Leasehold service charge surprise - What are my options?

CyberStein

Hi there.

Yesterday I found an invoice for £5500 in service charges backdated to 2020 in my postbox. It was addressed 17 September 2024.

I've lived here since 2020 and own my property, however it is leasehold and present in an apartment block which is managed. As far back as I can remember, I've not once had contact with the management company about the service charges, however I have regularly paid ground rent.

The management company renamed at one point and then got taken over by another since, but I'm certain there's been no attempt to get me to pay these service charges since I moved in, and honestly, and maybe embarassingly, they slipped my mind (there's been a hell of a lot going on over these years...), but it seems with the constantly swapping of management companies etc, I may have slipped the net with them.

I've had contact with the various management companies over the years, including the billing department, and not once have they queried the lack of payment of these service charges.

As far as I'm aware, it was their responsibility to get my direct debit setup with them upon them being instructed I purchased the property I now live in.

Obviously a charge of £5500 out of nowhere is an extortionate amount to pay.

Am I protected here by the 18-month rule of section 20b of the Landlord and Tenant Act 1985 in this case?

Again, I must stress, I've not once been queried by the management company (or landlord?) regarding these fees and I have not once had paperwork through the post or via email regarding a request to pay them, or a quote, or anything of the sort.

eddddy

Yep - the 18 month rule should apply 

(Unless there's something you haven't mentioned - for example, you told the management company to send the bills to another address, or you [or your solicitor] failed to serve a Notice Of Assignment after you purchased the flat.)

The Service Charge is only due once you receive a valid Service Charge Demand (bill).

But your comment about responsibility for setting up a direct debit is probably wrong and irrelevant - so it might be better to leave that out of the mix.

It's the management company's responsibility to send you the bill, and it's your responsibility to pay it. (It almost certainly doesn't say in the lease that it's anyone's duty to set up a direct debit).



Just to clarify - case law says it's 18 months from the date the management company pays an invoice or becomes liable to pay an invoice.

So for example, if the electricity company have only just sent a bill for communal electricity used in 2020 to the management company, the 18 months clock starts when they got the bill. But that's unlikely to apply to most bills.

CyberStein

eddddy said:

Yep - the 18 month rule should apply 

(Unless there's something you haven't mentioned - for example, you told the management company to send the bills to another address, or you [or your solicitor] failed to serve a Notice Of Assignment after you purchased the flat.)

The Service Charge is only due once you receive a valid Service Charge Demand (bill).

But your comment about responsibility for setting up a direct debit is probably wrong and irrelevant - so it might be better to leave that out of the mix.

It's the management company's responsibility to send you the bill, and it's your responsibility to pay it. (It almost certainly doesn't say in the lease that it's anyone's duty to set up a direct debit).



Just to clarify - case law says it's 18 months from the date the management company pays an invoice or becomes liable to pay an invoice.

So for example, if the electricity company have only just sent a bill for communal electricity used in 2020 to the management company, the 18 months clock starts when they got the bill. But that's unlikely to apply to most bills.

I see, thank you. I do not believe there's something I've failed to mention.

I can confirm that notice was served on the management company for the service charges and ground rent on the day of completion to notify them of my details by my solicitor. In this case, I should be protected then, right?

Schwarzwald

CyberStein said:

... I've lived here since 2020 and own my property, however it is leasehold and present in an apartment block which is managed. As far back as I can remember, I've not once had contact with the management company about the service charges, however I have regularly paid ground rent ...

.... Obviously a charge of £5500 out of nowhere is an extortionate amount to pay ....

it is convenient to look at it "out of nowhere", but i would challenge that.

You knew there is a management company.
you knew there is a service charge.
you knew you are only paying ground rent.
you probabl knew the average service charge rate from the time of purchasing the leasehold.
a proper thing would have been to put away each year or even month a small portion of your money to pay for the service charge, even if you are not actually paying it out.

so this isnt coming our of nowhere.
and it might not be extortionate.
you simply didnt prepare and save for it.

if there is a legal way to challenge being billed this amount retrospectively, you should use it.
but dont make yourself believe this came out of "nowhere". it didnt.

CyberStein

Schwarzwald said:

CyberStein said:

... I've lived here since 2020 and own my property, however it is leasehold and present in an apartment block which is managed. As far back as I can remember, I've not once had contact with the management company about the service charges, however I have regularly paid ground rent ...

.... Obviously a charge of £5500 out of nowhere is an extortionate amount to pay ....

it is convenient to look at it "out of nowhere", but i would challenge that.

You knew there is a management company.
you knew there is a service charge.
you knew you are only paying ground rent.
you probabl knew the average service charge rate from the time of purchasing the leasehold.
a proper thing would have been to put away each year or even month a small portion of your money to pay for the service charge, even if you are not actually paying it out.

so this isnt coming our of nowhere.
and it might not be extortionate.
you simply didnt prepare and save for it.

if there is a legal way to challenge being billed this amount retrospectively, you should use it.
but dont make yourself believe this came out of "nowhere". it didnt.

