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Section 18 (Definition of a ‘Service Charge’)

Summary

1. Section 18 defines what is meant by a Service Charge and also what counts as a ‘relevant cost’ for the calculation of a Service Charge.

2. This is important because the legal rights given in Section 18 to 30 of the Landlord and Tenant Act 1985 only apply to those charges which fall within this definition.

The Definition

A Service Charge:

i. Includes any costs incurred by a Landlord in connection with the supply of services, repairs, maintenance, improvements, insurance, management for a building or estate, as defined by a lease or other type of tenancy agreement

ii. Must vary in relation to the actual costs incurred by Landlord in doing the types of things stated in 1. above; for the purposes of sections 18 to 30 of the Landlord and Tenant Act 1985 means a Variable Service Charge

Types of a charge which are not a Service Charge

1. There are a number of other types of charge which may be payable by property owners but are not included in the definition of a Service Charge given in the Landlord and Tenant Act 1985.

2. These include:

i. Ground Rent

ii. Fixed service charge costs which do not vary according to the actual expenditure of a Landlord

iii. Administration charges by landlords for such things as permission to alter a leaseholder’s home, the provision of information before sale, and the registration of a change of ownership

iv. Estate costs payable by Freeholders

Relevant Case Law

See the section of our case law library on the Definition of a Variable Service Charge.

Click on the link to read more about the Landlord and Tenant Act 1985