Continuing our look at residential service charge demands, this article focuses on a document that should be familiar to anyone involved in residential block management. The Summary of Tenants’ Rights and Obligations.

It is something that is often attached automatically to a service charge demand and, for that reason, perhaps does not receive a great deal of attention.

However, there is a specific statutory framework governing not only what the summary must say, but also how it must be presented.

What does the legislation require?

Section 21B of the Landlord and Tenant Act 1985 provides that a demand for payment of a service charge must be accompanied by a summary of the rights and obligations of tenants of dwellings in relation to service charges.

Importantly, Parliament did not leave landlords or managing agents to decide what information that summary should contain.

Section 21B(2) provides for regulations prescribing the form and content of the summary.

For properties in England, those requirements are contained within the Service Charges (Summary of Rights and Obligations, and Transitional Provision) (England) Regulations 2007.

The Regulations go into a surprising degree of detail.

Regulation 3 requires the summary to:

• be legible;
• be typewritten or printed;
• use a font size of at least 10 point;
• contain the prescribed title, “Service Charges – Summary of tenants’ rights and obligations”; and
• contain the prescribed statutory wording.

It is therefore not sufficient to provide your own summary of a leaseholder’s rights or to substantially reproduce what the legislation says. There is prescribed wording which should be followed.

The font size actually matters

The requirement for the summary to be printed or typewritten in at least 10-point font is worth highlighting.

It may seem like a minor administrative detail, but it forms part of the express wording of Regulation 3.

This is particularly relevant where property management software automatically generates demands. A template may contain the correct wording but still warrant checking to ensure that formatting changes, document conversion or attempts to fit the summary onto fewer pages have not reduced the text below the prescribed size.

The simple practical point is do not shrink the statutory wording to make it fit however tempting it might be.

Make sure you are using the current wording

Another point worth checking is the age of the template being used.

The prescribed wording has been amended since the original 2007 Regulations, including to reflect changes to the tribunal system. It is therefore important to ensure that the version sitting within your property management system is the current prescribed wording rather than a historic version which has simply continued to be used.

For managing agents using templates that may have been sitting within a property management system for many years, this is a worthwhile check.

What happens if the summary is not provided?

This is where Section 21B can frustrate service charge recovery.

Section 21B(3) provides that a tenant may withhold payment of a service charge where the required summary has not accompanied the demand.

Section 21B(4) goes further. Where payment is withheld on this basis, provisions within the lease dealing with non-payment or late payment do not have effect during the period in which the tenant is entitled to withhold the service charge.

There is, however, an important distinction between a leaseholder withholding payment and a leaseholder who has already paid.

In Middleton and Another v Karbon Homes Limited [2023] UKUT 206 (LC), the Upper Tribunal considered the consequences of non-compliance with Section 21B. Importantly, the Upper Tribunal confirmed that where a leaseholder has already paid a service charge,

Section 21B does not provide a right to require repayment simply because the prescribed summary did not accompany the demand.

The statutory remedy is a right to withhold payment whilst the landlord remains in default. It is not a mechanism for recovering service charges which have already been paid.

This is an important distinction when reviewing historic demands.

If a landlord or managing agent discovers that the correct Summary of Rights and Obligations was not provided with earlier demands, sums already paid do not therefore have to be returned simply because of that omission.

Where sums remain outstanding, however, the sensible approach is to correct the position. If there is any doubt as to whether the correct summary accompanied an earlier demand, the appropriate summary can be served. As a practical precaution, I would always recommend doing so before progressing recovery action.

England and Wales – They have different wording

There are separate prescribed requirements for properties in England and Wales.

For properties in England, the prescribed requirements and wording can be found in the Service Charges (Summary of Rights and Obligations, and Transitional Provision) (England) Regulations 2007.

England – prescribed Summary of Rights and Obligations:

https://www.legislation.gov.uk/uksi/2007/1257

For properties in Wales, separate Regulations apply under the Service Charges (Summary of Rights and Obligations, and Transitional Provision) (Wales) Regulations 2007.

Wales – prescribed Summary of Rights and Obligations:

https://www.legislation.gov.uk/wsi/2007/3160

It is therefore important to ensure that the correct prescribed wording is being used for the property concerned.

A quick note on administration charges

Finally, there is a separate but related requirement which is worth mentioning.

The Summary of Rights and Obligations considered above relates to service charges. There is a separate statutory regime applying to administration charges under Schedule 11 to the Commonhold and Leasehold Reform Act 2002.

Administration charges can include charges arising from a leaseholder’s failure to make a payment by the due date or from a breach, or alleged breach, of the lease.

This can therefore capture some late payment, reminder, legal and other charges which may be added to a leaseholder’s account, subject always to the terms of the particular lease and the statutory requirements governing their recoverability.

Where an administration charge is demanded, the demand must also be accompanied by a separate prescribed Summary of Tenants’ Rights and Obligations relating to administration charges. If the required summary is not provided, the leaseholder may withhold payment of the administration charge.

It is important that the two summaries are not confused. The service charge summary does not replace the administration charge summary where an administration charge is being demanded.

The prescribed wording can be found here:

England – Administration Charges Summary of Rights and Obligations:

https://www.legislation.gov.uk/uksi/2007/1258

Wales – Administration Charges Summary of Rights and Obligations:

https://www.legislation.gov.uk/wsi/2007/3162

The practical takeaway

Compliance with Section 21B should be relatively easy.

For Landlords, RTM companies, RMCs and managing agents, the sensible approach is to have the correct prescribed summary built into the service charge demand process so that it accompanies each relevant demand automatically.

It is then worth periodically checking the template being used:

• Is it the current prescribed wording?
• Is it the correct version for England or Wales? Is the title correct?
• Is all of the wording present?
• And is it at least 10-point font?

These simple checks which can prevent a surprisingly inconvenient problem when service charge arrears subsequently need to be recovered.

If you have any queries or would like to discuss then please get in touch.