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Service Charge: Determination of reasonableness of service charges for structural repairs (RMB 102 Ltd v Leaseholders at Snowdon Mount – 2021)

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On behalf of our landlord client, J B Leitch successfully applied to the First-tier Tribunal (FTT) for determination of reasonableness of service charges demanded from tenants in respect of structural repairs to remedy building defects.

The background

RMB 102 Ltd v Leaseholders at Snowdon Mount [2021] concerns a residential block of flats, built in 2008 by the landlord’s predecessor in title and suffering from serious building defects including water ingress which identified further structural issues.

Following a previous successful application for dispensation of the section 20 Landlord and Tenant Act 1985 requirements, the landlord made an application to the FTT for a determination as to the reasonableness of the estimated service charges it wished to recover from leaseholders in respect of repair works to remedy the structural defects. Two leaseholders raised issue with the specification of works, stating that the service charges demanded included decorating works to the interiors of flats, together with replacement kitchens and bathrooms. As these areas were not part of the landlord’s reserved property, they argued that these charges should not be demanded through service charge.

The decision

The FTT found in favour of our landlord client, determining that estimated service charges demanded were reasonable and payable.

The landlord’s experienced building surveyor agreed with the work specified, which had been reduced following a meeting between parties, and provided himself in evidence that the costs demanded were reasonable. The leaseholders did not put forward any evidence which conflicted with the landlord’s figures, and the court concluded that the structural issues suffered by the building affected each leaseholder and each flat differently. The cost of structural repairs is covered by the leases’ service charge provisions, and the costs of repairs were found to be reasonable and payable under the terms of the leases.

Advice and action for landlords

J B Leitch is pleased to have delivered a successful outcome for our landlord client in this application, which concluded that all major works costs were recoverable as on account charges.

This most recent decision is the latest in a number of applications relating to this property, concluding that, whilst liability may possibly lie with other parties for the costs of the works given the serious nature of the structural defects, they remain reasonable and payable under the leases’ service charge provisions.

Leaseholders presented no evidence to contradict that of the landlord and the First-tier Tribunal found in favour of our client, determining that estimated service charges demanded were reasonable and payable.

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