Leasehold and Freehold Reform Act 2024

53 Extension of regulation to fixed service charges

(1) The Landlord and Tenant Act 1985 (“the LTA 1985”) is amended in accordance with subsections (2) to (6).

(2) In section 18 (meaning of “service charge” and “relevant costs”)—

(a) in the heading, after ““service charge”” insert “, “variable service charge””;

(b) for subsections (1) and (2) substitute—

“(1) In the following provisions of this Act—

• “service charge” means an amount payable by a tenant of a dwelling, as part of or in addition to the rent, which is payable, directly or indirectly, for the purpose of meeting, or contributing towards, the relevant costs;

• “variable service charge” means a service charge the whole or part of which varies or may vary according to the relevant costs.

(2) The “relevant costs” are the costs or estimated costs incurred or to be incurred by or on behalf of the landlord, or a superior landlord, in connection with services, repairs, maintenance, improvements or insurance or the landlord’s costs of management.”;

(c) in subsection (3)(b), for “a service charge” substitute “a variable service charge”.

(3) In the provisions referred to in subsection (4)—

(a) for “service charge” substitute “variable service charge”;

(b) for “service charges” substitute “variable service charges”.

(4) The provisions are—

(a) in section 19 (reasonableness of service charges), the heading and subsections (1) and (2);

(b) in section 20 (consultation requirements), the heading and subsection (2);

(c) in section 20A (grant-aided works), the heading and subsections (1) and (2);

(d) in section 20B (time limit on making demands), the heading and subsection (1) in the first place “service charge” occurs;

(e) in section 20D (remediation works), the heading and subsections (4) and (5);

(f) in section 20F (excluded costs for higher-risk buildings), the heading and subsection (2);

(g) in section 30D (liability for building safety costs), subsection (2)(a)(ii);

(h) in section 30E (liability for remuneration), subsection (1)(c).

(5) In section 30E(3), for ““service charge” has the meaning” substitute ““service charge” and “variable service charge” have the meaning”.

(6) In section 39 (index of defined expressions), at the end insert—

“variable service charge

section 18(1)”.

(7) The Landlord and Tenant Act 1987 (“the LTA 1987”) is amended in accordance with subsections (8) to (10).

(8) In the provisions referred to in subsection (9), in each place they occur—

(a) for “service charge” substitute “variable service charge”;

(b) for “service charges” substitute “variable service charges”.

(9) The provisions are—

(a) in section 24 (appointment of manager by tribunal), subsections (2) and (2A);

(b) in section 35 (application by party to lease for variation of lease), subsections (2) and (4);

(c) in section 42 (service charge contributions to be held in trust), the heading and subsections (1), (2), (3), (4), (6), and (8).

(10) In section 35(8), for ““service charge” has the meaning” substitute ““service charge” and “variable service charge” have the meaning”.

(11) In section 167 of the CLRA 2002 (failure to pay small amount for short period)—

(a) in subsection (1), for “service charges” substitute “variable service charges”;

(b) in subsection (5), for “service charge” substitute “variable service charge”.