Challenging a Service Charge

A leaseholder may apply to the First-tier Tribunal (Property Chamber) for a determination of whether a service charge is payable, and if so in what amount. This right is statutory under section 27A of the Landlord and Tenant Act 1985. The grounds for challenge include that the costs were not reasonably incurred, that the works or services were not carried out to a reasonable standard, that the demand was not validly made, or that the charge falls outside what the lease permits.

A charge that has been agreed or admitted by the leaseholder, or previously determined by a court or tribunal, is not within the tribunal's jurisdiction under section 27A. Agreement is construed narrowly — payment of a demand alone does not necessarily constitute agreement. An explicit written agreement to pay a specific amount does. A leaseholder who intends to challenge a charge should not make a payment in terms that could be construed as agreement to the amount.

Informal Challenge

Before making a tribunal application, a leaseholder should write to the landlord or managing agent setting out the specific charge disputed and the grounds for dispute. The informal challenge is not a statutory prerequisite for a tribunal application — but it creates a documented record, may prompt the landlord to provide supporting evidence, and may resolve the matter without proceedings. If the matter does proceed, the correspondence forms part of the evidence.

The written challenge should identify the demand by reference (date, amount, period covered), state the precise grounds on which the charge is disputed, and request a response within a reasonable period. Any evidence already obtained — such as a section 21 summary of costs or documents from a section 22 inspection — may be referred to. The letter should be sent to the managing agent, or directly to the landlord if there is no agent, as specified in the lease or as shown on the demand. Keep copies of all correspondence.

If the landlord or agent responds, the response itself becomes evidence. Non-response within a reasonable period is also relevant, particularly if the tribunal subsequently considers the conduct of the parties.

Application to the First-tier Tribunal

If the informal challenge does not resolve the dispute, or if the landlord fails to respond, a leaseholder may apply to the First-tier Tribunal (Property Chamber) under section 27A of the Landlord and Tenant Act 1985. The application is made using the form available from the HM Courts and Tribunals Service (HMCTS) online portal at GOV.UK. Applications may be submitted online or by post to the regional office of the Property Chamber covering the property.

The application should include: the completed form; the lease or relevant extract; the service charge demand being challenged; the summary of rights accompanying the demand; any correspondence with the landlord or agent; and any evidence already gathered (section 21 summary, section 22 documents, invoices, quotes). A clear statement of which charges are disputed and on what grounds will assist the tribunal in identifying the issues.

An application fee is payable. Fees are set by tribunal fee regulations and may be updated. Current fees should be verified at GOV.UK before submitting. The tribunal will acknowledge receipt and issue directions for the proceedings. See LHF/06 — First-tier Tribunal (Property Chamber) for the full process.

Evidence to Gather

The burden of proof in service charge proceedings rests primarily on the landlord to demonstrate that the costs were reasonably incurred and the works or services were to a reasonable standard. A leaseholder should nevertheless gather and present any evidence that supports the challenge.

Relevant documents include: the lease (which defines what can and cannot be charged, and any procedural requirements the landlord must meet); all service charge demands and covering letters; the section 21 summary of costs for the relevant period; any accounts, receipts, or invoices obtained under a section 22 inspection; correspondence with the landlord or managing agent; and any previous tribunal or court determinations concerning service charges in the same building.

Where the dispute relates to major works, alternative contractor quotes provide direct evidence that the landlord's costs were not competitively obtained. A report from a chartered surveyor may be relevant where the quality or necessity of works is in issue. Where the dispute relates to management fees, comparisons with RICS published guidance on managing agent charges may assist.

Joint Applications

Where multiple leaseholders in the same building are disputing the same or related charges, they may make a joint application to the First-tier Tribunal. A single application listing multiple applicants is more efficient and avoids duplication of proceedings. A determination on a joint application is binding on all parties to it.

Joint applications may carry additional weight, particularly where the tribunal is assessing the reasonableness of a charge that has been levied across the building. One leaseholder's agreement to a charge — or their decision not to challenge — does not bind others. Leaseholders who have paid a charge without dispute may still apply to the tribunal for a prospective determination on a proposed charge, or may apply to challenge future demands.

A residents' association or leaseholders' association can assist in coordinating a joint approach and may be a useful vehicle for pooling evidence. A recognised tenants' association has additional statutory rights to be consulted on service charges and to request information — see the Landlord and Tenant Act 1985, section 29.

The No-Costs Jurisdiction

The First-tier Tribunal operates under a no-costs rule in residential leasehold proceedings. Neither party is normally ordered to pay the other's legal or professional costs, regardless of the outcome. This means a leaseholder who brings an application is not routinely exposed to the landlord's solicitor costs if the application fails. The rule is set out in the Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013.

Two exceptions apply. First, the tribunal may make a costs order against a party for unreasonable or vexatious conduct — this is exceptional. Second, a landlord who incurs legal costs in defending a service charge application may attempt to recover those costs through the service charge itself, as an item of management expenditure. To prevent this, a leaseholder may apply under section 20C of the Landlord and Tenant Act 1985 for an order that the landlord's costs of the proceedings are not to be regarded as relevant costs for service charge purposes. A section 20C application can be made within the same proceedings as the main challenge; it is common practice to include it in the original application.

After a Determination

A First-tier Tribunal determination is binding on the parties. If the tribunal determines that a charge is not payable, or is only payable in a reduced amount, the landlord must comply. The leaseholder is not liable for the disallowed amount.

If the landlord fails to comply with a tribunal determination, the leaseholder may enforce it through the county court. A tribunal determination can be registered as a county court judgment, which then carries standard enforcement options. The landlord may appeal a tribunal decision to the Upper Tribunal (Lands Chamber) on a point of law; permission to appeal is required.

Where a section 20C order was made in the proceedings, it prevents the landlord from including their legal costs in the service charge for the relevant accounting period. The order should be recorded in writing and retained.