Residential Service Charges; The Basics
Before carrying out major works, a landlord must follow the consultation process under section 20. This applies where any one leaseholder’s contribution would exceed £250. A similar process applies to long-term contracts costing any leaseholder more than £100 a year. If the landlord fails to consult and the tribunal does not grant dispensation, recovery is capped at those amounts.
There are further safeguards:
- Costs incurred more than 18 months before they are demanded are generally not recoverable, unless you were told in writing within that period that they would be charged later (section 20B).
- Every demand must come with a prescribed summary of your rights (section 21B).
- You can ask for a summary of costs and inspect the supporting documents.
Do these rules apply?
In the recent decision of Cloisters Business Centre Management Co Ltd v Anvari [2026] EWCA Civ 17, the Court of Appeal considered a self-contained unit in a converted Victorian convent in Battersea. The lease permitted use as offices with ancillary residential use. The unit had a kitchen and shower room but was actually being used for storage.
The court held that the unit was a “dwelling” for the purposes of the 1985 Act, so the statutory service charge protections applied. Residential use did not have to be the predominant permitted use: the fact that it was permitted only as an ancillary use did not prevent the unit from being a dwelling. The terms of the lease, considered alongside the nature and physical configuration of the premises, were more important than the way the unit happened to be used at the time.
The decision matters for live/work units and other mixed-use lettings where the lease allows some residential occupation. Landlords who assumed they were dealing with commercial tenants may find they needed to follow the residential rules, including consultation. Each case turns on its own lease and layout, so the decision does not bring every commercial unit within the protections.
What if you are unhappy with the Service Charges
If you are unhappy with your service charge residential leaseholders in England can apply to the First-tier Tribunal (Property Chamber) under section 27A for a ruling on whether charges are payable and reasonable. The tribunal can also be asked to stop the landlord adding its legal costs to the service charge (section 20C).
Where management is the real problem, the Right to Manage may be an option.
What is changing
The Leasehold and Freehold Reform Act 2024 contains wider service charge reforms, most of which are not yet in force. In July 2026 the government published its response to the consultation on how they will work in England. It confirmed:
- standardised demand forms accompanied by a budget
- an annual report on the building
- standardised accounts
- a right to request information going back six years
- clearer disclosure about building insurance
- a requirement for court or tribunal approval before a landlord’s litigation costs can be recovered through the service charge.
The government intends to lay the regulations later in 2026, with changes taking effect from 2027. Separate proposals to reform the section 20 major works process, require reserve funds and introduce qualifications for managing agents are still under consideration, with no decision yet.
Leaseholder are often concerned with the charges being levied upon them by their Freeholder, we can help you understand these charges, if they are unlawful and your options to dispute the charges.
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