A recent Upper Tribunal (UT) decision in Rose v Bracknell Gate Properties Limited [2025] UKUT 386 (LC) has clarified two important issues that frequently arise in leasehold property management:
- How service charge demands must be issued under the lease.
- Whether section 20 consultation applies to professional fees incurred in connection with major works.
These findings have significant implications for managing agents, freeholders, and RMC directors seeking to stay compliant and avoid costly disputes.
Background to the case
Mr Rose, a long leaseholder at Bracknell Gate, received two service charge demands in December 2023: one for major electrical works to the sum of £14,406.85 and another for a Reserve Fund contribution. He challenged both at the First-tier Tribunal (FTT).
While the freeholder accepted that the Reserve Fund demand was incorrectly issued, the FTT upheld the major works demand. Mr Rose appealed to the Upper Tribunal, arguing that the demand was unlawful under the lease and that the freeholder had failed to consult on professional fees associated with the project.
Key points from the Upper Tribunal decision
- Service charge demands must follow the lease
The Tribunal decided that the freeholder could only issue one advance service charge demand each year, with payments spread across the usual quarter days. The lease did not allow for an extra, one-off bill for major works during the year.
The lease doesn’t allow separate demands unless it specifically says so. Even if sending an extra bill for major works feels practical, it won’t be enforceable unless the lease gives that right. - Professional fees don’t need section 20 consultation
The Tribunal confirmed that section 20 consultation only applies to actual building works. Professional services like design, tender preparation, and project management are not considered “works on a building,” so they don’t need to be included in the consultation process.
However, these fees still have to be reasonable and allowed under the lease. If they’re excessive or not properly incurred, they can still be challenged.
Why this matters for managing agents and freeholders
- Review your leases carefully, or get an expert to do so on your behalf, before issuing large or irregular demands. If the lease only permits annual or interim demands, additional one- off charges for major works could be unenforceable.
- Understand the scope of section 20 consultation. Notices should cover physical works only, but keep professional fees proportionate and well-documented to avoid disputes.
- Plan ahead for major works projects. Early legal advice can help ensure compliance and protect recovery of costs.
Brady Solicitor’s insight
At Brady Solicitors, we regularly provide advice on service charge compliance and the section 20 consultation process. This decision reinforces the importance of getting the details right, because even small deviations can lead to significant financial and legal consequences.
