Service charge dispute solicitors

Osbornes Law’s service charge dispute solicitors act for leaseholders and commercial tenants challenging unreasonable charges, and for landlords and managing agents recovering what they are properly owed.

If you pay a service charge, whether on a flat or on business premises, you are entitled to know what you are paying for and why. Costs can rise sharply with little warning, invoices arrive without a breakdown, and work gets carried out that nobody explained beforehand.

Service charges are one of the most common sources of conflict between the person who owns a building and the people who occupy it. The law treats residential and commercial charges very differently, and the route to challenging one is not the route to challenging the other. This page covers both.

Our property litigation team handles service charge disputes alongside other leasehold disputes, lease extensions, and commercial landlord and tenant disputes.

Residential and commercial charges follow different rules

The single most important question in any service charge dispute is which regime applies to you. The answer changes what you can challenge, where you challenge it, and how much protection the law gives you.

If you are a leaseholder of a flat, statute is on your side. The Landlord and Tenant Act 1985 caps what you can be charged, gives you a right to see how the figure was reached, requires your landlord to consult you before major works, and gives you a specialist tribunal to decide the dispute.

If you are a commercial tenant, there is no equivalent statutory regime. No legislation dictates what services a landlord must provide to a business tenant or what it can charge for them. Your lease is the contract, and the lease is where the argument is won or lost. Industry standards published by the Royal Institution of Chartered Surveyors fill part of the gap, and the courts decide the rest.

Both routes are workable. They just require completely different arguments, and mixing them up is one of the quickest ways to lose a case you should have won.

What counts as a service charge dispute

A service charge dispute usually falls into one of a few categories. You might be challenging the amount charged, the standard of work carried out, or whether the landlord followed the right process before charging you at all.

Common grounds for a dispute include:

• Charges for work that was never carried out, or was carried out to a poor standard
• Costs that are unreasonably high compared with the market rate for similar work
• A lack of any breakdown or supporting invoices for what you are being charged
• Major works carried out without the legally required consultation
• Charges for items outside what your lease actually allows the landlord to recover
• Sinking fund or reserve fund contributions that seem excessive or unexplained

If any of this sounds familiar, you are not alone, and you are not without options.

Your right to a reasonable charge as a leaseholder

Section 19 of the Landlord and Tenant Act 1985 is the starting point for most residential service charge disputes. It says that costs can only be passed on to you as a service charge “to the extent that they are reasonably incurred,” and that any work or service must be “of a reasonable standard.” Both the price and the quality have to stack up. A landlord cannot charge you for overpriced work, and they cannot charge you full price for a shoddy job.

You also have a legal right to ask your landlord for a written summary showing how a service charge has been worked out and what it has been spent on. Refusing to provide this without a good reason is a criminal offence. If your landlord cannot or will not explain a charge, that alone is often the first sign something is wrong. Find out more about reasonableness of service charges.

Consultation for major works: the Section 20 rules

If your landlord wants to carry out major works or enter into a long-term maintenance agreement, they usually have to consult you first. This is often called the “Section 20 process.”

Consultation is required once your contribution is likely to exceed:

• £250 for planned or one-off works
• £100 per year for a long-term agreement lasting more than 12 months, such as a maintenance or cleaning contract

Your landlord has to give you notice of the proposed works, let you make observations, and in most cases obtain at least two estimates. If they skip this process and do not get the tribunal’s agreement to waive it, the law caps what you can be made to pay at the same £250 or £100 figures above, no matter how much the works actually cost. This is one of the strongest protections available to leaseholders and one that is regularly overlooked.

How to challenge a residential service charge

Disputing a service charge does not mean withholding payment and hoping for the best. There is a clear route, and following it properly gives you the strongest chance of success.

