Under the Freedom of Information Act 2000 we recently applied to the Ministry of Justice for information on cases heard at the First-tier Tribunal (formerly Leasehold Valuation Tribunal) during 2011. The FTT remains a leap into the unknown for both managing agents and leaseholders alike. Brady Solicitors has been examining the spread of recent cases.
The stats from the MoJ make for interesting reading, not least for the overwhelming majority that relates to the ‘reasonableness’ of service charges. Whilst we crunch the numbers to bring you a full analysis of the report, we look at what managing agents can do to ensure they are fit to meet the challenge of reasonableness in the LVT.
First of all, let’s begin by defining what is meant by ‘reasonableness’ in terms of service charges.
In legal speak, Section 19 of the Landlord and Tenant Act 1985 states:
(1) Relevant costs shall be taken into account in determining the amount of a service charge payable for a period –
- Only to the extent that they are reasonably incurred and;
- Where they are incurred on the provision of services or the carrying out of works, only if the service or works are of a reasonable standard.
To translate: the leaseholder has to pay service charges that are reasonably incurred, and for services and works that are of a reasonable standard.
Our recent LVT experiences indicate that managing agents are dealing, on a far more frequent basis, with freestanding LVT applications challenging the reasonableness and payability of service charges – and this is backed up, in black and white, by the information provided to us by the Ministry of Justice.
So what can you, the managing agent, put place in now to show that the service you are providing to leaseholders is reasonable and represents value for money? We outline below seven recommended steps in the drive for fairness.
- Make sure you “go to market