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Housing Seminar: Partnerships with the Public Sector – Avoiding the pitfalls
Thu 31 May 2012
Minerva House, 5 Montague Close, London, SE1 9BB
Landlord wins management charge dispute
Wed 18 Jan 2012
A council that owns a block containing several flats has won its legal dispute with a tenant over the recovery of management charges.
The leaseholder of two flats owned by London Borough of Camden was obliged to pay part of the cost of repairing and maintaining the properties.
However, a dispute arose because the tenant believed some costs had been counted more than once and did not fall under the terms outlined by their lease.
The case went to the Lands Chamber of the Upper Tribunal, which had to decide whether the landlord's recovery of management charges through the service charge should have been capped at ten per cent.
It decided that no costs had been counted twice, since the council's finances had been recorded transparently and that it had therefore acted appropriately.
MarK Vinall, a partner at Winckworth Sherwood Solicitors, commented: "Charging management fees to flat owners is often the subject of dispute; flat owners may be unhappy with the quality of management or assert that there has been no management at all; landlords wish to pass on the full costs of management fees they incur whether internally or with third parties.
"The starting point is the flat owner's lease, as it is the contract that sets out the extent of such fees that the landlord can recover. In older leases there may be no such right at all. In others there may be a cap on the sum that can be recovered. If the landlord surmounts this hurdle then flat owners' second line of defence is the statutory scheme of protection against unreasonable service and administration charges.
"While on the facts the landlord won in this instance, it demonstrates the problems landlords can face and the strength of protection flat owners can call upon. Both need to scrutinise these provisions carefully prior to purchasing their interest and, in the landlord's case, making demands."
