[2025] UKUT 369 (LC)

Sections 18 to 30 of the 1985 Act contain provisions about service charges designed to limit the amount residential tenants and leaseholders are obliged to pay for services, to improve transparency and access to information, to require consultation on significant expenditure, and to provide for determination by an independent tribunal, the FTT, of amounts payable. The scope of all of these provisions is governed by the definition of “service charge” in section 18.

Section 18 provides as follows:

“18.

Meaning of “service charge” and “relevant costs”

(1)

In the following provisions of this Act “service charge” means an amount payable by a tenant of a dwelling as part of or in addition to the rent—

(a)

which is payable, directly or indirectly, for services, repairs, maintenance, or improvements or insurance or the landlord's costs of management, and

(b)

the whole or part of which varies or may vary according to the relevant costs.

(2)

The relevant costs are the costs or estimated costs incurred or to be incurred by or on behalf of the landlord, or a superior landlord, in connection with matters for which the service charge is payable.

(3)

For this purpose—

(a)

“costs” includes overheads, and

(b)

costs are relevant costs in relation to a service charge whether they are incurred, or to be incurred, in the period for which the service charge is payable or in an earlier or later period.”

Provisions in materially the same form as sections 18 and 19 have been in place for more than 50 years (originally found in sections 90 to 91A of the Housing Finance Act 1972, then in Schedule 19 to the Housing Act 1980, and now in the 1985 Act). Depending on the terms of the particular tenancy agreements they have always been capable of applying to charges for services provided by housing associations to their periodic tenants (although by section 26(1), 1985 Act, they do not apply to local authority periodic tenancies).

Sections 18 and 19 are among the provisions of the 1985 Act which are to be amended by Part 4 of the Leasehold and Freehold Reform Act 2024 which is concerned with the ‘Regulation of leasehold’. When brought into force, sections 53-60, 62, 64 and 67-71 will amend and enhance the protections provided to tenants and leaseholders by the 1985 Act. I will return to these prospective amendments later.