Dealing with Communal Area Service Charge Disputes

Sinead Campbell from London Flats Insurance explores the typical causes of service charge conflicts, explain the legal consultation requirements under UK leasehold law and share practical strategies for resolving disputes through communication, transparency and proper documentation.

Managing a residential block as a Residents’ Management Company (RMC) director can be deeply rewarding, but it also comes with its fair share of challenges. Among the most common of these are disputes over service charges, particularly when it comes to communal areas.

Whether residents are complaining about cleaning fees, posing questions about garden maintenance, or objecting to unexpected repairs, service charge disagreements can quickly escalate if not handled with care.

Why Service Charge Disputes Arise

Service charges are designed to cover the upkeep of shared areas in leasehold properties. Everything from lighting in stairwells and lift maintenance to communal gardens, window cleaning, insurance and even fire safety measures. When managed correctly, they ensure the block remains safe, attractive and well-maintained.

However, disagreements often arise when:

• Charges are unclear or unexplained
• Leaseholders question the fairness or value of specific costs
• There are sudden increases in fees
• Major works are proposed without proper consultation
• Residents feel they were not involved in key decisions

At the heart of most disputes is a simple issue: communication.

When leaseholders do not understand what they are paying for or how decisions are made, frustration can mount. Add to this rising costs and financial pressures and tensions can rise quickly.

The Importance of Transparency

Being transparent is one of the best ways to minimise disputes. This means being upfront about coats, not just supplying evidence when requested. Leaseholders are more likely to accept charges if they can clearly see what the money is being used for and how the RMC has arrived at its decisions.

You can foster transparency by:

• Issuing clear, itemised budgets and service charge demands
• Providing summaries of actual vs budgeted costs at year-end
• Explaining any changes in cost or scope of services
• Keeping detailed financial records and making them accessible
• Encouraging questions and responding openly to queries

Where possible, make communication ongoing rather than reactive. Regular newsletters, AGM updates and digital noticeboards (like those from Intratone) help keep residents informed and engaged throughout the year.

Leaseholder Consultation Requirements

Under the Landlord and Tenant Act 1985, RMCs must consult leaseholders before carrying out certain works or entering into long-term contracts. This includes:

• Major works: If any single leaseholder will be charged more than £250 for planned work (e.g. roof replacement, window refurbishments etc), the RMC must follow the Section 20 consultation process.
• Qualifying long-term agreements: If the RMC wishes to enter into a contract lasting more than 12 months and that costs any leaseholder more than £100 per year, consultation is required.

Failing to follow the consultation process can result in charges being capped by a tribunal, regardless of the actual cost of the works. This can leave RMCs financially exposed and obviously damage trust with residents.

The Section 20 process involves:

1. Issuing a notice of intention to carry out works
2. Considering leaseholder observations and nominations for contractors
3. Providing estimates and a statement of responses
4. Issuing a notice of reasons once a contractor is selected

Taking this seriously is not just a legal obligation, it is also a great opportunity to involve residents and build consensus.

Strategies to Resolve and Prevent Disputes

Even with the very best planning, occasional disagreements are inevitable. But how you respond can make all the difference.

When a resident raises a concern, respond promptly and respectfully. Often, just taking the time to explain the charges and the rationale behind them can defuse the issue.

Always refer to the lease. This is a legal contract that sets out the obligations of both the leaseholder and the RMC. If there is a dispute over whether something should be charged, always go back to the lease terms.

Hold informal meetings or Q&A sessions if a particular issue is causing friction. Giving leaseholders the chance to have their say (and be heard) can ease tension and lead to productive outcomes. If you are charging for a service, be prepared to show quotes, invoices, or contracts to justify the expense. Transparency builds credibility.

If matters escalate, a neutral third-party mediator can help both sides reach a fair resolution without resorting to tribunal proceedings.

The more predictable and well-communicated your maintenance plans and budgets are, the fewer surprises residents will face. Consider publishing a three or five-year maintenance plan so leaseholders can see what is on the horizon.

Accurate Documentation

Keeping thorough records of all communications, decisions and financials is essential. Should a dispute escalate to a First-tier Tribunal (Property Chamber), well-organised documentation will help you demonstrate that you acted lawfully and reasonably.

Make sure you have:

• Copies of all service charge demands and supporting documents
• Consultation notices and responses
• Meeting minutes and AGM records
• Invoices, receipts and maintenance logs

Staying organised not only protects your RMC but also gives leaseholders confidence in your management.

In Summary

Service charge disputes over communal areas are common, but they do not have to be overly disruptive. With transparency, good communication and a solid understanding of your legal obligations, you can reduce friction and foster a more cooperative community. Ultimately, the goal is shared by everyone: to keep the building safe, pleasant and financially sustainable.

Clear documentation, fair practices and a genuine commitment to openness will go a long way in ensuring that service charges are seen not as a burden, but as a necessary investment in everyone’s home.