A question we are asked regularly by leaseholders: our management fee has increased sharply and the service has not improved - can we challenge what the agent charges?
Where the management fee is recovered through the service charge, leaseholders can generally challenge whether it is payable under the lease and whether it is reasonable. Section 19 of the Landlord and Tenant Act 1985 limits recovery to costs reasonably incurred, and section 27A allows an application to the First-tier Tribunal to determine payability and amount. Administration charges are challengeable for reasonableness under Schedule 11 to the Commonhold and Leasehold Reform Act 2002. Before applying, use the statutory rights to a summary of costs and to inspect supporting documents, ask for a breakdown of the fee, raise it with the board and use the agent's complaints procedure and redress scheme.
The first distinction matters more than anything else. A leaseholder does not have a general right to challenge what an agent charges its client under a private contract. What can be challenged is the service charge: whether the management fee, as recovered from leaseholders, is payable under the lease and whether it is reasonable.
Where the fee is charged as part of the service charge, section 27A of the Landlord and Tenant Act 1985 allows an application to the First-tier Tribunal for a determination of whether a service charge is payable, by whom, to whom, how much and when. Section 19 limits recovery to costs reasonably incurred. Both apply to management fees as much as to cleaning or insurance.
Where a charge is an administration charge rather than a service charge, for example a fee for consent to alterations or a subletting notice, Schedule 11 to the Commonhold and Leasehold Reform Act 2002 applies instead, and a reasonableness challenge is available on that basis.
The arguments that go anywhere are specific. The lease does not permit recovery of the fee, or of that element of it. The fee has been apportioned incorrectly. The same work is being charged twice, typically as both a management fee and a separate additional charge. Fees for major works supervision duplicate the surveyor's fees. The increase is unexplained and unevidenced. The charge is materially out of line with comparable buildings and services. Or the service actually delivered falls short of the scope being charged for.
Arguments that rarely succeed are equally recognisable: general dissatisfaction with the agent, a preference for a cheaper agent found online, or the assertion that a fee is too high without evidence of what the market rate is for a comparable service.
Before challenging, get the facts. Section 21 of the 1985 Act provides for a written summary of relevant costs, and section 22 for the right to inspect and take copies of accounts, receipts and other supporting documents. Section 21B requires demands to be accompanied by the prescribed summary of rights and obligations. Section 47 and section 48 require the landlord's name and address to be given.
In practice, a leaseholder who asks precisely what the management fee covers, whether additional charges sit outside it, how the increase is made up and how it is apportioned will often either get a satisfactory answer or expose a real problem. Both outcomes are better than an unevidenced tribunal application.
Tribunal applications carry fees and take time, and the tribunal will expect evidence rather than assertion. Leaseholders should also check whether the lease allows the landlord's or company's costs of proceedings to be added to the service charge, and be aware of the application that can be made under section 20C of the 1985 Act to limit that.
If leaseholders are challenging the fee, treat it as information. Publish what the fee covers, what sits outside it, and why it changed. A board that can explain its management costs in a paragraph rarely ends up in a tribunal about them.
The practical route differs depending on whether you pay the fee or approve it.
Challenging the fee without reading the lease
If the lease does not permit recovery, that is a stronger point than reasonableness and it is often overlooked.
Skipping the information rights
Sections 21 and 22 usually produce the evidence a challenge needs, and sometimes resolve the issue outright.
Comparing to an unlike service
A quote for a basic service in a different building is weak evidence against a fee for a wider scope.
Ignoring the board
In RTM and RMC blocks the directors appoint the agent and can change the arrangement without any tribunal application.
Most questions on this topic are management questions rather than legal ones, and the two are worth separating. A managing agent can tell you how something works day to day and what it will cost. A solicitor tells you what your rights are and how a Tribunal is likely to view them.
East Valley Properties provides management expertise, not legal advice. Where a matter turns on the wording of your lease or on formal proceedings, we will say so and work alongside your solicitor.
The official material behind this guide. We summarise it in plain English rather than reproducing it.
Costs must be reasonably incurred and works of a reasonable standard.
Tribunal determination of whether a service charge is payable and how much.
Reasonableness of administration charges.
How to bring and evidence an application.
Clear budgets, designated client accounts and year-end accounts leaseholders can actually follow. We can review your current arrangement at no cost.
Answered by Romain Maillard - Director, East Valley Properties
Romain manages residential blocks and estates for RTM companies, residents' management companies, share of freehold developments and freeholders across East London and Essex.
Published
This answer has been anonymised. Personal details, addresses and company names have been removed. Guidance is general and does not replace advice from a solicitor or surveyor on your specific block. East Valley Properties is a managing agent, not a firm of solicitors or legal advisers.
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