Landlord wins dispute over holiday home service charges

The landlord of a holiday park has won a legal dispute with chalet tenants over service charges.

The tenants held long leases that obliged them to pay whatever the landlord “”may reasonably require on account”” by 31 December every year to maintain and manage the park.

The lease specified that the service charge was to be a fair and equitable proportion of the aggregate of the sums “”actually expended”” by the landlord in the relevant year. It made no provision for what was to happen if the service charge paid by a tenant on account exceeded the sum actually expended.

The tenants applied to the Lands Tribunal for a determination of the reasonableness of sums claimed on account by the landlord in December 2014.

A number of items of anticipated expenditure had been included in the amount demanded on account, but the expenditure had not been incurred during 2015. Those items included the proposed employment of a new site manager at a cost of £50,000 and the refurbishment of a children’s play area at a cost of £36,000.

The tribunal ruled that it should ignore the fact that part of the anticipated expenditure had not been incurred by the time it made its determination. It allowed the estimated cost of refurbishing the play area, but reduced the estimated sum of £50,000 for the site manager to what it considered to be a reasonable charge of £35,000.

The tenants appealed to the Upper Tribunal but it upheld that decision.

Please contact Janice Young if you would like more information about the issues raised in this article or any aspect of commercial property law.