Most leaseholders pay demands without checking. Many demands fail on the statutory formalities. Here is exactly how to check yours, step by step, using your lease, the demand letter, and free tools.
General information, not legal advice. Always seek professional counsel on your specific circumstances.
Most disputes do not happen because someone is acting in bad faith. They happen because the cycle has five distinct stages and at every stage there is a statutory hook that can be missed, a notification that can fail, or a number that can drift. Understanding the cycle makes the checks below much faster.
Year-ahead estimate
Issued to leaseholders
On account, in instalments
Spend through the year
Year-end accounts
The freeholder or RMC sets an estimate of the year's costs. There is no statutory deadline for circulating it, but the lease usually requires it before demands go out. The budget should show line items: insurance, repairs, management fee, reserve fund contribution, statutory inspections, communal utilities, cleaning, gardening.
The demand must include the freeholder's name and address (s.47-48 LTA 1987Section 47 requires landlord's name and address on demands. Section 48 requires an address for service of notices in England or Wales. s.47 LTA 1987 →) and the prescribed Section 21B summary of rights (s.21B LTA 1985A service charge is not payable until the prescribed summary of leaseholders' rights and obligations is served. s.21B LTA 1985 →). Demands without these may be lawfully withheld.
Service charge is usually paid in advance "on account" of the year's expected costs. Paid amounts are held on statutory trust under s.42 LTA 1987Service charge contributions are held on trust for the leaseholders, separate from the freeholder's own funds, in a designated account. s.42 LTA 1987 → in a designated account. They are not the freeholder's money to spend on anything else.
Costs incurred during the year must be reasonable (s.19 LTA 1985Service charges must be reasonably incurred and works/services of a reasonable standard. s.19 LTA 1985 →) and recoverable under the lease. For qualifying works (over £250 per leaseholder) and qualifying long-term agreements (over £100 per leaseholder per year), Section 20Consultation must be completed before the works/agreement starts. Skip it and recovery is capped at £250 per leaseholder. s.20 LTA 1985 → consultation must come first. Costs incurred more than 18 months before being demanded fall foul of s.20B LTA 1985Costs older than 18 months are not recoverable unless a Section 20B notice was served within that 18-month window. s.20B LTA 1985 → unless a Section 20B notice was served in time.
At year-end the actual spend is reconciled against the budget. Any surplus is credited or refunded; any shortfall is recovered through a balancing demand. Leaseholders have a right under s.21 LTA 1985Right to require a written summary of relevant costs within six months of the year-end. s.21 LTA 1985 → to request a written summary of costs and to inspect supporting receipts under s.22Right to inspect accounts and supporting documents within six months of receiving the s.21 summary. s.22 LTA 1985 →.
A separate pot for major works (roof, lifts, decoration cycles) built up over years. Set in accordance with the lease. Held on the same statutory trust as on-account contributions. RICS recommends a 25-year reserve plan from a chartered surveyor as the basis for setting the annual contribution. See reserve-fund.html for the full mechanics.
Every one of these is a statutory requirement. Miss one and the demand may be unenforceable until corrected.
The demand must include the landlord's name and an address in England or Wales where notices can be served. If missing, the leaseholder is not obligated to pay until it's provided.
Missing → legally withhold payment
A prescribed Summary of Tenant's Rights must accompany every demand. It's a statutory requirement, not optional. Omitting it makes the demand unenforceable until served.
Missing → demand unenforceable
Charges must be reasonably incurred and works/services must be of a reasonable standard. Leaseholders can challenge unreasonable charges at the First-tier Tribunal.
Unreasonable → FTT challenge available
A landlord cannot recover costs incurred more than 18 months before the demand unless the leaseholder was notified within that period. Back charges older than 18 months may be unenforceable.
Older than 18 months → may not be recoverable
If major works are included and the cost to any leaseholder exceeds £250, the landlord must have carried out a formal Section 20 consultation first. Skip this and recoverable costs may be capped at £250.
No consultation → costs capped at £250/leaseholder
Any ground rent demand for a regulated lease (granted after 30 June 2022) must be a peppercorn. Any higher demand is unenforceable and the landlord faces a civil financial penalty of up to £30,000 per breach.
Higher than peppercorn → civil penalty of up to £30,000 per breach
Each check tells you exactly what to look for, where to find it, and what it means if it's missing. Where your lease is relevant, LEASE-iQ can read it for you.
What to do: Look at your demand letter. It must state the landlord's full legal name and an address in England or Wales where notices can be served. A PO Box or overseas address does not count.
If it's missing: You are not legally obligated to pay until this information is provided. This is one of the most commonly missing items, especially in self-managed blocks where the freeholder company address isn't on the demand.
What to do: Check whether a separate document titled "Summary of Tenant's Rights and Obligations" was included with your demand. It's a prescribed statutory form, not something the landlord writes themselves. It must accompany every demand.
If it's missing: The demand is unenforceable until it is served. Many managing agents forget this or include an outdated version.
What to do: Your lease specifies how the service charge should be calculated: the apportionment percentage, payment schedule (quarterly, half-yearly, annually), and what costs are recoverable. The demand must follow these terms.
This is where most people get stuck. The relevant clauses are buried in dense legal language. Upload your lease to LEASE-iQ and ask it to find the service charge clauses, the payment schedule, and the apportionment method.
Upload your lease and ask: "What does my lease say about service charge payment, the schedule, the percentage I pay, and what costs the landlord can recover?"
Upload my lease →What to do: Look at the line items on the demand. Were any of these costs incurred more than 18 months ago? Check invoices, receipts, or accounts to see when the money was actually spent.
If yes: Unless you were notified within 18 months that the costs had been incurred, the landlord may not be able to recover them. This is a strict time limit.
What to do: If any works or long-term contract costs on the demand exceed £250 per leaseholder, the landlord must have carried out a formal Section 20 consultation before the work was done. This is a two-stage process with specific notice requirements.
What to check: Did you receive a "Notice of Intention" before the work started? Were you given 30 days to respond? Were alternative estimates obtained? If not, recoverable costs may be capped at £250 per leaseholder.
What to do: Even if the demand is procedurally correct, the amounts must be reasonable. Compare individual line items to what similar buildings pay. Are the managing agent's fees in line with market rates? Is the insurance premium competitive? Are cleaning or gardening costs proportionate?
If you think it's too high: You can apply to the First-tier Tribunal (Property Chamber) to challenge the reasonableness. Fees are typically under £300 and you don't need a solicitor.
Upload your lease to LEASE-iQ and ask: "What costs can the landlord recover through the service charge under this lease? Are there any caps or exclusions?"
Upload my lease →Write to your landlord or managing agent stating that the demand does not comply with s.47/48 or s.21B of the Landlord and Tenant Act 1985, and that you are withholding payment until the defect is corrected. Keep it factual. They can re-serve a corrected demand, but the clock resets.
You may have grounds to challenge at the First-tier Tribunal, or to negotiate directly. Start by requesting a summary of costs (your right under s.21 LTA 1985) and copies of all invoices. Call LEASE advisory service (free, government-funded) for advice on your specific situation.