Buying Flat Leasehold - Utilities recharged by management company

Jenniefour

vuvuzela wrote: »

If it's per month as the OP says, then it's not that cheap at all.

Ooops! You're right.

eddddy

chappers wrote: »

I'm not sure that is true. if you charge a fixed price for third party gas and electric, regardless of consumption, I think you can charge whatever you like.

What legislation are you basing your opinion on?

The Landlord and Tenant Act 1985 doesn't allow freeholders to charge "whatever they like" as Service Charges under any circumstances.

It allows them to recover costs that they have incurred.

As LEASE says:

The Landlord and Tenant Act 1985 (as amended) states that a service charge is only recoverable by a landlord so far as the costs have been reasonably incurred.

Link: https://www.lease-advice.org/fact-sheet/service-charges/

Or looking at the Landlord and Tenant Act itself:

18 Meaning of “service charge” and “relevant costs”.

(1)In the following provisions of this Act “service charge” means an amount payable by a tenant of a [F1dwelling] as part of or in addition to the rent

(a)which is payable, directly or indirectly, for services, repairs, maintenance [F2, improvements] or insurance or the landlord’s costs of management, and

(b)the whole or part of which varies or may vary according to the relevant costs.

(2)The relevant costs are the costs or estimated costs incurred or to be incurred by or on behalf of the landlord, or a superior landlord, in connection with the matters for which the service charge is payable.

Link: https://www.legislation.gov.uk/ukpga/1985/70/crossheading/service-charges