£millions in service charges at risk as demands invalid

Payment of millions of pounds in service and administration charges may be lawfully avoided as managing agents are sending out invalid service charge demands.  By law in England, since 1st October 2007, every demand for payment of service charges (and since 30 September 2003 in respect of administration charges) must be accompanied by a Summary of Rights and Obligations. Failure to do so entitles the ¯at owner to withhold payment until this document, which explains a leaseholders rights in respect of the charges, is duly provided. Due to a change in the law last year, the statutory text defining the Summary of Rights changed. However, many managing agents have failed to adopt the new text and their service charge demands are consequently invalid. The Summary of Rights and Obligations contains a clause referring to a right of appeal to The Lands Tribunal. However, by statutory instrument, the Lands Tribunal was abolished last year and is now officially known as The Upper Tribunal (Lands Chamber). This necessitated many minor amendments to a wide variety of Acts of Parliament and statutory instruments, to replace references to the “Lands Tribunal” with the “Upper Tribunal.” One of the documents that was amended was the Summary of Rights and Obligations. Unless the text has been updated to reflect this change in name a leaseholder could legitimately withhold service charges by arguing that the Summary of Rights provided is invalid.  Managing agents who originally criticised the introduction of the Summary of Rights as an additional bureaucratic burden, are now scrambling to correct their paperwork to avoid any delay in payment.