Residential service charges and recharging tenants
An interesting decision in the recent case of Assethold Limited v Adam and others [2022] UKUT 282 (LC) considered the liability for the costs of ongoing building owners’ duties under the Building Safety Act 2022.
In this case, the landlord of a residential block of flats carried out an assessment of the building in relation to the health, safety, and fire risk elements. The findings of the report revealed that there was a medium risk of fire at the building such that the potential consequences of a fire were extreme. As a result, the report identified recommendations in the interim for the use of a waking watch or the installation of an extended alarm system.
The landlord decided to hire a waking watch and the cost of this was to be borne by the residential flat tenants via the service charge. The tenants argued that there was no power in the leases for the landlord to demand a service charge payment on an ad hoc basis during the accounting year and further that the cost of the waking watch was not reasonably incurred.
If the landlord seeks to recover under a residential service charge, then it must be reasonable. The reasonableness test is found in section 19 of the Landlord and Tenant Act 1985 (section 19). There are two elements to the reasonableness test:
- The costs must have been reasonably incurred; and
- Any works or services to which the costs relate must be of a reasonable standard.
The Upper Tribunal found in favour of the landlord. By carrying out and following a report that identified the risk was “intolerable” and implementing the recommendation to put in place a waking watch was considered reasonable. The cost was therefore reasonably incurred and, subject to the assessment of the standard of service provided under section 19(1)(b) Landlord and Tenant Act 1985, was recoverable from the tenants.
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This is not legal advice; it is intended to provide information of general interest about current legal issues.
