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.
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