official sources and consider seeking professional advice for your specific situation.
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