This has been a busy period for leasehold enquiries ranging from unfair service charges to threats of legal action for breach of lease.
Signing legal document
Your lease details the terms on which you occupy your home (usually a flat), including your rights and obligations and those of the freeholder/landlord, and any promises or “covenants” between you.
It is often a lengthy, off-putting document, loaded with legal jargon that most people do not even look at unless a problem arises.
I have simplified a couple of common situations to provide a general idea of your rights in each. However, this is a complex and highly specialised area of law, and you should obtain legal advice where necessary.
So, if you’re a leaseholder, here are a few basic tips to help ensure that you’re not being billed or penalised unlawfully:
Major works
By law, you must receive an “section 20 notice” in relation to any work your freeholder proposes to carry out which will result in a cost to you of £250 or more.
The guidelines are in section 20 of the Landlord and Tenant Act 1985 and landlords must follow the correct procedure as well as complying with the terms of your lease. You also have rights under s21 and s22 of the Act to request details of the freeholder’s expenditure on the property including receipts.
Generally speaking, you will only be liable to pay for work where all of the s20 criteria have been met:
- You have been consulted in accordance with the Act
- The demand for payment has been served within 18 months of costs being incurred (unless the landlord anticipates a delay and sends you a s20B Notice)
The charge is ‘reasonable’
If you consider that you have been over-charged, the limitation period for bringing a claim is generally six years (s5 Limitation Act 1980).
You should initially write to the landlord, pointing out the error and speak to a solicitor if you need further assistance.
Service charge disputes can be resolved by the First-Tier Tribunal. The application fee is currently £100 and the hearing fee is £200. Normally each side pays their own costs, but the tribunal has the power to award costs where either party has been “unreasonable”, so please beware.
Right to buy
When you exercise a right to buy, you are given a s125 schedule which includes a five-year estimate of your liability for service charges and a list of anticipated major works.
This gives a new homeowner some protection and forewarning about their financial liability for a period of five years from completion of the purchase. If you have purchased such a property on the open market within five years of the original Right to Buy, you will still have the benefit of the s125 Notice for the remaining time.
The council cannot charge any more than the stated amounts, apart from an allowance for inflation. Neither is it permitted to charge for any major works that are not mentioned in the schedule. With the sheer number of housing repair and regeneration projects councils undertake, it is quite common, and perhaps understandable, for mistakes to be made resulting in homeowners receiving bills in respect of work that they are not liable to pay for.
A colleague recently advised a local homeowner facing a bill of £17,500 for renewal of a communal heating system. The work was not mentioned in the s125 Notice when she purchased her home a couple of years previously, and she was therefore relieved to be told she was not liable to pay.
Breach of lease or restrictive covenant
Legal action for breach of lease can only be taken in certain situations and within certain time limits. If the remedy being sought is damages or compensation, the claim must generally be brought within 12 years of the breach.
If, on the other hand, your landlord is threatening an injunction (for instance to prevent a breach, such as an unauthorised alteration to your home, from continuing), this is a matter of “equity” and the 12-year rule will not apply.
Where an injunction is being sought, case law says that, if the alleged breach has been in plain sight and unchallenged for long enough (20+ years in one case), then the freeholder cannot enforce the restrictive covenant because they will be deemed to have acquiesced and therefore waived the right to rely on it. This is a very technical area, and it is worth doing plenty of research as well as getting professional legal advice.
- Free legal advice can be obtained from LEASE, a government-funded service. While it does not take on individual cases, it is a fantastic source of information and guidance for anyone attempting to navigate this maze. I recommend you visit their website.
- If Lambeth council is your freeholder and you pay service charges to them, you might find it useful to join Lambeth Homeowners Association where you can share your experiences and tips with others.