1. Request a written summary of costs. Ask your landlord or managing agent for a full breakdown of the charge, along with copies of the invoices and receipts behind it. They are legally required to provide this.
2. Check your lease. Your lease sets out exactly what the landlord is entitled to recover through the service charge. Charges that fall outside these terms can often be challenged on that basis alone.
3. Raise the dispute in writing. Set out clearly which charges you are disputing and why, referring to the reasonableness test and any missing consultation. Keep a paper trail of every exchange.
4. Try to resolve it directly. Many disputes settle once a landlord realises the charge will not survive scrutiny. Mediation can also be a faster and cheaper route than a tribunal hearing.
5. Apply to the First-tier Tribunal (Property Chamber). If the dispute cannot be resolved, you can ask the tribunal to decide whether the charge is reasonable and payable. You can usually do this whether or not you have already paid the charge.

There are some situations where you cannot apply to the tribunal, including where you have already agreed the charge, where the amount is fixed by your lease, or where the matter has already been decided elsewhere. We will tell you early on whether your case is one the tribunal can hear. If your freeholder has threatened forfeiture over unpaid service charges, remember that they cannot forfeit until the amount has been admitted by you or determined by a tribunal or court — see our guide to forfeiture of a residential lease.

What evidence you need

Tribunals decide these cases on evidence, not on how strongly you feel the charge is unfair. Before you get to a hearing, it helps to gather:

• Copies of your lease and any service charge accounts you have received
• The disputed invoices, and quotes for comparable work from other contractors where you can get them
• Correspondence with your landlord or managing agent about the charge
• Photographs of the work in question, particularly where you are disputing standard rather than cost
• A record of any consultation notices you did, or did not, receive

We help clients build this evidence into a case a tribunal can actually act on, rather than a list of grievances.

Taking your case to the First-tier Tribunal

The First-tier Tribunal (Property Chamber) is a specialist tribunal set up to deal with exactly this kind of dispute. It is less formal than court, and you do not need a solicitor to apply. In practice, having someone who knows the legislation and the tribunal’s approach makes a real difference to how your case is put together and how it is received.

We prepare the application, gather and present the evidence, and represent you at the hearing if one is needed. Many cases settle once the landlord sees a properly prepared case against them, before a hearing ever takes place.

What are commercial service charges?

Commercial property service charges are payments made by tenants to landlords, in addition to their normal rent. They are intended to cover the cost of any service the landlord is obliged to provide under the terms of the lease. Typically, they include maintenance and repairs of the building, cleaning shared areas, security, buildings insurance, lift maintenance, and other services that contribute to the upkeep and operation of the building.

Service charges are a common feature of buildings with multiple tenants, such as office blocks. Where the building is shared, the annual cost of providing the services should be divided proportionately between the tenants.

Service charges are meant to be fair and reasonable. Landlords cannot profit from them, which means they should only cover the actual costs incurred by the managing agent in providing the services set out in the lease.

What goes wrong in commercial service charge disputes

In a typical arrangement, the landlord gives the tenant an estimate of the annual service charge at the start of the year. The tenant pays that amount in monthly or quarterly instalments, and a reconciliation takes place at the end of the year. Any shortfall is made up by the tenant, and any overpayment is refunded or, more usually, credited towards the next year’s service charge.

Disputes can arise at any stage of that process. Issues on which our team regularly advises include:

• Whether a particular service was within the scope of the service charge at all.
• How items were costed and apportioned between tenants.
• Whether the service charge costs are excessive compared to market rates.
• Disputes over sinking funds or reserve funds.
• Whether managing agents’ fees are reasonable.
• Work not being carried out, or not being carried out to a reasonable standard.
• Whether tenants should be charged for major upgrades they will not benefit from.
• Service charge arrears recovery, including forfeiture proceedings.

