Service charge apportionments
Section 19 (1) (a) of the Landlord and Tenant Act 1985 states that service charges are payable “only to the extent that they are reasonably incurred”.
In Blackpool Borough Council v Cargill [2013] , the Tribunal was asked to decide if a service charge which had not been precisely apportioned was reasonable.
Facts of the case
The landlord had instructed a management company to manage 6,000 properties. The leases stipulated that the tenants must pay a ‘proportionate amount’ of the expenses incurred by the landlord. The tenants argued that the management charges were excessive and not reasonably incurred pursuant to section 19 of the 1985 Act because the tenants were not charged a precise apportionment of the management charge in respect of their individual premises.
Judgement
The Tribunal held that the landlord had acted reasonably with regards to the apportionment of the management company charge and that it was right to divide the charge equally rather than trying to calculate how much was payable by each individual property as an attempt to apportion precisely would not be successful and would have increased costs in undertaking complex calculations.
This case acts as a reminder that it is not always necessary to apportion on the size of the property or the use of the services, simpler apportionments may sometimes be valid and appropriate.
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