Case No. UKUT-273-(LC)-UTLC-Case-Number:-LC-2022-172

of the Annual Service Charge as hereinafter defined”6.The underlining has been added to indicate where the other leases differ. The lessee of 84 The Meadowings has to pay “a proportionate part”, and the lessees of 23 and 67 Sheepfoote Hill have to pay “a fair proportion”, of the Annual Service Charge.7.Thus each lessee has to pay a proportion of the Annual Service Charge, although the leases differ in how they describe or define that proportion.8.The Annual Service Charge is then defined in clause 5(2) as:“the total of all sums actually expended or provided either directly or as in the case of service by the Lessors own staff indirectly by the Lessor during the period to which the relevant Service Account relates in connection with the management and maintenance of the Buildings … and in particular but without limiting the generality of the foregoing shall include the following:”a)[the cost to the lessor of performing its covenants to repair and maintain the estate]b)[the cost of maintaining communal television and radio aerials]c)[the cost of the lessor’s compliance with notices from the local authority]d)“All fees charges expenses and commissions … payable to any agent or agents whom the Lessor may from time to time employ for managing and maintaining the Buildings and all salaries and other payments made to staff and employees of the Lessor where works are undertaken by the Lessor without employment of an agent including an element of profit to the Lessor”e)[fees charged by the lessor’s solicitor, accountant, surveyor etc]”9.The respondent has calculated the Annual Service Charge for all four properties by aggregating the sum of the lessor’s expenditure (and salary costs etc where work is done in-house) under heads (a), (b), (c) and (e) and charging each property 1/138 (rather than 137 to reflect the fact that the caretaker’s flat is now let on an assured tenancy) and that figure is used for all four properties even though only one stipulates an arithmetical percentage. There is no dispute about that calculation.10.As to item (d), the freeholders are charged £150 per annum, and the long leaseholders pay £300 per annum (per lease, obviously, in the case of this appellant). The assured tenants are charged a percentage of the rest of the service charges (presently 15%).11.In November 2019 the appellants made an application to the FTT pursuant to sections 19 and 27A of the Landlord and Tenant Act 1985, which so far as relevant read as follows:“19.(1) Relevant costs shall be taken into account in determining the amount of a service charge payable for a period—(a) only to the extent that they are reasonably incurred, and(b) where they are incurred on the provision of services or the carrying out of works, only if the services or works are of a reasonable standard; and the amount payable shall be limited accordingly.27A(1) An application may be made to [the appropriate tribunal] for a determination whether a service charge is payable and, if it is, as to—(a) the person by whom it is payable,(b) the person to whom it is payable,(c) the amount which is payable,(d) the date at or by which it is payable, and(e) the manner in which it is payable.”12.The applicants challenged a number of items within the Annual Service Charge for the three years in question. Only one of those is relevant to the appeal, namely the management fee described in item (d) and charged as just explained. Before the FTT the appellants said that the £300 they had to pay was excessive; it did not represent value for money and was inequitable compared with the 15% being charged to the assured tenants (which, Mr Verduyn told me, came to about £50 per annum).13.In its decision the FTT considered the disputed items one by one, going through the grounds maintenance, the tree management, the insurance (which does not seem to have been really in dispute by the time of the hearing) and finally the management fees, which it dealt with in four paragraphs as follows:“31.The Applicant claimed that annual management fees charged by the Respondent should not exceed 15% of the service charges payable for that year. Ms Burns [the director of the Applicant/appellant] stated that the services she received were not worth £300 per year, and also argued that the services provided to all residents on the estate were identical and therefore the long leaseholders and every other resident should pay the same management fee.32.The Respondent produced an explanation of its five-tier system of charging fixed annual management fees to long leaseholders in accordance with current RICS guidelines. The Applicant has not demonstrated that a lower fee would be charged by any alternative manager of the estate, The Tribunal notes that the statutory framework governing social tenants is not the same as that for leaseholders and finds that an annual management framework governing social tenants is not the same as that for leaseholders and finds that an annual management fee of £300 per long leaseholder on the Yarm estate is within the spectrum of reasonable charges for the work undertaken.33.The Applicant further claimed that the level of service provided by the Respondent was unreasonable. [The FTT set out brief particulars of what Ms Burns said about the standard of service] …34.… the Tribunal find that the Respondent manages the Yarm estate generally to a high standard…”The appellant appeals, with permission from this Tribunal, on the ground that the flat fee of £300 for management was not payable because clause 5 of the four leases each require the lessee to pay a single proportion of the entire Annual Service Charge, made up of items (a) to (e); it is not open to the respondent to charge a management fee that is not calculated in that way, nor to charge different management fees according to the tenure of the property.