Pursuant to section 20B(1) of the Landlord and Tenant Act 1985 (the Act), a landlord is prohibited from making a demand for service charges if those costs were incurred more than 18 months before a demand for payment was served on the tenant. Section 20B(2) of the Act tempers the effect of section 20B(1) of the Act by enabling a landlord to preserve its position if within 18 months beginning with the date the relevant costs were incurred, the tenant was notified in writing that a service charge demand for those incurred costs would be made at later date.
In Cookson v Assethold Ltd [2020] UKUT 0115 (LC) the Upper Tribunal (Lands Chamber) (UT) was asked to determine whether the landlord had complied with the provisions of section 20B of the Act for the year 2016/2017.
The appellant was the long lessee of a flat in a converted terraced Victorian house comprising of three self-contained flats. Since October 2017 the property had been managed by the lessees through a RTM company.
Under the service charge provision of the appellant’s lease, she had to pay a service charge on account. An initial advance payment was made by the lessee at the start of the term, subsequently a notice certified by an accountant was given to the lessee each year. The notice set out the actual expenditure for the previous year, the estimate for the coming year, and the amount payable by the lessee and the credit being given for advance payments.
Before the First-tier Tribunal (FTT), the lessee argued that she had not received a service charge demand from the respondent landlord for the year 2016/2017. The landlord had instead sent a demand to the RTM company only. The bundle of documents before the FTT contained an undated schedule of service charges for expenses since 24 March 2016 (the Schedule). The costs listed for the whole building totalled £10,730.74 and the lessee’s one-third apportionment totalled £3,576.91. The FTT determined that, in accordance with section 20B of the Act, the landlord had given the lessees sufficient notice of the estimated costs of the service charges. They did not have to be in a set form of defined figures, be certified or be accompanied by the summary of rights to still be adequate notice. The lessee appealed.
In setting aside the decision of the FTT, the UT commented that it was impossible to identify which document the FTT had found to be compliant with section 20B of the Act. It could not have been the Schedule because it was undated, addressed to the RTM company and was not certified as required by the lease. Further, it failed to set out the tenant’s rights and obligations as required by section 21B of the Act. Further, a demand sent to the lessee in February 2017 was not certified and also failed to set out the tenant’s rights and obligations as required by section 21B of the Act.
Relying on the decision of the Court of Appeal in Skelton v DBS Homes (Kings Hill) Ltd [2017] EWCA Civ 1139; [2017] PLSCS 159, the UT reiterated that it simply was not enough under section 20B of the Act that the tenant had received information that their landlord proposed to make a demand if a valid demand for payment of the service charge was not subsequently sent.
Elizabeth Dwomoh is a barrister at Lamb Chambers
