First-tier Tribunal: where to go if you're in dispute with your freeholder

The First-tier Tribunal is the new body that will oversee disputes between leaseholders and freeholders. Along with the new name, it has new powers too...

This month sees the Leasehold Valuation Tribunal (LVT) change its name to the First-tier Tribunal (Property Chamber).

It might not be a catchy name, but the tribunal can help settle disputes between leaseholders and freeholders.

As well as leasehold disputes, the Property Chamber hosts other tribunals including the Residential Property Tribunal, Rent Assessment Committee and Adjudicator to Her Majesty’s Land Registry.

The change from Leasehold Valuation Tribunal to First-tier Tribunal only applies in England – the LVT remains in Wales for the time being.

But what does the First-tier Tribunal (Property Chamber) actually do?

Leaseholders vs freeholders

If you own a flat in a leasehold block the building itself is owned by a freeholder (or landlord) responsible for the communal parts of the building.

To pay for the upkeep of the building leaseholders (or flat owners) have to pay service charges. However it’s the freeholder, or managing agent employed by them, who will decide how the money will be spent.

On top of service charges, freeholders and managing agents can also charge administration charges for a range of tasks during the purchase, sale, subletting of, and alterations to, a flat.

Fees and charges can be high and often bear no relation to the work actually needed or completed. For this reason disputes between leaseholders and freeholders are common.

Tribunals

If you’re a leaseholder, you can appeal to the First-tier Tribunal (Property Chamber) if you can’t reach an agreement with the freeholder of any number of issues including service charges, lease extensions, changes to the lease, buying the freehold and insuring the building.

Freeholders can also take leaseholders to a tribunal. The most common reason is for non-payment of service charges.

The tribunal can decide whether the amount charged for services or repairs is 'reasonable'.

If a building is badly managed – for example, repairs and maintenance are not carried out – leaseholders can ask the tribunal to appoint a different managing agent.

New powers

The Property Chamber has more powers than the old Leasehold Valuation Tribunal.

One of the key issues with the old Leasehold Valuation Tribunal was that the tribunal had few sanctions available to it if a party decided to flout the rules.

The new Property Chamber, however, has the power to impose sanctions if a party fails to comply with procedural directions. This can include banning a party from taking further part in proceedings if they fail to comply.

There are also enhanced provisions allowing one party to apply to strike out another party’s case if it is without merit.

Another change is the power of the Tribunal to award costs. The First-tier Tribunal can award costs if a person has acted unreasonably in bringing, defending or conducting proceedings. At the LVT the maximum award was £500; at a First-tier Tribunal the amount is unlimited.

How to query service charges

The First-tier Tribunal should be the last resort in any disputes between leaseholders and freeholders.

If you have complaints about the service you receive or the amount you have to pay, you should complain to the managing agent or freeholder first.

All your communications should be by post or email, or at least followed-up in this way, so you have written evidence.

You should demand a summary of service charges and details of any insurance cover, as you are entitled to do. You also have the right to inspect accounts, receipts for services, and other documents.

Beware the unfair advantage

Before you rush off to the tribunal with a complaint about your freeholder, be aware that the rules are heavily weighted in the freeholder’s favour.

Big freeholders and the managing agents they work with could own hundreds of blocks around the country. The same names appear in tribunal cases over and over again and, perhaps unlike leaseholders bringing a case for the first time, freeholders and their legal teams will know exactly what they’re doing.

One thing to watch out for is that some leases contain clauses that mean if you take your freeholder or managing agent to a tribunal and you win, the freeholder is allowed to add their legal costs on to future service charges bills.

So even if you win, you lose, as you’ll be paying your own legal costs and the freeholder’s too.

More on property:

Japanese knotweed: the plant that could cost you your home

Why you should extend your lease now

My leasehold property nightmare

Five reasons you should never buy leasehold