Service Charges – Landlords 18 month window to demand payment
10 October 2022
A new Act has confirmed that landlords have an 18-month window in which to demand service charge payments, once costs have been incurred.
The Upper Tribunal decision in Parmar v 127 Ladbroke Grove  confirms the approach taken by courts to Section 20B of the Landlord and Tenant Act 1985. Under Section 20B, landlords must make demands for service charge payments within 18 months of the costs being incurred. This applies in all cases except where, under s20B(2), the landlord notifies the tenant, in writing, that the costs have been incurred and that a subsequent payment of the service charge would be required under the terms of the lease.
A London house was converted into flats. The appellant held a long lease of one of these flats and in doing so, covenanted to pay service charges under the lease. The leaseholders then acquired the freehold, and the appellant ceased payment of the interim service charges.
The respondent then brought proceedings to claim the interim service charges, in addition to interest.
The First Tier Tribunal considered notice to have been given of the costs, and found in favour of the landlord. It was ordered that the payment be made, following the landlord providing proper certification of the costs incurred.
On appeal, the appellant maintained that the First Tier Tribunal was incorrect in their decision, as no documentation was presented, by way of evidence, that shows notice being provided in the precise form required under s20B(2).
Following this submission, it was argued that the provision of any certification now would fall after the 18-month period under s20B had elapsed.
The Upper Tribunal allowed the appeal.
The decision once again confirms the approach taken to section 20B(1) in Brent London Borough Council v Shulem B Association Ltd  under which, in the absence of a valid demand for payment within 18 months, a landlord may only recover the costs where it satisfies the requirements for the limited exception under s20B(2). Section 20(B) requires the landlord to notify the leaseholder in writing that costs had been incurred and make a clear statement regarding the expected payment of a service charge.
The Birketts view
Parmar v 127 Ladbroke Grove  serves as a poignant reminder to landlords to always ensure that service charge demands are made in accordance with the terms of the lease and, crucially, within 18 months of the costs, for which the service charge is payable, being incurred.
Landlords and property managers should keep tenants informed of works and prospective service charges. In absence of final certification, notice must be given in writing, and make clear the nature and cost of the service charge.
The content of this article is for general information only. It is not, and should not be taken as, legal advice. If you require any further information in relation to this article please contact the author in the first instance. Law covered as at October 2022.