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


Updated on 10 July 2013 | 2 Comments

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

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Comments



  • 11 July 2013

    I would advise anyone thinking of purchasing a leasehold property to investigate all the terms and conditions thoroughly and only go ahead when you have confirmed everything to your satisfaction. I don't think it is generally realised that a leaseholder doesn't own their property - the freeholder does - so basically you are a glorified long term tenant. Although you don't have to pay rent as such for the rooms that you occupy, a common problem is that landlords/managing agents levy ridiculous 'service charges' ... you will need to keep tabs that what you are charged for is actually carried out ... and of course, their hefty 'management fee' which will probably be a considerable amount for, in effect, very little. When I moved into our small low rise block about ten years ago, the ratio of occupier leaseholders to sublet flats was approximately 75%/25% ... over the years it seems every time a lease comes up for sale it is bought up by buy to let landlords, so that the ratio has now reversed to approximately 25/75%. Around six years ago, an attempt was made to buy the freehold. This stirred them managing agents into life for once and a meeting was called. Unfortunately I work varying shifts and was at work at the time so I couldn't attend. I was told that the guy who came round was very condescending but succeeded in his mission of 'quelling the rebellion', so to speak. My two neighbours who were 'ringleaders of the rebellion' have since left and as the majority of the block is now in the hands of absentee buy to let landlords who couldn't give a damn as long as they get their rent, then the possibility of getting the majority required to buy the freehold is remote. With buy-to-let spreading like the plague, I would imagine this would be a common problem these days. Along with others, I have been in dispute with the managing agents regarding the make-up of the 'service charge' ... I have raised queries for which answers were promised but never received. I therefore decided to deduct an amount from my payments pending proof that work billed for (very vaguely) had actually been carried out. Various threatening letters were received from solicitors threatening dire consequences leading eventually to a court prosecution - which was fine by me but which was called off by the managing agents at the eleventh hour. A state of dispute still exists between us regarding this. You will find that the problems outlined above and many others are commonplace and are something you will most likely have to look forward to if you become a leaseholder.

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  • 10 July 2013

    This article is actually very misleading and potentially scaremongering. There is no mention about the fact that Leaseholders in a block of flats can actually apply for Right To Manage and thus avoid the majority of the problems relating to Managing Agents and unfair costs (althogh you will still be liable for any costs associated with the Freehold). Nor is there any mention that if you are forced to go to the Tribunal, you can apply to avoid legal costs being made against you through the Management Charges: Section 20C of the Landlord and Tenant Act 1985 gives the Tribunal power, on application by a tenant, to make an order to the effect that such costs are not to be treated as relevant costs to be taken into account in determining the amount of any service charge payable by the tenant or any other person(s) specified in the application.

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