In Garside, the Appellant Lessees (“A”) appealed against a decision of the Leasehold Valuation Tribunal (“the LVT”)
... whereby the LVT decided that service charges being demanded by the Respondents in respect of major works for the years 2009 (£100,000) and 2010 (£538,012) were reasonably incurred pursuant to s.19(1)(a) of the Landlord and Tenant Act 1985 (“the LTA 1985”). The LVT interpreted reasonableness under s.19 LTA 1985 as relating to the reasonableness of the works in question and their costs.In allowing the appeal, the Upper Tribunal (Lands Chamber) held that LTA 1985 did not limit the scope of what was to be considered reasonable. “Reasonable” should be given a broad, commonsense meaning in the present circumstances. As such, the financial impact of major works on lessees through service charge demands and consideration of whether major works should be phased were capable of being material considerations when assessing whether the costs were reasonably incurred for the purposes of s.19(1)(a) LTA 1985.
For example, cases of financial impact could be considered in broad terms by reference to the nature and location of the property and the amount of service charges being demanded in one year in comparison to previous years. Other factors could be relevant but remained factual issues and matters of judgment for the LVT to weigh up against the hardship of substantial increased costs when deciding, on the evidence, whether the service charge costs were reasonably incurred.
Elizabeth Dwomoh / 1st Nov 2011
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