Residential Service Charges and “The 18 Month Rule”

3rd March 2021

Residential Service Charges and “The 18 Month Rule”

It’s almost 12 months since the first national lockdown was implemented alongside the Coronavirus Act 2020, so now seems a more than apt time to remind both landlords and residential long leaseholders of “the 18 month rule” for service charges.

Under Section 20B of the Landlord and Tenant Act 1985, a landlord has 18 months within which to notify leaseholders of service charge costs being incurred and/or to demand payment. If a landlord fails to either give notice of costs incurred or demand payment within 18 months, they will not be able to recover the charges from the leaseholder.

The Coronavirus Act 2020 did not suspend statutory time limits during lockdown. Therefore, it has not affected a landlord’s obligation to carry out repair and maintenance works, nor a long leaseholders’ liability to pay for such works under any service charge provisions.

In many cases, quarterly ground rent and interim service charges would have fallen due just weeks after the first lockdown was introduced in March 2020. Consequently, there is no doubt that landlords will have faced a number of difficulties as a result, including requests from leaseholders for concessions to be made and demands to be delayed. Whilst such requests will likely have been handled with a great deal of sympathy, landlords will now have to start thinking about the legal implications, especially where demands have been placed on hold.

Time is still very much of the essence in respect of service charge recovery and both landlords and leaseholders should be savvy to this, especially in a time where every penny counts.





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