© 2025 News On The Block. All rights reserved.
News on the Block is a trading name of Premier Property Media Ltd.
© 2025 News On The Block. All rights reserved.
News on the Block is a trading name of Premier Property Media Ltd.
The landlords were the freehold owners of a building. The ground floor flat was leased to the tenants under a long lease. The landlords occupied the remainder of the building. At some time prior to the landlord or tenant obtaining their respective interests, someone had removed a length of wall from the ground floor flat and had erected a stud partition wall. Both of these works were at variance with the plans of the flats. It seemed clear that the then tenant had not obtained the necessary consent from the then landlord.
The current tenants then removed the partition wall without obtaining written consent. Retrospective consent was sought and a price of £1500 plus VAT, together with costs was proposed. Costs eventually to almost £10,000. Against that background, the tenant applied to the LVT for a determination of the payability and reasonableness of these charges.
The landlord argued that the LVT had no jurisdiction to consider this matter, arguing that no formal demand for payment had ever been issued and that the correspondence, rather than reflecting demands for money, was on-going “without prejudice” correspondence. The LVT disagreed and concluded that it had jurisdiction but granted permission to appeal.
The Lands Tribunal (HHJ Huskinson) dismissed the appeal. Whilst the correspondence was indeed “without prejudice” correspondence, this was not determinative of the matter. On any view, it was clear that the facts existed which would have enabled the LVT to hear the matter. It was wrong to say that the LVT had to wait until the administration charge was “due” – the question was, under the statute, whether or not the administration charge was “payable”. This may well involve a consideration of matters in advance of them actually coming to pass. There is no requirement to formally serve a demand before an administration charge is payable. To hold otherwise would mean that a landlord had, by his decision whether or not to demand the service charge, determined whether or not a tenant could apply to an LVT.
However, the LVT did not have a jurisdiction to determine what level of administration charges would be payable in the future. It was limited to determining what was payable to date.
HHJ Huskinson also stated that an LVT was empowered, when considering an application for a determination of the payability and reasonableness of an administration charge, to consider whether or not a breach of covenant had actually occurred. This power had been expressly conferred by s168 Commonhold and Leasehold Reform Act 2002 (admittedly in relation to s146 Notices) but it was clear that Parliament was happy to leave such issues in the hands of the LVT.
Analysis
A fascinating decision and, it seems, the first Administration Charge case to reach the Lands Tribunal. The lengthy discussion about the status of “without prejudice” correspondence seems to have been a bit of a red herring. If a dispute exists between landlord and tenant as to whether or not an administration charge can properly be charged for an item, then there is no reason why the LVT should not determine that question – whether or not the parties have been proposing figures in their correspondence does not prevent the LVT from determining whether a charge is payable and, if so, the amount which is payable.
The decision to exclude ‘future’ administration charges is also correct, albeit that it represents a lacuna in the LVT’s jurisdiction. Schedule 11 of the Commonhold and Leasehold Reform Act 2002 does not simply replicate the LVT’s service charge jurisdiction. There is no provision in Schedule 11 for applications in respect of charges which are to be incurred. It remains to be seen to what extent this will impede the work of the LVT. The most sensible approach is simply for parties to wait until the charges have been incurred before heading off to the LVT. It is possible that landlords will lose out under this approach, as they may well want to know, in advance, whether or not they can charge for a particular item. At the moment, any such application would have to be made to the County Court.
Readers who have any comments to make about the LVT bulletin or who wish to bring particular cases or issues to the attention of the author, should e-mail us at editor@newsontheblock.com