How to challenge a service charge
If you think your leasehold service charge is unreasonable, you can challenge it. By law a service charge is only payable if it is reasonable and the work is done to a reasonable standard, and if you cannot resolve it with the freeholder you can ask the First-tier Tribunal to decide. The safest approach is to question the charge in the right order rather than simply refusing to pay.
This guide takes you through it step by step, from understanding the charge to applying to the tribunal, including one order worth knowing about that stops the freeholder charging you for the cost of the fight.
Know your right first
The foundation of any challenge is the law that says a service charge is only payable to the extent that it is reasonably incurred, and that any works must be of a reasonable standard. That gives you a clear basis to question a charge, and it means the freeholder has to be able to justify what they are spending. You can read the wider context in our service charges guide. Reasonable does not mean cheapest, but it does mean defensible, and a charge that cannot be explained is a charge worth challenging.
Step 1: get the breakdown
You cannot challenge what you cannot see, so start by getting the detail. You are entitled to a written summary of the costs that make up your service charge, and once you have that you can ask to inspect the underlying accounts, invoices and receipts. Ask the managing agent or freeholder for these in writing. Often, simply seeing the breakdown either reassures you or reveals exactly where the problem is, such as a sharp jump in management fees or a major works cost that was never properly explained.
Step 2: check the rules were followed
Before arguing about whether a charge is reasonable, check whether it can be charged at all. Two things are worth looking at. First, the 18-month rule: if a cost was incurred more than 18 months before it was demanded, and you were not notified within that time that you would have to pay, it generally cannot be recovered. Second, for major works, check whether a proper Section 20 consultation was carried out. If the freeholder skipped it, the amount they can recover for those works is capped at £250 per leaseholder, regardless of the real cost. These two checks can resolve a dispute before you even reach the question of reasonableness.
Step 3: raise it with the freeholder
Put your concern in writing to the freeholder or managing agent, setting out exactly which charge you are questioning and why, and what you would like them to do, whether that is a fuller explanation, evidence, or a reduction. Keep it factual and keep copies. Many disputes are settled at this stage, because a managing agent would usually rather explain or adjust a charge than defend it at a tribunal. Give them a reasonable deadline to respond.
Step 4: apply to the tribunal
If you cannot resolve it, you can apply to the First-tier Tribunal (Property Chamber), which has the power to decide whether a service charge is payable and whether it is reasonable. You do not need a solicitor, and the tribunal is used to dealing with leaseholders representing themselves. You set out the charges you dispute and why, the freeholder responds, and the tribunal makes a decision. It deals with these cases routinely, so applying is a normal step rather than a last resort. Free guidance on the process is available from the Leasehold Advisory Service (LEASE).
Protect yourself with a Section 20C order
This is the part many leaseholders do not know about, and it matters. When you challenge a service charge, the freeholder may try to add their own legal costs of defending the challenge back into the service charge, which would mean you partly paying for the privilege of challenging them. You can ask the tribunal to make what is called a Section 20C order, which prevents the freeholder recovering those litigation costs through the service charge. Always consider applying for one as part of your case, because without it a win can be undermined by the costs being passed back to you.
Should you withhold payment?
Be careful here. Simply refusing to pay can put you in breach of your lease, which a freeholder could in theory try to use against you, so it is usually not the right opening move. The safer path is to pay under protest while you challenge, or to apply to the tribunal to have the charge determined, rather than to stop paying and hope. If you are tempted to withhold, get advice first, because the consequences depend on your lease and your situation.
Frequently asked questions
Does it cost money to go to the tribunal?
There are modest tribunal fees, and you usually bear your own costs. The Section 20C order described above is what stops the freeholder loading their costs onto your service charge, so it is an important part of keeping a challenge affordable.
Can I challenge old service charges?
Possibly. As well as the reasonableness test, the 18-month rule can rule out costs that were demanded too late. Check the dates on any older charge before assuming you have to pay it.
What if lots of leaseholders are affected?
You can challenge together, which spreads the effort and cost and can carry more weight. If the underlying issue is persistently poor or expensive management rather than one bad bill, it may also be worth considering Right to Manage to take control of the building.
This guide provides general information about challenging service charges in England and Wales. It is not legal advice, and every lease and situation is different. For advice on your own case, consult a solicitor or a specialist such as the Leasehold Advisory Service (LEASE). Sources: Landlord and Tenant Act 1985 (including sections 19, 20B, 20C and 27A); GOV.UK and LEASE guidance. Last reviewed [date]; reviewed whenever the law changes.