What the RICS standard requires of commercial landlords

The Royal Institution of Chartered Surveyors (RICS) publishes the professional standard that governs how commercial service charges should be managed. The second edition took effect on 31 December 2025 and sets mandatory requirements for RICS members and RICS-regulated firms. The key points are:

• The landlord can only recover expenditure set out in the lease, and must not exceed 100% of the actual cost of the services.
• The tenant should receive a budget each year and a copy of the service charge accounts showing what was spent, which means the landlord must keep good records.
• Landlords must apportion the service charge fairly between tenants and explain how each tenant’s proportion is calculated. If a tenant benefits more from a specific service, this should be reflected in their apportionment.
• Landlords should ensure service charges are reasonable and works are carried out to a reasonable standard. As part of that obligation, they have a duty to compare quotes and seek competitive prices.

The standard does not override the lease, and a tenant cannot sue on it directly. It does bind the surveyors and managing agents who are RICS-regulated, and a failure to follow it can be taken into account by the court if a dispute goes that far. In practice it is often the most useful benchmark a commercial tenant has.

Sinking funds and reserve funds in commercial leases

Many commercial leases provide for a reserve fund, a pot of money held to one side to deal with an unexpected, unbudgeted repair. Reserve funds can benefit tenants, as they smooth out sudden spikes in the annual charge.

Sinking funds are less common but not unheard of. A sinking fund is money set aside to replace a wasting asset in the future, such as the lifts or the heating system. Tenants tend to dislike sinking funds because they may never see the benefit of the works, for example where the work takes place long after the lease term ends.

Both are a frequent source of argument. Tenants feel they are paying to improve the value of the landlord’s investment, while landlords argue the funds are necessary for the proper management of the building. Whether a fund is recoverable at all comes down to the drafting of the lease, and we can advise you on where you stand.

Recovering commercial service charge arrears

Unpaid service charges are a debt due to the landlord. If the tenant does not pay after negotiation or mediation, the landlord can issue court proceedings and obtain a judgement for the unpaid sums.

Once a judgement has been obtained, it can be enforced in a number of ways. Our commercial service charge dispute solicitors advise landlords and managing agents on which enforcement route is likely to actually produce money in the shortest time.

Service charges are often specified in the lease as being “payable by way of rent.” Where that is the case, it may be possible to forfeit the lease using a bailiff, without issuing court proceedings at all. Forfeiture by peaceable re-entry is fast but procedurally unforgiving, and a landlord who gets a step wrong can lose the right to forfeit altogether. Take advice before you act, not after.

Challenging a commercial service charge

Business tenants question their service charge demands all the time. If you think you are being charged too much, speak to us. We can review your lease and the year-end accounts and advise on whether you have grounds to raise a challenge. Many leases set a timetable for disputing a charge and for inspecting records, so acting quickly matters.

Refusing to pay is not the answer. Withholding a commercial service charge can put you in breach of the lease and hand the landlord the right to forfeit it, which is a far worse position than the one you started in.

Where a dispute cannot be resolved straight away, one option is to pay the charge “under protest”. This keeps the door open to pursue the argument later, while avoiding the suggestion that by paying you accepted the charge as reasonable. Get legal advice on the wording before you use it.

Why choose Osbornes

Our property litigation team is led by partner Shilpa Mathuradas, and is ranked for property litigation by both Chambers UK and the Legal 500. We are members of the Association of Leasehold Enfranchisement Practitioners, a specialist body for lawyers working in leasehold disputes.

In residential leasehold disputes we act for leaseholders, not for freeholders or managing agents. In commercial disputes we act on both sides, for landlords and managing agents recovering arrears and for business tenants challenging what they have been asked to pay. That gives us a clear view of how the other side will run its case.

We have helped leaseholders across London successfully challenge unreasonable charges, recover money that was wrongly demanded, and hold freeholders to the consultation process the law requires.

Speak to a service charge dispute solicitor today

If you think you are being asked to pay more than you should, or you are a landlord struggling to recover what the lease entitles you to, do not wait until the position hardens. Call us on 020 7485 8811 or fill in the contact form below to speak to one of our service charge dispute lawyers. You can also contact the wider property litigation team.