Challenging a Service Charge at Tribunal: Section 27A

If you believe a service charge is too high, wrongly worked out, or not owed at all, the route in England is an application to the First-tier Tribunal (Property Chamber) under section 27A of the Landlord and Tenant Act 1985. The tribunal decides whether the charge is payable and, if it is, the person by whom and to whom it is payable, the amount, the date it is payable and the manner of payment. You can apply whether or not you have paid, and paying does not count as agreeing the charge. This article covers England; Wales has diverged on several points.

What a Section 27a Application Decides

Section 27A(1) covers five questions: who pays, who is paid, how much, when and in what manner. Section 27A(2) says this applies whether or not any payment has been made, and section 27A(5) says a tenant is not to be taken to have agreed or admitted any matter by reason only of having made a payment. That matters. Many leaseholders pay under protest to avoid interest or a forfeiture threat, then assume they have lost the argument. They have not.

Section 27A(3) allows a forward-looking question: if costs were incurred for services, repairs, maintenance, improvements, insurance or management of a specified description, would a service charge be payable, and how much. That is useful before a large project starts, rather than after the money has gone.

There are limits. Section 27A(4) bars an application about a matter that has been agreed or admitted by the tenant, has been or is to be referred to arbitration under a post-dispute arbitration agreement, or has already been determined by a court or an arbitral tribunal. Section 27A(6) makes void any agreement by a tenant, other than a post-dispute arbitration agreement, purporting to fix how such a question is decided or on what evidence.

The jurisdiction reaches only a variable service charge. Section 18 defines one as an amount payable by a tenant of a dwelling, as part of or in addition to rent, for services, repairs, maintenance, improvements, insurance or management costs, where the whole or part varies according to the relevant costs. A genuinely fixed charge written into the lease sits outside section 27A, as does ground rent. The respondent is whoever demands the charge: section 30 defines landlord, for these provisions, as including any person who has a right to enforce payment of a service charge, so a resident management company or RTM company is often the respondent rather than the freeholder.

What “Reasonably Incurred” Means

Section 19(1) is the test. Relevant costs count only to the extent that they are reasonably incurred, and where they are incurred on the provision of services or the carrying out of works, only if the services or works are of a reasonable standard. Section 19(2) covers money collected in advance: no greater amount than is reasonable is payable before the costs are incurred, with any necessary adjustment made afterwards by repayment, reduction or subsequent charges.

Reasonable does not mean cheapest. In London Borough of Hounslow v Waaler [2017] EWCA Civ 45, the Court of Appeal approved the two-stage approach in Forcelux Ltd v Sweetman: look at whether the landlord’s decision-making process was reasonable, then at whether the amount charged was reasonable in the light of the evidence. Lewison LJ put it at paragraph 37: whether costs have been reasonably incurred is not simply a question of process, it is also a question of outcome. A faultless tender exercise that produces an outlandish price is still open to challenge, and a low price reached through a shambolic process can still be reasonable.

Waaler also matters where a building faces discretionary work. A landlord carrying out improvements, rather than repairs it is obliged to do, must take particular account of the extent of the leaseholders’ interests, their views and the financial impact of proceeding. Leaseholders get no veto, but their observations must carry weight.

Before reasonableness arises at all, check the lease. If it does not permit the cost to be recovered through the service charge, or does not apportion it to your flat as the demand assumes, the charge fails at the first hurdle. Reading the recovery clause, the apportionment clause and any sweeper wording is the most productive hour you will spend.

What to Do Before You Apply

Most service charge disputes are information problems. The steps below usually either settle the dispute or produce the evidence you would need at a hearing. Start with the validity of the demand itself and your right to a summary of relevant costs.

• Check timing. Under section 20B, if relevant costs were incurred more than 18 months before the demand was served, you are not liable for the part of the charge reflecting them, unless you were notified in writing within those 18 months that the costs had been incurred and that you would have to contribute.
• Ask to inspect the paperwork. Section 22 lets a tenant who has obtained a summary of relevant costs require the landlord in writing, within six months of obtaining it, to provide reasonable facilities for inspecting the accounts, receipts and supporting documents and taking copies. Inspection is free, and available for two months beginning not later than one month after the request.
• Put specific written questions to the managing agent. Ask about one line, not the whole budget. Vague questions produce vague answers.
• Work out whether the problem is one year or a pattern. A single overpriced contract is a section 27A case. Persistent mismanagement needs a different remedy.

If the complaint is how the building is run rather than the arithmetic, section 27A will not fix it. Look instead at appointing a manager under section 24 of the Landlord and Tenant Act 1987, or at changing the agent where the resident management company controls the appointment.

Applications Worth Making at the Same Time

Form Leasehold 3 is the application form for a service charge determination. It carries boxes for two further applications, and it is a mistake to leave them blank.

Two other statutory hooks come up often. Where qualifying works would cost any one leaseholder more than £250, or a qualifying long term agreement would cost any one leaseholder more than £100 in an accounting period, the section 20 consultation requirements bite and contributions are capped at those figures unless the landlord consulted properly or obtains dispensation under section 20ZA. On dispensation, the Supreme Court held in Daejan Investments Ltd v Benson [2013] UKSC 14 that the focus is the extent to which leaseholders were prejudiced by the failure to consult, not the gravity of the breach, and that dispensation may be granted on conditions.