I am aware, yeah, that's why I mentioned I was embarrassed. I have savings for this kind of thing, so it's not the end of the world.

eddddy

CyberStein said:

I see, thank you. I do not believe there's something I've failed to mention.

I can confirm that notice was served on the management company for the service charges and ground rent on the day of completion to notify them of my details by my solicitor. In this case, I should be protected then, right?

Yep - it's hard to see a reason why the 18 month rule wouldn't apply.

You can ask/tell the management company to adjust your bill on that basis.


But a problem will arise if they say you're wrong - and refuse to adjust the £5500 bill. If you don't pay it in full, they're likely to add 'late fees', debt collector's fees, solicitor's fees, etc.

You could refuse to pay and challenge the original bill and the extra fees at tribunal.

• If you win, that's great - you don't have to pay the 'late fees', debt collector's fees, solicitor's fees, etc
• But if you lose - you'll have to pay the original bill plus 'late fees', debt collector's fees, solicitor's fees, etc.

On the other hand, you could pay the full £5500 now (to avoid the extra fees), and then challenge the original bill

• If you win, that's great - you get some of your £5500 back (and you haven't paid any fees)
• If you lose - you won't get any of the £5500 back - but you won't have to pay any 'late fees', debt collector's fees, solicitor's fees, etc.

Hoenir

eddddy said:

CyberStein said:

I see, thank you. I do not believe there's something I've failed to mention.

I can confirm that notice was served on the management company for the service charges and ground rent on the day of completion to notify them of my details by my solicitor. In this case, I should be protected then, right?

Yep - it's hard to see a reason why the 18 month rule wouldn't apply.

You can ask/tell the management company to adjust your bill on that basis.

Where does the money come from then? Magic money trees are increasingly in short supply. Some else pays has limits. 

eddddy

Hoenir said:

eddddy said:

CyberStein said:

I see, thank you. I do not believe there's something I've failed to mention.

I can confirm that notice was served on the management company for the service charges and ground rent on the day of completion to notify them of my details by my solicitor. In this case, I should be protected then, right?

Yep - it's hard to see a reason why the 18 month rule wouldn't apply.

You can ask/tell the management company to adjust your bill on that basis.

Where does the money come from then? Magic money trees are increasingly in short supply. Some else pays has limits. 

Based on what the OP says, the management company have messed up. 

The management company have paid bills, and the law says they cannot claim the money back from the leaseholders. So the management company won't be reimbursed. They have to take the hit.


So if, for example, the management company were borrowing money from the bank (or elsewhere) to pay those bills, and they now cannot repay their lenders - their lenders might choose to make the management company bankrupt.

In that case, the lenders would take the hit.

fullyrendered

Can you break it down for us to give you more detailed advice? 

Does the demand contain a breakdown that shows £x for the service charge year 20/21, and so on for each part of this £5,500.

Some of the cost might be in time, does it include the estimate for the next year?

Does it all relate to 'services' or are there any planned works or an amount to be put to a sinking fund?

CyberStein

fullyrendered said:

Can you break it down for us to give you more detailed advice? 

Does the demand contain a breakdown that shows £x for the service charge year 20/21, and so on for each part of this £5,500.

Some of the cost might be in time, does it include the estimate for the next year?

Does it all relate to 'services' or are there any planned works or an amount to be put to a sinking fund?

Hiya

From 2020, it's 6 monthly periods containing -
Half Year Apartment/Estate S/C in Advance, also worded as Half Yearly Estate Service Charge in advance

And one single entry of -
Estate Service Charge Year End Adjustment

Each entry is billed with a different figure and there's nothing regarding any works. Latest period stated is from 1 Oct 24 to 31 Mar 25 which is £703.77.

Cheers.

Edit: I've also now been in touch with Citizen's Advice and they're taking a look and recommend that I contact The Leasehold Advisory Service, so I have arranged an appointment there. I've also been in contact with the solicitor that completed on my property who is asking internally about the situation for advice.

35har1old

eddddy said:

Yep - the 18 month rule should apply 

(Unless there's something you haven't mentioned - for example, you told the management company to send the bills to another address, or you [or your solicitor] failed to serve a Notice Of Assignment after you purchased the flat.)

The Service Charge is only due once you receive a valid Service Charge Demand (bill).

But your comment about responsibility for setting up a direct debit is probably wrong and irrelevant - so it might be better to leave that out of the mix.

It's the management company's responsibility to send you the bill, and it's your responsibility to pay it. (It almost certainly doesn't say in the lease that it's anyone's duty to set up a direct debit).



Just to clarify - case law says it's 18 months from the date the management company pays an invoice or becomes liable to pay an invoice.

So for example, if the electricity company have only just sent a bill for communal electricity used in 2020 to the management company, the 18 months clock starts when they got the bill. But that's unlikely to apply to most bills.

But is he a tenant or landlord