In the recent Upper Tribunal case of Webber v Syed [2025] UKUT 173 (LC), the Tribunal considered whether payment of service charges by a tenant can amount to an admission by the tenant that the charges are reasonable.
The Relevant Law
Section 27A of the Landlord and Tenant Act 1985 (the “Act”) allows parties to long residential leases to apply to the First-tier Tribunal (“FTT”) for determination in relation to the payability and reasonableness of service charges. Such applications are limited though and cannot be made in relation to a matter which “has been agreed or admitted by the tenant”.
Background
In July 2023, Ms Syed, the tenant of a flat in Guildford, (the “Tenant”) applied to the FTT under section 27A(1) of the Act to determine her liability for service charges from 2014 – 2023. The Tenant had paid all the service charges which had been demanded by Mr Webber (the “Landlord”) but continued to express her dissatisfaction with the management of the building and the information received in support of the service charge demands since at least 2017.
First-tier Tribunal Decision
In the FTT, the Judge did not agree with the Landlord and stated: “Whilst the Tenant may not have used the words ‘without prejudice’ or ‘payment under protest’ it is clear the Tenant has protested the service charges at every turn and frequently referred to past protests or disputes. The Tribunal finds that the Tenant continued to dispute the charges whilst making payment and therefore cannot be said to have admitted the charges were reasonable.”. As a result, the FTT reduced the service charge payable by the Tenant.
The Landlord appealed to the Upper Tribunal (“UT”) and argued that the Tenant should be found to have agreed to all of the service charges because she had paid them even after putting the Landlord to rigorous scrutiny about what the charges were and why they were said to be justified.
Upper Tribunal Decision
The UT referred to email communications including several threats by the Landlord that if payment was not received, he would commence court proceedings to terminate the Tenant’s lease. The Tenant’s evidence was that as a result of the Landlord’s threats, she had paid the service charges demanded.
The UT referred to the following decisions:
- Cain v London Borough of Islington [2015] UKUT 542 (LC) à Notwithstanding the limitations set out in the Act, the Tribunal was entitled to infer a service charge had been admitted or agreed from a pattern of payment without any challenge.
- G & A Gorrara Ltd v Kenilworth Court Block E RTM Co Ltd [2024] UKUT 81 (LC) à An agreement or admission cannot be inferred from payment alone and that something more than just payment must be present. In this case, something which invited the inference of agreement was that the Tenant had waited six years after making the last of the payments before challenging the charges.
This resulted in the UT coming to the decision that the payments made by the Tenant did not signify agreement to the service charges’ reasonableness and the UT therefore upheld the FTT’s decision. To read the full judgment, click here – LC-2024-432.pdf.
Points to Note
The “pay now, argue later” approach was approved by the Judge in the commercial property case of Sara & Hossein Asset Holdings Ltd v Blacks Outdoor Retail Ltd [2023] UKSC 2 so it is useful to see that the same approach has now been taken to residential properties.
However, Webber v Syed makes it clear that it is not as simple as paying now and challenging later, evidence challenging the amounts must be kept in support of this approach. It would also be prudent to keep such evidence in commercial property cases as well.
Landlords must carefully consider the relevant factual circumstances when faced with the question of whether or not payment of service charges by a tenant could amount to an admission of the charges’ reasonableness.
The Property Litigation team at Tyr can support you as a tenant, in relation to any concerns you may have regarding charges’ reasonableness, and as a landlord, Tyr can support you in relation to any concerns you may have around the duties of a landlord or manager of a residential block.
Contact details
eleanor.tordoff@tyrlaw.co.uk +44(0)7908 190547 +44(0)113 322 8240
