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Terms Explained: S to Z

Section 20 Notice: A special kind of letter a landlord must send a leaseholder before they enter into a contract to carry out Qualifying Works or before they enter into a Qualifying Long Term Agreement. For more information see Section 20 (Landlords must Consult).

Section 20B Notice: A special kind of letter a landlord can send out if they can’t issue a demand for payment of a service charge within 18 months of a cost being incurred. For more information see Section 20B (the ’18 month rule’).

Services enjoyed in common: The cost of cleaning, maintaining, repairing and sometimes improving the common areas within a building or an estate, and the cost of maintaining, repairing and sometimes improving the structure of a building.

Service Level Agreement: An agreement between a landlord and a service provider setting out the standard, nature and frequency of the services provided.

Schedule of rates: A list of prices for building works, including both the cost of labour and of materials. These are produced by building companies as a way of quoting for work, and by organisations such as The Royal Institute of Chartered Surveyors as guidance in assessing the value of building works.

Shared Ownership: An arrangement where the ‘Shared Owner’ purchases a percentage of a Leasehold Property and then pay the Landlord a rent based on the percentage they do not own. Over time the idea is that the Shared Owner purchases further shares in the Lease until they own 100%, this process is known as ‘Staircasing’. It is normal for Shared Ownership leases to state that the Shared Owner pays 100% of the Service Charge from the outset even though they only own part of the Lease.

Sinking Funds: Also known as a ‘reserve’ funds. This is a sum of money collected by a Landlord from Service Charge payers to use to pay for future Service Charge costs, typically to fund infrequent items of major expenditure such as a roof replacement. For Landlords other than Registered Providers (ie. Councils and Housing Associations) there is a legal obligation to hold any such funds in a designated trust account, for more information on this see Section 42 (Service Charge Contributions to be Held in Trust) and Section 42A (Service Charge Contributions to be Held in a Designated Account).

Specified Rent: The amount of rent which a Shared Owner pays. The Specified rent is a proportion of the Gross Rent which equals the proportion of the Lease which they have not purchased.

Statute Law: This is law made by Parliament, or by Government with the authority to do so given by Parliament, in the form of Acts of Parliament or Statutory Instruments. This is different to Case Law (or Common Law) which is Law made by Upper Courts or Tribunals. For more information see Overview of Case Law for Leaseholders.

Summary of tenant’s rights and obligations: A demand for a service charge must be accompanied by this statement. This document must be in the correct format as set out by the government. See Summary of tenant’s rights and obligations

Sweeping up clause: clause in lease intended to cover a range of possibilities without ever giving specifics. For example, a lease may say something along the lines of the ‘Landlord may charge for any services and works it deems to be necessary for the good management of the building’. See Can I Be Charged for Something Not in My Lease

Tendering Process: This term refers to the way a Landlord or Manager goes about getting quotes for work from contractors or other service providers. This process can be very complicated with adverts placed in a number of publications or websites, and very struct rules for assessing any quotes received. At the other end of the scale, the tendering process can be very simple with one or to contractors or service providers being telephoned and verbally asked for a quote and the decision being made by an individual without consultation with residents.

Tripartite Lease: This is  a Lease which includes three parties: a Freeholder, a Leaseholder and a ‘Manager’. The Manager is responsible for providing the services and maintaining the buildings and external areas. This type of lease is very common for newer private residential leasehold developments. The Manager is typically appointed by the Freeholder.

Upper Tribunal (Lands Chamber): This is where decisions made about Service Charges by a First Tier Tribunal can be appealed. If the Upper Tribunal believes that an First Tier Tribunal has applied the law incorrectly, the decisions of the First Tier Tribunal can be overturned by the Upper Tribunal. Decisions by the Upper Tribunal are important because they set a binding legal precedent which First Tier Tribunals must follow. For a summary of some of the more important Service Charge related Upper Tribunal decisions see our Case Law Library.

Variable Service Charge: The amount is a proportion of the actual amount of expenditure on providing services. It goes up and down in relation to the cost of providing the services.

Varying a Lease: The Landlord and Tenant Act 1987 gives both Landlord and Leaseholder the right to apply to a First Tier Tribunal to change (‘vary’) the wording of a lease or leases. A lease can also be changed by agreement between the Landlord and Leasehold by making a Deed of Variation. To read more about applying to to Vary a Lease see our guide to the Landlord and Tenant Act 1987.