Service Charge Law: The 8 Provisions Every Leaseholder and RMC Director Should Know

Here is an uncomfortable truth about service charge disputes: most of them are not decided on whether the works were needed or the price was fair. They are decided on procedure. Was the demand in the right form? Was consultation carried out? Was the cost demanded in time? A landlord who did £40,000 of perfectly sensible roof repairs can still find the charge irrecoverable because a notice was missed - and a leaseholder with a genuine grievance can lose at tribunal because they argued the wrong section.

Whether you are a leaseholder questioning a demand or an RMC or RTM director issuing one, the same handful of statutory provisions decide the outcome. This guide covers the eight that matter most, in plain English, with links to the original legislation so you can read the exact wording yourself.

Everything below applies to England. Wales shares the primary legislation but uses different secondary regulations in places, and Scotland and Northern Ireland have separate regimes entirely.

The quick-reference table

Six of the eight provisions live in the Landlord and Tenant Act 1985 ("LTA 1985"); the last two are in the Landlord and Tenant Act 1987 ("LTA 1987"):

Notice how many rows say "Both". If you are an RMC or RTM director, you are the landlord for these purposes - every protection a leaseholder can use to challenge a charge is a compliance duty on your desk. The rest of this article takes each section in turn.

Section 27A: the tribunal's jurisdiction

Section 27A is where every First-tier Tribunal (FTT) service charge case starts. Under s27A(1), anyone - leaseholder or landlord - can apply for a determination of whether a service charge is payable and, if it is: by whom, to whom, how much, when, and how.

Three details in this section catch people out:

• Paying does not close the door. Section 27A(2) says an application can be made whether or not the charge has been paid. If you paid under protest two years ago, you can still challenge it.
• But agreement does. Under s27A(4), no application can be made about a matter the leaseholder has agreed or admitted - though s27A(5) confirms that paying, by itself, is not an admission. Be careful what you put in writing during a dispute.
• You can apply before spending. Section 27A(3) allows a forward-looking application: if costs were incurred on proposed works, would a charge be payable and reasonable? Directors can use this proactively to de-risk a contentious major works programme before signing contracts.

A note on the common claim "I've already paid, so it's settled": tribunals see a steady stream of "already paid" disputes that turn out to be confusion over accounting years, on-account payments versus balancing charges, or payments credited against a different year's arrears. Before alleging double-charging, get a full statement of account - every demand and every payment, by date. Most "already paid" arguments dissolve, or crystallise, the moment that statement exists.

Section 19: the reasonableness test

Section 19 is the substantive heart of service charge law. Costs count towards a service charge only to the extent they are reasonably incurred, and where they are incurred on works or services, only if the works or services are of a reasonable standard.

Two distinct arguments live here, and they are not equally easy to run:

• "The works were not needed" (not reasonably incurred) is harder than it sounds. Leases contain obligations that are not obvious - repairing covenants, statutory compliance, fire safety works required by changing legislation. If the freeholder had to do something to comply with a covenant or with the law, works that look excessive to a leaseholder can still be reasonably incurred. You need firm grounds and evidence, typically an independent surveyor's view, not just disagreement.
• "The works were done badly" (not to a reasonable standard) is usually easier to evidence: photographs, snagging lists, a surveyor's report on defective workmanship. If the standard argument is available to you, lead with it.

For directors, s19 is the discipline that keeps you out of the tribunal: obtain competing quotes, record why the chosen contractor was selected, and keep the paper trail that shows the decision was reasonable at the time it was made.

Section 20: consultation for major works

Section 20 in effect requires the landlord to consult leaseholders before carrying out qualifying works that would cost any one leaseholder more than £250, or entering a qualifying long-term agreement (a contract of more than 12 months) that would cost any one leaseholder more than £100 in any accounting period. The detailed procedure - notices of intention, estimates, regard to observations - is set out in the Service Charges (Consultation Requirements) (England) Regulations 2003.

The sanction has real teeth: skip or botch the consultation and recovery is capped at £250 (or £100) per leaseholder, however much was actually spent - unless the tribunal grants dispensation under s20ZA. A £60,000 roof project across a block of ten equally contributing flats becomes £2,500 recoverable. This is the single most expensive procedural mistake an RMC board can make.

Directors should also remember the thresholds are per-leaseholder, calculated on the highest individual contribution under the lease's apportionment - not an average. One flat with a 15% share can drag a modest contract over the line while the others sit below it.

Section 20B: the 18-month rule

Section 20B says costs incurred more than 18 months before a demand is served are not recoverable - unless, within those 18 months, the leaseholder was notified in writing that the costs had been incurred and that a contribution would be required (s20B(2)).

The clock starts when the cost is incurred - which is usually the invoice or payment date, not the date the works were done. The Court of Appeal held in OM Property Management Ltd v Burr [2013] EWCA Civ 479 that a cost is generally incurred when the invoice is presented or paid - so a contractor who invoices late can quietly shorten the landlord's window without anyone noticing.

