Service charges - legal update
Late Service Charge Demands: Why the Dates in Your Lease Matter
A recent Upper Tribunal decision highlights an important lesson for RTM Companies, RMCs and freeholders: when a lease sets a timetable for service charge demands, missing the deadline can have serious consequences.
Short answer
Where a lease sets its own timetable for service charge demands - for example a budget to be issued before the start of the service charge year - missing that deadline can affect what the landlord or RTM company is able to recover for that period. That is a question of contract, decided on the wording of the individual lease. It is separate from the statutory 18-month rule in section 20B of the Landlord and Tenant Act 1985, which bars recovery of costs demanded more than 18 months after they were incurred unless the leaseholder was notified in time. Both can apply to the same demand, and a demand can be within the 18-month rule but still late under the lease.
What happened?
The case of Jamal v London Borough of Enfield [2026] UKUT 104 (LC) concerned a leaseholder who was asked to pay service charges that had been demanded outside the timetable set out in the lease itself.
Most residential leases do more than simply say that a service charge is payable. They usually set out a mechanism: when the service charge year runs, when an estimate or budget must be prepared, when on-account demands are issued, and when the year-end balancing figure must be certified and demanded. Those provisions are contractual obligations, not administrative preferences.
In this case, the demands did not follow that timetable. The leaseholder argued that because the landlord had not complied with the mechanism in the lease, the sums claimed were not properly payable.
The First-tier Tribunal decision
At first instance, the First-tier Tribunal took a pragmatic view. The costs had genuinely been incurred, the services had genuinely been provided, and the leaseholder had received the benefit of them. On that reasoning, the sums were treated as recoverable despite the timing problem.
That approach reflects a view many landlords and managing agents have relied on for years: that a late demand is an administrative slip rather than something that defeats recovery altogether.
The Upper Tribunal decision
The Upper Tribunal took a stricter, more contractual approach. A lease is a contract, and if it sets out a timetable for demanding service charges, the party seeking payment has to follow it.
The key points in plain English
Fairness alone does not create a right to payment. The right to payment comes from the lease, and the lease has to be followed.
- Where a lease sets a deadline for demanding service charges, that deadline forms part of the contractual machinery for making the charge payable.
- If the machinery is not followed, the sum may not become payable in the way the landlord intended - even where the underlying costs were properly incurred.
- The fact that services were delivered and money was genuinely spent does not automatically override the wording of the lease.
- The consequences of a late demand are determined by how the individual lease is drafted, not by a single general rule that applies to all buildings.
"Good block management is not simply about collecting service charges. It is about collecting the right amount, using the right process, at the right time."
Does this mean every late demand is invalid?
No. This is the point most often misunderstood. The decision does not create a rule that every late service charge demand is automatically unenforceable. Everything turns on the drafting of the particular lease.
Higher risk wording
- A clear, mandatory deadline for issuing demands or certifying accounts.
- Wording that makes payment conditional on the demand being served by a stated date.
- A detailed step-by-step mechanism that has plainly not been followed.
Lower risk wording
- Timing expressed as an expectation rather than a strict condition of payment.
- Flexible drafting such as "as soon as practicable" after the year end.
- No fixed date attached to the issue of demands at all.
Two blocks on the same street can be in completely different positions simply because their leases were drafted differently. That is why a lease review, rather than a general assumption, should drive the decision about what to do next.
What happened to the actual expenditure?
This is where the practical consequences bite. The money in question had already been spent. Contractors had been paid, insurance had been placed, staff and suppliers had been engaged and the building had been maintained.
A timing failure does not refund those costs. If a sum cannot be recovered from leaseholders in the way the lease intended, the shortfall has to be absorbed somewhere - typically by the RTM Company, RMC or freeholder, or indirectly by other leaseholders through future budgets and reserves.
For a small RTM Company or RMC with no reserves and a limited cash position, that is a serious problem. It can affect the ability to pay suppliers, place insurance or fund essential repairs, and it can put directors in a difficult position with their fellow leaseholders.
Don't confuse this with the 18-month rule
These are two separate requirements. Complying with one does not mean you have complied with the other, and they can bite at different times.
Deadlines in the individual lease
Created by the lease itself and specific to your building. They govern when budgets are prepared, when demands are issued and when year-end accounts are certified.
- Vary from block to block.
- Interpreted as a matter of contract.
- The issue considered in the Jamal decision.
Section 20B, Landlord and Tenant Act 1985
A statutory backstop that applies to every residential long lease. Broadly, costs must be demanded within 18 months of being incurred, unless the leaseholder was notified in writing within that period that the costs had been incurred and would be charged.
- Applies regardless of lease wording.
- Can be managed with a timely written notification.
- A separate test from the lease timetable.
In short: a demand issued inside the 18-month statutory window can still cause difficulties if it breaches a contractual deadline in the lease. Both need to be managed, and the effect of a late demand always depends on the wording of the individual lease.
Timing is only part of the picture. A demand also has to contain the right information to be valid, see what a valid service charge demand must include.
What should RTM and RMC directors do?
Directors of an RTM Company or RMC carry the responsibility for getting this right, even where the day-to-day work is delegated to a managing agent. A few straightforward habits remove most of the risk.
