Property service charges holiday?

by Property118.com News Team

9:03 AM, 6th April 2020
About 8 months ago

Property service charges holiday?

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Property service charges holiday?

I have applied for mortgage holidays to help through this time. I have flats with service charges that are bigger than the mortgages.

Is there an approach that can be made to have the same sort of payment holiday?

Or at least a reduction?

Many thanks

John

The Leasehold Advisory Service News page >> https://www.lease-advice.org/news-items/


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Comments

Neil Patterson

9:05 AM, 6th April 2020
About 8 months ago

Hi John.
There has been no official guidance on this subject that I am aware of, but you may wish to contact and keep an eye out on the Official Government help site the Leasehold Advisory Service which I have linked to in the article above.

Hedley

12:43 PM, 6th April 2020
About 8 months ago

As service charges are to pay for ongoing costs of insurance, maintenance, etc. I would doubt that these would be reduced or allowed a holiday

Peter G

13:15 PM, 7th April 2020
About 8 months ago

While insurance continuesthrough the period, the amount of maintenance seems reduced, but no sign that Charges have been reduced to reflect this. Are Maintenance company contracts still being paid as if working as normal?

BernieW

10:03 AM, 9th April 2020
About 8 months ago

I'll reply wearing my residential managing agent hat, if I may.

The terms of your lease do not change because COVID-19 has arrived. Nor has Landlord & Tenant law changed, yet. So you and your landlord (and the landlord's managing agent) are still bound by the terms of the lease.

The service charges cover specific services; e.g. cleaning, gardening, repairs, insurance, etc ... and those differ from building to building. The landlord/agent should still be providing those services where possible, but COVID-19 restrictions may have made some of them impossible. Equally some services may have had to be increased; e.g. cleaning of lifts, communal doors and handrails, entryphone panels, etc. Consequently the expenditure expected - as itemised in the service charge budget for the building's financial year - will have changed. Some headings will have reduced expenditure and some headings will have increased expenditure. The net result of these increases and decreases will be totalled in the annual service charge Accounts, at the end of the service charge financial year. You may well see an overall reduction/saving at that time ... but maybe not ... depending upon the individual circumstances for the individual property.

The terms of the lease also continue to apply to the leaseholder. So service charge demands will continue to be sent to you and you should pay those service charges in accordance with the terms of the lease and the law. The landlord/agent continues to be entitled to take legal action if you fail to pay what is legally due.

HOWEVER, ARMA ... the Association of Residential Managing Agents ... has issued guidance to its members stating that they should investigate the circumstances surrounding a leaseholder's sudden inability to pay, if that leaseholder stops paying. Managing agents are being encouraged to find out, for example, whether that person has been made redundant, has been furloughed, or if there is some other reason their income has been changed/lowered. Where there are genuine reasons for a leaseholder having cash flow problems, managing agents are being encouraged to take those circumstances into account before taking legal action - perhaps agreeing a payment plan, monthly payments instead of quarterly, or whatever ... all within the instructions placed upon the managing agent by their client/landlord.

So, in answer to your question John - you are not entitled to a service charge holiday. You will need to demonstrate transparently that there are genuine reasons for your non-payment of the service charges. Those reasons may have to be demonstrated to a County Court or First-tier Tribunal Judge in due course - as will the actions of the landlord / managing agent - and I'm sure the Judges will look at what is fair and equitable based upon the evidence presented ... and pronounce Judgments accordingly. Leaseholders, landlords and their managing agents will no doubt have costs awarded against them where they have tried to take advantage of these difficult times.

My advice to you John is - discuss your circumstances with your landlord and/or the managing agent. Be open and transparent. Back up your story with hard evidence; e.g. bank statements, pay slips, etc. Look for a mutually agreeable solution, based upon both sides being considerate and recognising the other person's situation.

Good luck and stay safe.


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