Question 1

Service Charge Payments

Accepted Answer

We are a recently built development which residents moved into from 4 January 2012. The first financial year was the calendar year 2012. On completion when moving in, we were asked to pay the sum of £2,500 which was a defined term in the lease under Schedule 7-2.7: "Service charge for the first financial year The sum payable ... is the Initial Provisional Service Charge of which the Lessee must, on the date of this Lease pay to the Landlord." Subsequent requests for payment in respect of charges for this year were issued by the managing agent. They varied by flat but were considerable. In my case the additional demand was for £1,186.55. Most of us paid under protest. The accounts for this financial year were then served late i.e. on 15 October 2013. Are we obliged to pay any more than the Initial Provisional Service Charge of £2,500? The FPRA replies: There are a couple of things which are confusing and need to be clarified before a full response can be provided.

The lease states that the “sum payable for the financial year current at the date of this document is to be the initial Provisional Service Charge…”
The lease we have on file is not dated with a completion date although the year on the lease is 2011
Are you sure the first financial year is 2012? Or is it 2011?
Is there a gap between the date of the lease and the moving in dates?

In any case, Clause 7.2.7 of the Seventh Schedule cannot be read in isolation. It needs to be read in the context of the whole of the service charge provisions. Consequently, the service charges work as follows: The tenants pay in advance their respective service charge percentages under their leases on 1st January and 1st June in equal instalments The landlord has reserved to him the option of revising the advance contributions to take into account increased expenditure as the year goes on For the first financial year, £2,500 is payable on completion of the lease. In other words, the £2,500 is the equivalent to the in advance payments on 1st January and 1st June (the position in subsequent years) As soon as practicable after the end of the financial year, the landlord must furnish the final accounts. Any credit will be off-set against future service charges and debit to be paid within 28days of the final account. Given the balancing provisions contained in Clause 7.2.8 of the Seventh Schedule it would seem the landlord, under the lease, is entitled to request further sums if required.

Question 2

Service Charge Payments

Accepted Answer

We are a recently built development which residents moved into from 4 January 2012. The first financial year was the calendar year 2012. On completion when moving in, we were asked to pay the sum of £2,500 which was a defined term in the lease under Schedule 7-2.7: "Service charge for the first financial year The sum payable ... is the Initial Provisional Service Charge of which the Lessee must, on the date of this Lease pay to the Landlord." Subsequent requests for payment in respect of charges for this year were issued by the managing agent. They varied by flat but were considerable. In my case the additional demand was for £1,186.55. Most of us paid under protest. The accounts for this financial year were then served late i.e. on 15 October 2013. Are we obliged to pay any more than the Initial Provisional Service Charge of £2,500? The FPRA replies: There are a couple of things which are confusing and need to be clarified before a full response can be provided.

The lease states that the “sum payable for the financial year current at the date of this document is to be the initial Provisional Service Charge…”
The lease we have on file is not dated with a completion date although the year on the lease is 2011
Are you sure the first financial year is 2012? Or is it 2011?
Is there a gap between the date of the lease and the moving in dates?

In any case, Clause 7.2.7 of the Seventh Schedule cannot be read in isolation. It needs to be read in the context of the whole of the service charge provisions. Consequently, the service charges work as follows: The tenants pay in advance their respective service charge percentages under their leases on 1st January and 1st June in equal instalments The landlord has reserved to him the option of revising the advance contributions to take into account increased expenditure as the year goes on For the first financial year, £2,500 is payable on completion of the lease. In other words, the £2,500 is the equivalent to the in advance payments on 1st January and 1st June (the position in subsequent years) As soon as practicable after the end of the financial year, the landlord must furnish the final accounts. Any credit will be off-set against future service charges and debit to be paid within 28days of the final account. Given the balancing provisions contained in Clause 7.2.8 of the Seventh Schedule it would seem the landlord, under the lease, is entitled to request further sums if required.

Service Charge Payments

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