Websters Accountants - Property Accounting & Property Auditors

Another legal decision has been published in an article by Shoosmiths about the ‘fair’ apportionment of service charges between tenants in a new build development of residential flats.

The article concludes:

It is important that landlords and managing agents consult before setting service charge levels because in this case, the service charges amounted to more than 100% of the landlords costs.  This encouraged the tenants to seek a legal decision to vary their leases in order to adjust the apportionment between the leaseholders to a more “fair” share.

This decision should not be seen as a get out of jail card for landlords in getting the service charge percentages wrong, provided they all add up to 100%. Rather, it highlights the difficulties in calculating fair service charge proportions especially when dealing with premises of different sizes and in larger estates where different parts get the benefit of different services.

It is in no one’s interests that tenants should feel aggrieved by what they perceive as an unfair service charge, and in new developments in particular it should be possible to avoid this. An essential element of doing so is a robust analysis of the service charge as early as possible in the scheme.

Read the full article here.