Second, where the disputed charge relates to remediating fire spread or building collapse risks, the form asks whether the building is at least 11 metres high or has at least five storeys, because the leaseholder protections in Schedule 8 to the Building Safety Act 2022 may cap or remove what a qualifying leaseholder pays. Buildings below that threshold sit outside Schedule 8 and are handled differently.

Fees, Tracks and How a Case Runs

If your building is in Devon or Cornwall, the application goes to the Southern region office at Havant Justice Centre, Elmleigh Road, Havant PO9 2AL, which covers Plymouth, Torbay, Devon, and Cornwall and the Isles of Scilly.

Help with Fees may cover both fees if you have only a small amount in savings, receive certain benefits or are on a low income. Apply online and quote the reference on your application, or attach form EX160.

Once the application is registered, the tribunal issues written directions or holds a case management conference, setting the issues, the dates for exchanging documents, whether an inspection is needed and the time estimate. Follow them: the party who ignores directions is the one most likely to face a costs order. A simple case can be decided on the papers if the parties agree, but any party may ask for a hearing. In most service charge cases the tribunal treats a site visit as necessary, and will only inspect inside a flat with the occupier’s permission.

Evidence That Works

The tribunal is deciding specific sums, not the general quality of the relationship. The evidence that carries weight is narrow and dull.

• A schedule listing each disputed item, the amount charged, what you say is wrong and what the correct figure should be. Tribunals often direct one; producing it unprompted focuses the case.
• The lease, with the recovery and apportionment clauses marked.
• The invoices, contracts, specifications and tender returns behind the disputed items, obtained by inspection under section 22 or by direction.
• Comparable quotes for the same scope of work. A cheaper quote for a smaller job proves nothing.
• Dated photographs and a short witness statement where the challenge is to the standard of works or services under section 19(1)(b).
• The certified accounts, and the reconciliation between what was demanded on account and what was actually spent.

Rule 19(2) of the Property Chamber Rules 2013 says no party may adduce expert evidence without the tribunal’s permission, so ask early if a surveyor’s report is needed. What does not work: assertions with no figure attached, complaints about the agent’s manner, and arguments about items you agreed in writing, which section 27A(4)(a) puts outside the tribunal’s reach. Payment alone is not agreement, but a signed settlement usually is.

The Costs Risk

Two costs risks run in parallel, and they are routinely confused.

Costs Orders Made by the Tribunal

Rule 13 of the Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013 allows a costs order only in limited situations: wasted costs under section 29(4) of the Tribunals, Courts and Enforcement Act 2007, and where a person has acted unreasonably in bringing, defending or conducting proceedings. There is no general rule that the loser pays. Rule 13(2) separately lets the tribunal order one party to reimburse fees another has paid, which is how a successful applicant usually recovers the £114 and £227. A costs application must be made within 28 days after the tribunal sends the decision that finally disposes of the proceedings.

Costs the Landlord Recovers Through the Lease

This is the bigger risk. Many leases let the landlord treat its legal costs of proceedings as a service charge item, or demand them from one leaseholder as an administration charge. You can win the substantive case and still see the landlord’s solicitors appear in next year’s budget.

Section 20C answers the first: the tribunal may order that all or part of the landlord’s costs are not to be regarded as relevant costs in determining any service charge, making such order as it considers just and equitable in the circumstances. Paragraph 5A of Schedule 11 to the Commonhold and Leasehold Reform Act 2002, in force since 6 April 2017, answers the second: a tenant in England may apply for an order reducing or extinguishing liability for an administration charge in respect of litigation costs. Tick both boxes.

The Leasehold and Freehold Reform Act 2024 rewrites this. Section 62 inserts new sections 20CA and 20CB into the 1985 Act and new paragraphs 5B and 5C into Schedule 11, so that a landlord must apply for permission to pass litigation costs on rather than doing so automatically. Section 63 gives tenants a reciprocal right to claim their litigation costs from the landlord. Neither was in force at Royal Assent, and section 62 remains prospective as at August 2026; the Government consulted on implementation on 4 July 2025. Until commencement regulations are made, section 20C and paragraph 5A are the tools you have.

If the Decision Goes Against You

An appeal is not a second attempt at the same argument. You apply in writing to the First-tier Tribunal for permission, identifying the decision, the grounds and the result you seek. Rule 52 requires the application to be received within 28 days after the latest of the dates on which the tribunal sends the written reasons, notification of amended or corrected reasons following a review, or notification that an application to set the decision aside failed. If permission is refused, you may apply again directly to the Upper Tribunal (Lands Chamber).

A note for directors of resident management companies and RTM companies on the receiving end: the tribunal will be scrutinising decisions you took as an unpaid volunteer, and a section 20C order can leave the company carrying legal costs it cannot recover from anyone. Plymouth Block Management can review a disputed year’s charges, demands and consultation trail before an application is issued, and will say plainly where a charge looks hard to defend.

Common Questions

Points that come up repeatedly when leaseholders and directors weigh up an application.