Residential Service Charge Update

By Graham Halsall

Replacement of window frames: unlawful improvement or reasonable repair?

In a residential leasehold relationship, the landlord is usually under a duty to keep the building in a state of good repair and condition and provide other services. The costs of complying with this duty are then passed on to the leaseholders as a service charge.

There is, however, a limit to what the landlord can recover as a service charge. This is controlled by the terms of the lease and by reference to statutory laws which introduce a “reasonableness cap” on the amount of service charge that is recoverable.

A question which often arises in practice is whether the landlord is entitled to recover charges incurred in connection with improvements to the building. There is no rule of law which says that “improvements” cannot be recovered as part of the service charge. However, the suggestion of an improvement favouring the landlord can often lead to a dispute. In all cases, this will come down to the particular terms of the lease and what is reasonable in the circumstances.

It is a question which came up recently before the Court of Appeal in the case of Waaler v Hounslow LBC. In this case, the landlord intended to carry out major works to the building, including the replacement of the original wooden-framed windows with new metal framed units. The leaseholders claimed that these works were optional improvements and the costs could not be recovered as part of the service.

The Court of Appeal agreed. A big factor in their decision was the landlord’s failure to take proper account of the tenants’ interests. The Court said that when determining whether costs of improvements had been “reasonably incurred” the landlord must consider the interests of the tenants, their views and financial means.

This case does not create a general rule that the replacement of window frames falls outside of the service charge liability. There will be plenty of cases where it would be reasonable for these costs to be recovered. However, this is a helpful decision for tenants and landlords as it highlights the importance of proper consultation and dialogue, particularly when major works are intended.

We act for both landlords and tenants in residential service charge disputes. If you have any queries about this area, please feel free to contact Graham Halsall, a Senior Associate in our Property Dispute Resolution Team on 01737 854 577 or email graham.halsall@morrlaw.com.

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