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Published On: January 20, 2021 | Blog | 0 comments

Fire Safety Works and Service Charges

Fire safety works in blocks of flats are big news at the moment.   These works are not just cladding removal but all sorts of other things. Leaseholders are potentially being asked to pay through their service charge for surveys, interim measures and works.   These can include things like waking watches, the cost of the infamous EWS1 survey, other survey and professional costs, as well as the cost of extensive remediation works themselves. Those works can include not just the removal of cladding, but also things like the removal of other potentially dangerous materials like wooden decking on balconies, the stripping out and replacement of insulation, and the replacement of fire-stopping.

All these measures are expensive.  While the government’s Building Safety Fund may eventually provide funding for the cost of some of these works, it certainly will not do so for all. That leaves freeholders and management companies looking to leaseholders to pay for these costs through their service charges. Many leaseholders are caught in a double trap where not only is it difficult or impossible to sell their flats until their works are done, but they are also being faced with a huge service charge bill to fund the cost of the works.

Does it follow that leaseholders will definitely have to pay these costs through their service charge? Not at all.  That is where it pays leaseholders to take a close look at the terms of their lease.   Service charge can only be levied if the lease allows it.   If the lease does not allow service charge to be charged for a particular service or item of work, then the freeholder cannot charge a leaseholder through the service charge.  Many leases, particularly more recent leases, will have wide ranging service charge clauses which will cover most if not all of the items listed above.  Not all leases though do have such wide-ranging service charge clauses, and it can repay leaseholders to look carefully.

If there is a dispute about whether an item is chargeable through the service charge, the First Tier Tribunal (Property Chamber) has the jurisdiction to decide what is payable and what is not.

Controversially, the government’s draft Building Safety Bill proposes to expand the scope of leaseholder’s service charge obligations to cover building safety costs.   There is an amendment to another Bill, the Fire Safety Bill, which is seeking to head off this change even before the Building Safety Bill is introduced to parliament.  However, for the time being, leaseholders should have a very careful look at their lease if faced with a substantial service charge bill for fire safety works.

* Disclaimer: The information on the Anthony Gold website is for general information only and reflects the position at the date of publication. It does not constitute legal advice and should not be treated as such. It is provided without any representations or warranties, express or implied.*

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3 thoughts on “Fire Safety Works and Service Charges

  1. Paradoxically, finding that such costs are not recoverable under the service charge may be worse for tenants in a block than if they are. Unless the freeholder has substantial assets of its own which it can be compelled to disgorge then the work will not get done. However, it is usually the case that if a cost cannot be recovered it is because there is no obligation on the part of the landlord to do the work.

    This is not great news for tenants. If the Bill “expand[s] the scope of leaseholder’s service charge obligations to cover building safety costs” there will exist a mechanism to get the work done. This will undoubtedly be harsh and some leaseholders may have to sell their homes, probably at a discount.

    The alternative will be stalemate and everyone concerned having to live in an unsafe building that is not going to be fixed. Leaseholders who are willing and able to pay their share may be stuck unless they are also willing and able to subsidise their neighbours.

    1. Thanks Ian. I agree there are no easy answers. The problem you identify is particularly acute for resident-owned management companies which have no other assets apart from monies raised from service charge or from the building safety fund. However, many freeholders do have substantial assets. There is no reason why leaseholders should always be the ones asked to pick up the tab if they are not legally obliged to do so.

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