Leaseholders fail with court claim of no service, no fee: Court rules a landlord is not obliged to provide upkeep if it is not specified in contract

THOUSANDS of flat owners who pay service charges are unaware that the terms of their lease could lead to serious difficulties.

For Su Gilroy and the other residents of Silchester Court in Thornton Heath, Surrey, their lease problems are so fraught that they have become embroiled in a court battle with their landlords and another one is yet to come.

There are likely to be many other leases drafted in the same way where flat owners could face huge financial problems.

The facts of the Silchester Court case will have a familiar ring for anyone who has encountered problems with a management company and the payment of service charges.

In simple terms, the residents of the flats declined to pay the rent and service charge because they claimed the independent management company was failing to provide services to the flats.

The landlord, Hafton Properties, issued proceedings against 28 flat owners for arrears of rent and service charges. In the test case that went to court, the landlord alleged one flat owner owed pounds 9,890 in arrears of rent and charges.

The landlord applied to forfeit the leases and repossess the flats. The flat owners defended the action and counter-claimed.

They said that the management company had allowed the flats to fall into disrepair. It therefore fell on the landlord to perform the covenants of repair and maintenance on the management company's behalf.

The problem was the leases of the flats stipulated that only the management company had to perform the services. No duty was imposed on the landlord. The flat owners tried to claim that the lease implied a duty on the landlord.

The flat owners lost. The judge said the court would not imply any obligation on the landlord to make sure that the management company fulfilled its duties.

The sting in the tail is that the flat owners are still liable to pay the rent and service charge to the landlord, even though they claim the management company is not providing the services and the landlord is not under any obligation to compel the management company to carry them out. Miss Gilroy says: 'It is our leases that are the problem. We feel that everyone can just walk away from the provision of the services.'

John Samson, property partner with the solicitors Nabarro Nathanson, says that many leases do put an express obligation on the landlord to take over the responsibility if the management company does not perform.

'But equally there will be many others, like these, where there is no such obligation,' adds Mr Samson. 'It is important that all flat owners check their lease. Where leases contain significant inequities, there is a right under the 1987 Landlord and Tenant Act to apply to court to vary the lease.'

Meanwhile, the flat owners of Silchester Court fight on. There is another trial scheduled for November, when the merits of both sides' claims will be decided.

(Photograph omitted)