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The lift has not worked properly for a long time. Am I entitled to withhold my next year’s service charge?

Reader’s E-mail:

I live in a block of 8 flats the top floor of which is the 4th. Since November 2014 the lift has broken down roughly once a month (if not more frequently). There are several elderly residents who have been trapped in the lift at these times. The Managing Board and the Managing Agents have called in the lift manufacturer each time when various repairs have been carried out but after a few days it breaks down again. After a whole years unreliable service would we be entitled to withhold our next Maintenance Payment (due on 1st January) as the lift has been virtually unusable during 2015. I am the Block Rep. for this block.

Reply from Service Charge Dispute Guide

1. You are not legally entitled to withhold payment of your service charge, save for a situation where either you have not been sent the required statement of ‘right and obligations’ with your bill (section 21B of the Landlord and Tenant Act 1985) or your landlord has not informed you of their address (sections 47 and 48 of the Landlord and Tenant Act 1987).

2. We do not advise that any leaseholder withhold payment of a service charge because of the possibility that they become liable for penalty charges, interest on the outstanding sum, and their landlord’s legal costs. Sadly, a leaseholder can upon occasion be liable to foot their landlord’s legal costs as an administration charge even if they successfully dispute their liability for a service charge.

3. A further problem with withholding a future service charge is that your issue is with the service which you have already paid. You would be withholding a sum which did not relate to the matters with which you are concerned.

4. This does not, however, mean that you cannot dispute your liability for the monies you have already paid as service charge contribution in respect of the lifts on the basis that the lift has not been repaired properly.

5. Assuming that your lease allows charges in respect of the lift to be made, that these charges have been calculated correctly, and that the correct billing procedure has been followed, your option would be to dispute the lift repair component of your previous service charge bills on the basis of section 19(1)(a) and section 19(1)(b) of the Landlord and Tenant Act 1985.

6. Section 19(1)(a) of the Landlord and Tenant Act 1985 states that a service charge is only payable to the extent that it is ‘reasonably incurred’. The legislation does not define what the term reasonably incurred means, however, the Upper Court and Tribunals have decided (in cases such as Forcelux v Sweetman [2001] 2 EGLR 173) that there are two aspects to this:

i. Whether the decision to incur the costs was a reasonable one.

ii. Whether the service charge is reasonable in amount.

7. When part of a building is constantly being repaired, and service charges are being levied for those repairs, the question which leaseholders should be asking is whether the repair strategy of the landlord is a reasonable one. If the same problem keeps reoccurring an effective landlord will consider whether the appropriate solution might not be replacement.

8. Depending on the precise facts of your situation there may be a case to argue that the decision to incur costs in effecting a ‘patch repair’ is not a reasonable one when what is actually required is a more extensive set of works.

9. Setting aside the issue of disputing a service charge liability there is a more general issue about whether the management of your block is taking the necessary steps to resolve this problem. From the description in your e-mail it does not sound as though this is the case. For sure lift replacement works will be expensive, but that doesn’t mean that the manager of your block is relieved of responsibility to consider such works and to seek the opinions of the residents who would have to pay for it.

10. A second basis for disputing the costs would be in relation to section 19(1)(b) of the Landlord and Tenant Act 1985 which states that a service charge is only payable to the extent that the works or services supplied were carried out to a ‘reasonable standard’.

i. Again the legislation does not define what constitutes a ‘reasonable standard’.

ii. However, good guidance on this is provided by Upper Tribunal decisions such as the one given in the case of Country Trade Limited v Noakes [2011] UKUT 407 (LC).

iii. Two important points to note in this case: an assessment of whether the work is to a ‘reasonable standard’ will be evidence based; and the test is in effect about value for money – the charge is to be reduced to the point where what was paid is commensurate with what was successfully achieved.

iv. If the lift did not work after the repairs were done, depending on the circumstances, you might have grounds to argue that nothing is payable because nothing was achieved.

11. From your e-mail it appears to us that your principle concern is not financial, but rather that the lift does not work and that steps are not being taken to address that problem.

i. Your lease and those of your neighbours are likely to contain a covenant requiring that your landlord keeps the building in good state of repair. It may well be a breach of lease for the lift to have been in disrepair for this long.

ii. One approach to the problem would be to try to make a claim in the County Court for compensation in respect of this breach.

iii. Another, perhaps less costly, approach would be to threaten to dispute the charges you have already paid by applying to a First Tier Tribunal if the lift problem is not swiftly remedied.

iv. Whichever route you take the best starting point is a written complaint.

v. It is not beneficial in the long run to either leaseholders or landlords to enter into litigation and we would hope that in response to a sufficiently strong complaint the management board and management company would look for an effective solution.

Click on the link to read more Reader’s Questions and Answers on Disputing a Service Charge