Ms P owns a flat, as well as a share in the company that owns the freehold of the building, which has a total of seven flats.
All of the flats are owned by leaseholders who each have a share in the freehold-owning company.
Nearly a decade ago, two of the flats were bought by property investors who became directors of the freehold-owning company.
After four years of owning their respective flats, the two property investors questioned the legality of the lease and the basis upon which the service charge percentages were calculated. They demanded that the flat owners:
- Rewrite the leases.
- Recalculate the service charge apportionments, and at the same time threatened to take the freeholder to the First-tier Tribunal (Property Chamber) (“the FTT”) if there was disagreement over the service charge.
- Expected the costs for the above application to FTT would come out of the service charge/maintenance account.
Ms P contacted LEASE, who confirmed:
- A lease is a contractual arrangement and as such it cannot be varied unilaterally. It can be varied either by mutual agreement or by an order of the FTT.
- With regards to service charges, the tribunal will only vary these on the grounds of computation i.e. they add up to more or less than 100% altogether.
- If the directors choose to make an application to the FTT, then any costs for this application cannot be paid out from the service charge account as it is very unlikely that costs for a lease variation are covered under the service charge provisions of a lease.
Upon presentation of these arguments the respective individuals backed down.
Ms. P. said: “LEASE’s advice was invaluable.”
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