Service charges, finally clear.
Issue service-charge demands that pass the §19 reasonableness test, send §21 summaries on request within one month, keep §22 inspection rights covered — and never trip the 18-month rule under §20B. Built around the Landlord and Tenant Act 1985 and the way English residential leasehold actually works.
Service charges under the Landlord and Tenant Act 1985 — the practical guide
Service charges in residential leasehold are governed by sections 18–30 of the Landlord and Tenant Act 1985 (LTA 1985). A service charge is, under §18(1), an amount payable by the tenant for services, repairs, maintenance, improvements, insurance or the landlord's management costs — where the amount varies according to the actual costs incurred. Fixed charges in the lease are not service charges in the LTA sense, although the Leasehold Reform (Reasonableness of Service Charges) Bill is moving to change that.
§19 LTA 1985 — the reasonableness test: the cornerstone. A service charge is only payable to the extent that (a) costs are reasonably incurred, and (b) the works or services are of a reasonable standard. If a leaseholder challenges a charge at the First-tier Tribunal (Property Chamber), the burden is on the landlord to justify it. Rentprime keeps every supporting invoice, contractor quote and consultation paper attached to the relevant charge — so when a §27A application lands, your evidence file is already assembled.
§20 LTA 1985 — consultation for major works: if a single set of works will cost any leaseholder more than £250, or you're entering a long-term qualifying agreement costing any leaseholder more than £100 per year, you must consult. Two stages: a Notice of Intention (30-day response window), then notice of estimates (another 30 days). Skip consultation and your recoverable share is capped at £250 per leaseholder regardless of actual cost — unless you obtain dispensation from the Tribunal.
§20B — the 18-month rule: service charges must be demanded within 18 months of the costs being incurred, or you serve a §20B(2) notice within those 18 months stating that costs have been incurred and will be charged later. Miss both and the charges are unrecoverable, full stop. Rentprime tags every invoice with its incurred-date and flags items approaching the 18-month boundary three months in advance — typically the difference between recoverable and written-off.
§21 and §22 — information rights: on written request, the landlord must supply a summary of relevant costs for the last accounting year within one month (or six months from year-end, whichever is later). If service charges are payable by tenants of more than four flats, the summary must be certified by a qualified accountant. The tenant then has six months to ask under §22 to inspect supporting accounts and receipts, and you must make them available within one month for a two-month inspection window. Rentprime generates the §21 summary in one click and provides a tenant-portal inspection mode that satisfies §22 without you sending paper or sitting in for in-person inspection.
Reserve / sinking funds: permissible only if the lease provides for them. Under §42 of the Landlord and Tenant Act 1987, service charges (including reserve contributions) are held on statutory trust — separate bank account, not commingled with the landlord's own money. Rentprime supports a separate client-money ledger per building so trust-account audits are straightforward.
Section 47 / 48 LTA 1987: every demand must state the landlord's name and an address for service in England or Wales. Miss this and the service charge isn't treated as due until the information is supplied. Our PDF templates have these fields prepopulated and validated.