Service Charges: Your Rights Under the Landlord and Tenant Act 1985

Service charges, the payments a leaseholder makes towards the costs of maintaining and running their building, are one of the most disputed areas of leasehold ownership. This guide sets out the actual legal limits on what a landlord can charge, the consultation a landlord must run before major works, and how to challenge a charge you think is unreasonable.

The Legal Framework: Landlord and Tenant Act 1985

Most of the law governing service charges for long residential leases in England and Wales sits in the Landlord and Tenant Act 1985, as amended over the years. Three sections matter most in practice: section 19 sets the standard a charge must meet, section 20 requires consultation before major spending, and section 27A gives leaseholders a route to challenge a charge at an independent tribunal.

Section 19: Charges Must Be Reasonable

Section 19 of the Act provides that relevant costs are only taken into account in a service charge to the extent that they were reasonably incurred, and, where the costs relate to works or services, only to the extent that the works or services are of a reasonable standard. The amount a leaseholder has to pay is capped accordingly. This means a landlord cannot simply pass on whatever it spent; both the amount spent and the standard of what was delivered have to be reasonable, and a leaseholder can challenge either.

The section also covers charges collected in advance of costs being incurred: a landlord cannot demand more than a reasonable amount up front, and any difference between what was collected and what was actually spent has to be accounted for, either by repayment, a reduction in a later charge, or an additional charge if too little was collected.

Section 20: Consultation Before Major Works or Long-Term Contracts

Section 20 requires a landlord to consult leaseholders before committing to certain spending, with the specific thresholds set out in the Service Charges (Consultation Requirements) (England) Regulations 2003:

• Qualifying works: consultation is required where any individual leaseholder's contribution to the cost of the works would exceed £250.
• Qualifying long-term agreements: consultation is required where any individual leaseholder's contribution under a contract running for more than 12 months would exceed £100 a year.

The consultation process generally involves the landlord notifying leaseholders of the proposed works or contract, giving them an opportunity to nominate a contractor and comment on estimates, and providing a statement of the landlord's response to those comments before proceeding.

What happens if a landlord skips consultation

If a landlord does not follow the required consultation steps, and has not obtained dispensation from the First-tier Tribunal, the amount it can recover from each leaseholder is capped at the relevant threshold: £250 for qualifying works, or £100 a year for a qualifying long-term agreement, regardless of what was actually spent. A landlord can apply to the tribunal for dispensation from all or some of the consultation requirements, which the tribunal may grant, typically where it is satisfied leaseholders were not prejudiced by the failure, but dispensation is not automatic and often comes with conditions.

These thresholds, £250 and £100 a year, have not changed in over 20 years, which is one reason the government has been consulting separately on whether the section 20 process needs updating; that consultation has not yet resulted in a change to the figures themselves.

Section 27A: Challenging a Service Charge at the Tribunal

Section 27A of the Act allows a leaseholder to apply to the First-tier Tribunal (Property Chamber) for a determination of whether a service charge is, or would be, payable, and if so, the amount, who it is payable to, when, and how. This covers both charges already demanded and charges that would apply if particular costs were incurred, so a leaseholder does not necessarily have to wait until after paying, or after a cost is actually spent, to get clarity.

Crucially, a term in a lease that tries to say service charge disputes must be resolved in a particular way, effectively trying to remove the tribunal's jurisdiction, is void, except for a genuine post-dispute arbitration agreement entered into after the dispute has already arisen. This means a leaseholder's right to bring a section 27A application cannot be signed away in advance through the lease itself.

The First-tier Tribunal (Property Chamber) also handles related leasehold matters, including lease extension and enfranchisement valuations, so it is worth checking its current guidance on making an application, including any fees, before starting a claim.

Reforms Not Yet in Force: Standardised Demand Forms

Section 55 of the Leasehold and Freehold Reform Act 2024 would require landlords to demand service charges in a specified form, containing specified information, provided in a specified manner, with a demand that does not comply losing its effect for non-payment or late payment purposes. This has not been commenced. The detailed requirements are expected to be set out in future regulations, which have not yet been made. Until that happens, existing service charge demand practice, without a mandatory standardised form, continues. See our guide to leasehold reform for the wider picture on what is and is not currently in force under the 2024 Act.

Scotland: A Different System

Scotland does not have leasehold in the residential sense, and does not have an equivalent to sections 19, 20 and 27A of the Landlord and Tenant Act 1985. The nearest equivalent for shared costs in Scotland is the regulation of "property factors", the term for the companies or organisations that manage and maintain common parts of residential property, under the Property Factors (Scotland) Act 2011. That Act requires property factors to register, follow a statutory code of conduct, and gives homeowners a route to the First-tier Tribunal for Scotland if a factor breaches the code, but it is a distinct regime built around a different form of property ownership, not a Scottish version of the English and Welsh service charge rules.

How to Challenge a Service Charge in Practice

If you think a service charge is too high or covers unreasonable work, start by asking your landlord or managing agent, in writing, for a breakdown of the costs and how they were calculated. Check whether the spending should have triggered section 20 consultation, and if it did, whether that consultation actually happened. If you remain unsatisfied, you can apply to the First-tier Tribunal (Property Chamber) under section 27A for a determination, without needing to instruct a solicitor, though advice is worth getting for a high-value or complex dispute. The Leasehold Advisory Service (LEASE) provides free, impartial guidance on service charge disputes and the tribunal process for leaseholders in England and Wales.

This article explains the general legal framework for service charges in England and Wales and is not a substitute for advice on your specific lease or dispute. For related topics, see leasehold reform and ground rent, or the UK Property Law hub. If you rent rather than own, see the Tenant Rights hub.