[2025] UKUT 19 (LC)

This was a charge of £1,416.00 made by BML Group Ltd for work done in October 2021. It seems there had been a leak in the roof, so that flat 2 required internal decoration, and that the landlord had the decoration done but then charged it to the service charge. As the leaseholders said in the Scott Schedule, work to the interior of the demised premises is not within the scope of the service charge, and in any event it was covered by the landlord’s insurance. Mr Rana said in his witness statement:

“It is clear that these works relate to internal damage to flat 2 as a result of a leak in the roof. This damage was subject to an insurance claim and as may be seen from the accounts dated 5 September 2022, the insurance claim excess of £250 has been charged. In consequence the sum of £1,416 is not a service charge item and is not therefore payable by us.”

The respondent’s comment in the Scott Schedule was “not covered by insurance so charged to service charges”. The FTT’s comment in the following column was: “The tribunal finds this work is reasonable and payable by the applicants.”

No reason is given for the FTT’s disagreement with the leaseholders’ evidence, nor for its judgment that work to the interior of one of the flats could be charged to the service charge despite what the leaseholders said about the terms of the leases. Its decision is at best unexplained, if not irrational, and is set aside.

As I have all the material that was available to the FTT I can substitute the Tribunal’s decision on this item. For two reasons it is not payable as a service charge.

First, as Mr Rana said, the service charge account for 2021/2022 (which is in the appeal bundle) indicates that the landlord did charge a £250 insurance excess to the leaseholders, and no evidence has been adduced to refute the leaseholders’ assertion that this excess related to a claim that included the redecoration of flat 2. Whether or not the cost was reasonably incurred, the cost was therefore not a cost to the landlord and is not payable as a service charge.

Second the service charge is defined in Schedule 7 of the leases (of which there is a sample copy in the appeal bundle) as the aggregate of the costs set out in the sixth schedule, together with contributions to a reserve fund and a management fee. The sixth schedule sets out a number of costs and refers to the landlord’s maintenance and repair obligations in the fifth schedule. All the landlord’s obligations relate to the structure of the building and to the maintenance of the common parts. There is no obligation in the lease to decorate the interior of any of the demised premises; there might of course be an obligation arising in a different way, for example as a result of damage caused by the landlord’s failure to repair the roof, but that would not be an obligation of which the cost could be met by the service charge. Whatever the reason why the decoration was done, this cost was not within the service charge and is not payable by the leaseholders.

The appeal therefore succeeds on this ground.