Service charge dispute: how to challenge unfair charges on your lease

An unexpected or high service charge can be difficult to deal with, but legal protections exist. Whether the issue stems from unclear lease terms or concerns about building maintenance or repairs, you have rights under UK law. You can request a cost breakdown, inspect invoices, and dispute unreasonable items. These rights apply to most leasehold arrangements, including flats and freehold service charges. If necessary, a conveyancing solicitor can review the lease and advise on the next steps. For complex or high-value disputes, a landlord & tenant solicitor can help assess your position before you respond.

Key takeaway: Can you refuse to pay a service charge?

No, you generally cannot refuse to pay a service charge. If you simply stop paying a charge you are responsible for, your landlord can take legal action. Instead, you should formally challenge unreasonable service charges through mediation or the tribunal while paying under protest.

This guide explains the steps you can take to protect your finances and dispute unfair demands legally.

Understanding service charge disputes and your right to a breakdown

Your lease explains how the service charge works and what the landlord can charge for. A service charge is paid by leaseholders to cover maintenance and management of the building.

If you want to dispute a service charge, start by checking the details. You have the right to:

• Ask for a written summary of the relevant costs.
• Request a breakdown of how the money was spent.
• Inspect supporting documents, such as invoices and receipts.

The landlord must respond to a valid statutory request within the legal timeframe. Failure to comply may be a criminal offence.

You may also challenge a charge if the landlord did not demand payment or notify you of the costs within 18 months of incurring them.

For commercial service charge disputes, the first step is also to check the lease carefully to confirm whether the charge is allowed.

Real example:

A landlord carries out roof repairs but serves the service charge demand almost two years later. Under Section 20B of the Landlord and Tenant Act 1985, leaseholders may be able to challenge the charge if the landlord did not serve written notice within 18 months of the costs being incurred, stating that those costs had been incurred and would be recovered through the service charge.

How property measurement standards affect your service charge proportion

Service charges are often split based on your property’s floor area, but landlords should use a clear and consistent method, not arbitrary figures. The Royal Institution of Chartered Surveyors (RICS) Code of Measuring Practice (2015) is a recognised reference point for measurement standards.

If your share seems too high, check the method used:

• Gross Internal Area (GIA): internal measurement including internal walls and structural elements, but excluding external walls and open balconies
• Net Internal Area (NIA): usable space only, excluding common areas such as corridors, stairwells, lifts, and very low-height areas
• Gross External Area (GEA): measured externally, including wall thickness, mainly for planning or insurance, rather than service charges

Ground rent, insurance, and reserve funds: what else is in your lease?

Service charges can overlap with other costs, so it is important to separate them.

• Ground rent: a separate fee paid to the landlord, usually without a direct service in return.
  • Pre-30 June 2022 leases: arrears may be recoverable only if formally demanded; up to 6 years of arrears may be claimed.
  • Most new leases granted from 30 June 2022: usually a peppercorn rent.
• Building insurance: usually paid through the service charge (covers building, not contents). You can request the policy details and challenge unreasonable costs. In some cases, indemnity insurance may also be relevant when purchasing a leasehold property.
• Reserve/sinking fund: money set aside for major repairs (e.g. roof). You usually cannot reclaim it when you move.

Fictional scenario:

A leaseholder receives a bill that mixes ground rent, service charge, and insurance. They challenge the service charge after noticing unclear repair costs, check the insurance policy for overcharging, and confirm the ground rent is only recoverable if properly demanded (for older leases).

What makes a charge challengeable: the reasonableness test under Section 19

Under Section 19 of the Landlord and Tenant Act 1985, service charges are recoverable only to the extent that they are reasonably incurred and the works or services are of a reasonable standard.

You can challenge them if:

• Costs were not reasonably incurred
• Works or services were not of a reasonable standard
• Charges appear excessive or unjustified

You may also dispute them if:

• The works were not necessary
• The work could reasonably have been planned to spread costs
• Poor maintenance by the landlord appears to have caused the issue

Real case:

In Assethold Ltd v Various Leaseholders [2022] UKUT 282 (LC), the Upper Tribunal confirmed that only reasonably incurred service charges are recoverable and assessed whether the landlord’s costs were objectively reasonable in the circumstances.

Full judgment:

You will find the full judgment here.

The Section 20 consultation requirement for major works

Major works may trigger a Section 20 consultation before costs can be recovered.

Leaseholders must usually be consulted if charges exceed:

• £250 per leaseholder for qualifying works
• £100 per leaseholder per year for qualifying long-term agreements

The landlord must:

• Provide details of proposed works
• Obtain and compare estimates
• Consider leaseholders’ comments
• Explain the final decision

Resolving a leasehold service charge dispute through the First-tier Tribunal

If negotiation or ADR fails, you can apply to the First-tier Tribunal (Property Chamber).

Under Section 27A of the Landlord and Tenant Act 1985, the tribunal can decide:

• Whether a charge is payable
• Who must pay it
• Who it is payable to
• The amount
• The payment date and method

You can apply:

• Even if nothing has been paid
• For future estimated costs

Legal effect:

• Any clause preventing tribunal review is usually void

You cannot apply if:

• The matter is already before a court
• It concerns a fixed charge rather than a variable service charge
• Liability has been expressly admitted

FAQs

How do I dispute a service charge?

Request a written breakdown and receipts from your landlord. If it still looks unfair, send a formal challenge letter. If necessary, use mediation or apply to the First-tier Tribunal (Property Chamber).

What can you do about unreasonable service charges?

Under Section 19 of the Landlord and Tenant Act 1985, charges must be reasonable. You can gather quotes or evidence of overpricing and ask the tribunal to determine whether the amount should be reduced.

Can you refuse to pay a service charge?

No. You should not simply stop paying, as this can lead to court action. Pay under protest and dispute it through the tribunal instead.

Service charge demands must follow strict legal rules on reasonableness and consultation. By understanding your lease and using the First-tier Tribunal (Property Chamber), you can challenge unfair costs and reduce the risk of overcharging.

This guide is for general information only and does not constitute legal advice.

Has your landlord missed a Section 20 consultation?

If your landlord refuses to engage or disputes your claim, specialist solicitors can help you understand your options and seek a fair outcome.

KEY TAKEAWAYS:

• Requesting evidence: You have a statutory right to demand a written summary of costs and inspect all supporting receipts to verify exactly how your service charge is calculated.
• Reasonableness and consultation: Charges must be reasonably incurred and of a reasonable standard. Furthermore, landlords must consult you for planned major works costing over £250, or face financial caps.
• Tribunal protection: The First-tier Tribunal can formally determine the amount you may owe, but you should gather strong evidence and should avoid withholding payment entirely without professional legal guidance.