Residential service charges not recoverable as demand letter had agent's address, Tribunal says

In its decision (5-page / 32KB PDF) the Upper Tribunal (Lands Chamber) said that a demand for service charges which gave the landlord's name but its agent's address was invalid, even though this was a technical point that did not go to "the merits or justice of the case". The Landlord and Tenant Act 1987 states that any written demands must contain "the name and address of the landlord".

Property law expert Siobhan Cross of Pinsent Masons, the law firm behind Out-Law.com, said that the decision could be of "particular concern" to landlords who use managing agents, as it would likely be the agent who would be responsible for issuing service charge demands. Service charges are paid by tenants to cover the costs a landlord incurs in providing maintenance, insurance and other services, such as the lighting and cleaning of common areas, to a building.

Although the decision was not "as disastrous for landlords as it first appears" as landlords in this situation would be able to serve a further demand which did contain the landlord's proper address, at which point the demanded charges would become due, she added, this could result on landlords losing out on interest on any arrears. In addition, the strict time limits imposed on payment demands could also lead to problems.

"Residential tenants are not required to pay service charges where the costs to which the demand relates were incurred more than 18 months prior to the demand," she explained. "This means that, if an invalid demand for payment of service charges is served, the 18 month period may have run out before the landlord issues a valid demand."

However, there is an exception to this limit if the tenant is notified in writing that costs have been incurred and that the tenant will be required to contribute to them by way of a service charge within 18 months of the costs being incurred, she said.

"A demand for payment which is served within the 18-month time limit but is invalid by virtue of not providing the landlord's proper address would probably meet these requirements, stop time running and enable the landlord to issue a further notice," she added. "However, we may see this issue raised before the courts in light of the Upper Tribunal's decision."

Although the service charge demands at issue had given the name of the landlord, Beitov Properties Ltd, it had substituted the address of its managing agents rather than the landlord's address. The original Leasehold Valuations Tribunal (LVT) rejected Beitov's argument that it was good enough to give the details of the agent as an address with "sufficient connection" to the landlord and at which it could receive communications, meaning that the services charges contained in the demand were not due.

The Upper Tribunal agreed, stating that the wording of the relevant section of the 1987 Act was "clear".

"The purpose of [the provision] to include in any demand the name and address of the landlord, in my judgment, is to enable a tenant to know who his landlord is, and a name alone may not be sufficient for this purpose," George Bartlett QC, presiding, said. "To provide an address at which the landlord can be found assists in the process of identification."

He said that if this was not the case, the rules would not go on to state that an "additional" address be provided at which notices may be served on the landlord by the tenant in England and Wales if the tenant was located elsewhere. "Even if the landlord's address is not in England and Wales it still has to be given," he said.

He added that this address should be the "place of residence or the place from which he carries on business" if the landlord was an individual, or "the company's registered office or the place from which it carried on business" if the landlord was a company. If the landlord had more than one place or residence or business then "it may be that any one of such addresses will do" - however, this would depend on the facts of the case.