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Residential service charges – a new hazard

Wed 16 Jan 2013

A High Court decision in December 2012 has thrown into doubt most landlords’ interpretation of the £250 threshold per dwelling for resident consultation prior to undertaking works.  

In many cases, landlords only consult residents when any resident’s service charge contribution to any specific set of works may exceed £250.  However, the court’s judgment in Phillips and Goddard v Francis [2012] EWHC 3650 (Ch) suggests that the £250 threshold applies to all works that a resident should contribute to, regardless of what the works relate to. In other words,  if a landlord is undertaking major works which exceed the £250 threshold for any contributing resident, this means that any further works, of whatever value, are then subject to the consultation requirement.  This is because the contribution to all works must be aggregated in order to establish whether the £250 threshold is exceeded, instead of applying the threshold to each set of works. Whether an annual threshold of £250 is available remains to be established.

Our detailed briefing on the case and how landlords can manage the risk of irrecoverable service charges will be published shortly

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