Housing Act 1985

47 Limitation of service charges.

(1) Relevant costs shall be taken into account in determining the amount of a service charge payable for a period—

(a) only to the extent that they are reasonably incurred, and

(b) where they are incurred on the provision of services or the carrying out of works, only if the services or works are of a reasonable standard;

and the amount payable shall be limited accordingly.

(2) Where the service charge is payable before the relevant costs are incurred, no greater amount than is reasonable is so payable and after the relevant costs have been incurred any necessary adjustment shall be made by repayment, reduction of subsequent charges or otherwise.

(3) An agreement by the payer (other than an arbitration agreement within the meaning of section 32 of the [1950 c. 27.] Arbitration Act 1950) is void in so far as it purports to provide for a determination in a particular manner or on particular evidence of any question—

(a) whether an amount payable before costs for services, repairs, maintenance, insurance or management are incurred is reasonable,

(b) whether such costs were reasonably incurred, or

(c) whether services or works for which costs were incurred are of a reasonable standard.