The recent case of Holland Park (Management ) Limited  v Dell and Dell serves as a reminder to leaseholders to check the costs they are paying for in their service charge.

The case itself was unusual,  as the management company of 89 Holland Park had incurred litigation costs of close to £3 million in a dispute with its next door neighbour. It was then seeking to split and recover these costs from the leaseholders through the service charge. The Court of Appeal held that Mr and Mrs Dell, the leaseholders of one flat, were not liable to pay these costs, in particular because service charge costs related to day-to-day maintenance and management of 89 Holland Park, rather than disputes with neighbouring landowners.

Although costs on this scale are unlikely to go unnoticed by leaseholders, the same principle applies to all costs being put through the service charge by a management company, particularly under general ‘sweeper clauses’.  Costs unquestioned and charged on a quarterly basis can easily add up and decrease the value of your asset. Our advice to all long leaseholders is to carefully check the costs charged by management companies are fully due and payable before making payment.