Best Accountants in Erith

A lease is a private contract between you and your landlord which sets out the rights and duties of both parties. The lease sets out exactly what you have bought, what is exclusively yours and what is shared; what services the landlord must deliver and what proportion you must pay.

A decision of the Lands Tribunal in 2010 clarified that the need for a S20B notice may only arises when there is deficit at the year end. In Summary The 18 month rule does not apply if the annual accounts or expected accounts will show a surplus. The 18 month rule does not mean interim service charge demands in advance allowed by the lease can be withheld by the lessees. The 18 month rule only applies if there is a deficit known or expected at the end of the financial year. But the 18 month period only starts from the date in the financial year when you have spent the payments in advance; not form the beginning of the year if you are billing in advance.

Any leaseholder can challenge the reasonableness and payability of any service charge item before a Tribunal, whether that service charge has already been paid or not. The reasonableness challenge is whether the costs incurred or to be incurred are reasonable or works carried out reasonably. The first thing to do is read and understand your lease. Whether or not you are liable to pay usually depends on your lease. However, if the demand is unreasonable then the law is behind you. A service charge demand must show the landlords name and address and be accompanied by a summary of your rights and obligations. The demand is not payable until both requirements have been complied with.

Service charge money is held in trust in accordance with the Section 42 of Landlord and Tenant Act 1987. This is why it is best practice to separate service charge monies from other monies of RMCs.

S42 also requires that any interest earned on the trust funds for service charges belongs to that trust fund so it should be credited back to the service charge accounts.