[2025] UKUT 56 (LC)

It is the respondents’ case that from 2016 onwards their service charges have increased significantly, and they attribute the increase to an escalation in the charge for services provided by the freeholder. It was their belief that this charge was introduced for the first time after NHG became their landlord, a belief perhaps explained by the repeated changes in the way the charge was described. They sought an explanation from NHG and eventually engaged in a process of mediation which did not provide a resolution. In 2023 they applied to the FTT under section 27A, Landlord and Tenant Act 1987 for a determination of the amount of service charges they were liable to pay for the years 2016 to 2023.

The FTT was unable to determine whether the respondents were correct in their belief that the services for which they were charged had changed and that the cost had increased substantially after NHG became their landlord. The respondents themselves had no information to substantiate that belief and NHG provided no evidence to the FTT about charges for the years 2009 to 2015. Belatedly, and shortly before the hearing of this appeal, NHG applied for permission to adduce additional evidence of charges in the early years of the tenancies. I refused that application as no satisfactory explanation had been provided why the documents had not been provided to the FTT.

The FTT decided that the respondents were not obliged to contribute anything towards the cost of the services supplied by the freeholder. It considered that the reference to “Management Fee” in the printed list of services was not apt to include the costs of the services provided by Rendall & Rittner to the whole estate: “The mere fact that it is a managing agent who is seeking to recover a cost does not make that cost a management fee.” The FTT said that there was no ambiguity in the printed list and nothing on it would be understood by the reasonable reader to include a charge for services provided by the freeholder.

In relation to the screenshot, the FTT said that it was not possible to discern from the screenshot, or from the tenancy agreements to which it was attached, what ‘PSCTP’ stands for or what it might have been intended to include. The label “would be unintelligible to a reasonable reader.” Nor could the ambiguity in the tenancy agreement be cured by evidence of what had in fact been charged for, as had happened in Cardiff Community Housing Association Ltd v Kahar [2016] UKUT 279 (LC). The charge had been claimed under so many different headings in the service charge demands sent to tenants that nobody would have understood that the ‘managing agent cost’, or ‘third party service charge-tenants’ or whatever description was chosen in a particular year was intended to refer to the obligation imposed by the tenancy agreement to contribute towards a service referred to as ‘PSCTP’.

The FTT reached the same conclusion for all versions of the tenancy agreements, including those with no list at all and those where the agreements, or the service charge schedules, had been lost or not retained. It also determined that it was impossible to say whether the charges had been reasonably incurred or were reasonable in amount because no evidence had been supplied by NHG showing what the charges were for or how the total PSCTP figure had been built up.

Only one other part of the FTT’s decision is challenged in this appeal. It concerns the cost of lift maintenance, which is one of the services provided by NHG itself. Four of the tenancy agreements, those which included the screenshot list of services, contained an express reference to lift maintenance (as “PSCLIFT”). Nothing specific was included in the printed list. The printed list did include “daily building fabric” as a service for which the tenants were required to pay and NHG argued that the cost of maintaining the lifts could be recovered under that heading. The FTT disagreed. It did not think that phrase would be understood by the reasonable reader as including the maintenance or repair of items of plant or machinery such as a lift and would generally be understood to refer to the structure of the building and perhaps its decorative surfaces and floor coverings. That conclusion is challenged by NHG.

The FTT reached a different conclusion in relation to those tenancies which could not be found, or which contain a blank schedule or no schedule at all. In those cases it accepted NHG’s argument that the uncertainty over the terms of the agreements could be cured by its evidence that since at least 2016 every demand for service charges had included a sum for either lift repair or lift maintenance. The demands were easily ascertainable and understandable, and it would therefore have been common ground between the parties that the weekly service charge included a contribution towards the costs of the lift. The FTT’s conclusion on that issue is not challenged by the respondents affected by it.