One important carve-out: where costs were met from on-account payments validly demanded in advance, s20B generally does not bite (Gilje v Charlegrove Securities Ltd [2003] EWHC 1284 (Ch)) - the 18-month clock matters most for balancing charges and costs demanded after the event.

For leaseholders, this is still one of the cleaner challenges available: match each disputed cost's incurred date against the demand date, and look for a s20B(2) protective notice. For directors, the defence is routine housekeeping - demand promptly after year-end, and where final accounts will be slow, issue a protective notification within the 18 months as a matter of course.

Sections 21B, 47 and 48: demand formalities

Three sections govern the form of the demand itself. Each has the same practical effect when breached: the money is not collectable until the defect is fixed.

Section 21B: summary of rights and obligations

Under s21B LTA 1985, every service charge demand must be accompanied by a summary of leaseholders' rights and obligations. This is not free text - the wording and form are prescribed by the Service Charges (Summary of Rights and Obligations, and Transitional Provision) (England) Regulations 2007. If the summary is missing or wrong, the leaseholder may withhold payment (s21B(3)), and the lease's late-payment provisions cannot be enforced while the payment is properly withheld (s21B(4)).

Sections 47 and 48: name and address on the demand

Section 47 LTA 1987 requires every written demand to state the landlord's name and address. Section 48 separately requires the landlord to give leaseholders an address in England and Wales at which notices can be served. Breach either one and the service charge is treated as not due until the information is provided. These are the quiet workhorses of service charge defence: no tribunal application needed, the statute suspends the debt automatically.

For directors the fix costs nothing - build the s47/s48 details and the current prescribed s21B summary into your demand template once, and every demand you send is compliant.

The thresholds that matter

Before you threaten the tribunal: three practical realities

Knowing the sections is necessary but not sufficient. Three practical points decide how disputes actually play out:

• Do not use the FTT as a negotiating tactic. Rolling out "I'll take this to tribunal" without a prepared case - statement of account, the relevant sections, supporting evidence - weakens your position when the bluff is called. If you have a strong case, stop negotiating and apply. If you do not, build the case first.
• Negotiations may be "without prejudice" even when unlabelled. Case law recognises that genuine settlement negotiations can attract without-prejudice protection even if nobody wrote the magic words on the letter. A concession made in negotiation may not be usable as evidence - so get any agreed reduction recorded in open correspondence before relying on it.
• Check the managing agent's authority. An agent's offer to reduce a charge binds the landlord only if the agent had authority to make it. If a reduction was offered in writing, ask the landlord to confirm it - do not assume the agent's word alone settles the matter.

For a fuller picture of when the tribunal is the right forum at all, see our guide to the Property Ombudsman vs the First-tier Tribunal.

For directors: the compliance checklist

Every section above doubles as a line on the board's checklist. In practice:

1. Demand template - s47/s48 name and address, plus the current prescribed s21B summary, attached to every demand
2. Consultation calendar - before any works or contract, test the £250 and £100 thresholds against the highest individual apportionment
3. Year-end discipline - demand promptly; where accounts will be slow, send s20B(2) protective notices within 18 months of costs being incurred
4. Decision records - quotes, board minutes, and the reasoning behind contractor selection, so the s19 reasonableness question answers itself
5. Statement of account on request - a leaseholder who can see every demand and payment rarely escalates a misunderstanding into an application

This is the record-keeping burden Marklet is built for: the Service Charges module keeps demands, budgets and payment records in one exportable place, the Documents area holds section 20 notices and contracts, and the Email Tracker preserves the correspondence chronology that tribunals and ombudsmen both ask for. When a dispute starts, the evidence bundle already exists.

The law is changing

The Leasehold and Freehold Reform Act 2024 includes provisions to reshape this regime - standardised service charge demand forms, annual reports to leaseholders, and stronger rights to information. Most of the service charge provisions require secondary legislation and are being commenced in stages, so the sections in this article remain the operative law until the relevant commencement regulations land. We will update this article as that changes.

References and further reading

• Landlord and Tenant Act 1985 - sections 19, 20, 20ZA, 20B, 21B and 27A
• Landlord and Tenant Act 1987 - sections 47 and 48
• Service Charges (Consultation Requirements) (England) Regulations 2003 - the s20 consultation procedure and thresholds
• Service Charges (Summary of Rights and Obligations) (England) Regulations 2007 - the prescribed s21B summary
• First-tier Tribunal (Property Chamber) - application forms and guidance
• Leasehold Advisory Service (LEASE) - free, government-funded advice for leaseholders

This article is general information about the law in England, not legal advice. Service charge disputes turn on the wording of the individual lease and the facts - take advice from a solicitor or LEASE before acting on a specific dispute.