Read the lease properly
Identify the service charge year, the date the budget must be prepared and any deadline for issuing demands or year-end accounts.
Diarise every lease date
Put the contractual dates in a management calendar, not just the statutory ones. A missed lease date is far easier to avoid than to argue about later.
Budget early
Draft the budget well before the deadline so demands can be checked, approved and issued on time rather than in a rush.
Keep evidence of service
Record when each demand was issued, how it was sent and to which address. Proof of timing matters if recovery is later challenged.
Brief your managing agent
Agents should be working to the lease timetable for your block, not a generic in-house calendar applied to every building.
Take advice when a date slips
If a deadline has been missed, get the lease reviewed before issuing anything. The right next step depends entirely on the wording.
If your company is newly formed or still finding its feet, our Right to Manage support covers the practical side of running the company, and our Section 20 consultation support deals with the separate timetable that applies to major works.
Why this matters when changing managing agents
Timing problems are often inherited rather than created. When a block changes hands, the incoming agent may find that budgets were issued late, that year-end accounts were never certified, or that costs were incurred in a previous period and never properly demanded.
A proper handover should therefore include a review of what has been demanded, what remains outstanding and whether any of it is at risk on timing grounds. Discovering a problem at handover gives directors options; discovering it when a leaseholder disputes a demand usually does not.
We cover the wider process in our guide to changing managing agent, including the documents an outgoing agent should provide and the checks worth carrying out before the first budget under new management is issued.
How East Valley Properties approaches service charge management
We treat the lease as the operating manual for the building. Timetables are set from the lease for each block we manage, so demands go out correctly and on time.
Lease-driven calendars
Every block we manage has its own timetable built from the lease, covering budgets, demands, accounts and reserve contributions.
Budgets prepared in advance
Draft budgets go to directors early so there is time to review, question and approve before demands are due.
Clear, compliant demands
Demands include the statutory summary of rights and obligations, the correct landlord details and a plain breakdown of what is being charged.
Section 20B monitoring
Costs incurred are tracked against the 18-month rule so demands or notices are issued in good time.
Auditable records
Issue dates, delivery method and correspondence are recorded, so recovery can be evidenced if it is ever questioned.
Careful handovers
When we take over a block we review what has been demanded, what has not, and where any timing problems may already exist.
What does this mean in practice?
The practical lesson is about diary discipline rather than case law. Most recovery problems we see start with a budget issued a few weeks late and nobody noticing.
If you are one of the rtm directors
- Find the demand timetable in your own lease and put those dates in a calendar for the next three years, not just this one.
- Issue the budget on time even if a cost is still uncertain. A demand on time with a prudent estimate beats a perfect demand issued late.
- Check that demands go out with the statutory summary of rights and the correct landlord details. A technically late demand and a defective demand cause similar problems.
If you are one of the rmc directors
- Review any period where costs were incurred but not demanded within 18 months, and take advice before writing them off or pursuing them.
- Where a cost is known but the invoice has not arrived, consider notifying leaseholders in writing that the cost has been incurred.
If you are one of the freeholders
- Ask your managing agent to evidence the date each demand was sent, not just the date on the document.
- Treat the lease timetable as a contractual obligation, not an administrative preference.
If you are one of the leaseholders
- Check your lease for a demand deadline before assuming only the 18-month rule applies.
- Ask when the cost was incurred, not just when it was demanded. The two dates decide the position.
Common mistakes
Assuming the 18-month rule is the only deadline
Many leases impose their own, earlier timetable. A demand can be comfortably inside 18 months and still be late under the contract.
Waiting for final invoices before issuing the budget
Budgets are estimates. Holding one back for certainty is the most common way a lease deadline gets missed.
No record of when demands were actually sent
If the sending date cannot be evidenced, arguments about lateness are hard to answer. Keep the dispatch record with the demand.
Relying on verbal reassurance from an outgoing agent
On handovers we regularly find demand histories that do not match what was described. Ask for the documents.
When to seek professional advice
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.
Speak to a managing agent when
- You want your demand timetable mapped from the lease and built into a working calendar.
- Budgets, year-end accounts or demand templates need bringing back into order.
- You are taking over a block and need the demand history checked as part of handover.
Take specialist legal advice when
- Recovery for a past period is already in question, or arrears are being disputed on this basis.
- The lease wording on timing is ambiguous and money turns on the interpretation.
- You are considering, or facing, a First-tier Tribunal application.
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.
Primary sources
The official material behind this guide. We summarise it in plain English rather than reproducing it.
- Landlord and Tenant Act 1985, section 20B - limitation of service charges (legislation.gov.uk)
The 18-month rule and the notification exception.
- Landlord and Tenant Act 1985, section 21B - summary of rights and obligations (legislation.gov.uk)
What must accompany a service charge demand for it to be valid.
- Upper Tribunal (Lands Chamber) decisions (GOV.UK)
Published decisions on lease demand timetables and service charge recovery.
Please note: this article is general information about residential block management and is not legal advice. The effect of a late service charge demand depends on the wording of the individual lease and the facts of the case. You should take advice from a solicitor on your own lease before relying on anything set out here.
Written 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.
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