Housing Act 1985

Restriction on service charges

45Disposals in relation to which ss. 46 to 51 apply, etc. payable after disposal of house.

(1)The following provisions of this Part down to section 51 (restrictions on, and provision of information about, services charges) apply where—

(a)a house has been disposed of by a public sector authority,

(b)the conveyance or grant, or, in the case of an assignment of a lease, the lease, enabled the vendor or lessor to recover from the purchaser or lessee a service charge, and

(c)the house is not a flat within the meaning of sections 18 to 30 of the [1985 c. 70.] Landlord and Tenant Act 1985 (which make provision for flats corresponding to that made by the following provisions of this Act).

(2)In subsection (1)(a)—

(a)the reference to disposal is to the conveyance of the freehold or the grant or assignment of a long lease (that is, a lease creating a long tenancy as defined in section 115); and

(b)“public sector authority” means—

• a local authority,

• a new town corporation,

• an urban development corporation,

• the Development Board for Rural Wales,

• the Housing Corporation, or

• a registered housing association.

(3)The following provisions—

• section 170 (power of Secretary of State to given assistance in connection with legal proceedings), and

• section 181 (jurisdiction of county court),

apply to proceedings and questions arising under this section and sections 46 to 51 as they apply to proceedings and questions arising under Part V (the right to buy).

46Meaning of “service charge” and related expressions.

(1)In sections 45 to 51 “service charge” means an amount payable by the purchaser or lessee—

(a)which is payable, directly or indirectly, for services, repairs, maintenance or insurance or the vendor’s or lessor’s costs of management, and

(b)the whole or part of which varies or may vary according to the relevant costs.

(2)The relevant costs are the costs or estimated costs incurred or to be incurred by or on behalf of the payee, or (in the case of a lease) a superior landlord, in connection with the matters for which the service charge is payable.

(3)For this purpose—

(a)“costs” includes overheads, and

(b)costs are relevant costs in relation to a service charge whether they are incurred, or to be incurred, in the period for which the service charge is payable or in an earlier or later period.

(4)In relation to a service charge—

(a)the “payee” means the person entitled to enforce payment of the charge, and

(b)the “payer” means the person liable to pay it.

47Limitation of service charges.

(1)Relevant costs shall be taken into account in determining the amount of a service charge payable for a period—

(a)only to the extent that they are reasonably incurred, and

(b)where they are incurred on the provision of services or the carrying out of works, only if the services or works are of a reasonable standard;

and the amount payable shall be limited accordingly.

(2)Where the service charge is payable before the relevant costs are incurred, no greater amount than is reasonable is so payable and after the relevant costs have been incurred any necessary adjustment shall be made by repayment, reduction of subsequent charges or otherwise.

(3)An agreement by the payer (other than an arbitration agreement within the meaning of section 32 of the [1950 c. 27.] Arbitration Act 1950) is void in so far as it purports to provide for a determination in a particular manner or on particular evidence of any question—

(a)whether an amount payable before costs for services, repairs, maintenance, insurance or management are incurred is reasonable,

(b)whether such costs were reasonably incurred, or

(c)whether services or works for which costs were incurred are of a reasonable standard.

48Information as to relevant costs.

(1)The payer may require the payee in writing to supply him with a written summary of the costs incurred—

(a)if the relevant accounts are made up for periods of twelve months, in the last such period ending not later than the date of the request, or

(b)if the accounts are not so made up, in the period of twelve months ending with the date of the request,

and which are relevant to the service charges payable or demanded as payable in that or any other period.

(2)The payee shall comply with the request within one month of the request or within six months of the end of the period referred to in subsection (1)(a) or (b), whichever is the later.

(3)The summary shall set out those costs in a way showing how they are or will be reflected in demands for service charges and must be certified by a qualified accountant as in his opinion a fair summary complying with this requirement and as being sufficiently supported by accounts, receipts and other documents which have been produced to him.

(4)Where the payer has obtained such a summary as is referred to in subsection (1) (whether in pursuance of this section or otherwise, he may within six months of obtaining it require the payee in writing to afford him reasonable facilities—

(a)for inspecting the accounts, receipts and other documents supporting the summary, and

(b)for taking copies of extracts from them,

and the payee shall then make such facilities available to the payer for a period of two months beginning not later than one month after the request is made.

(5)A request under this section shall be deemed to be served on the payee if it is served on a person who receives the service charge on behalf of the payee; and a person on whom a request is so served shall forward it as soon as possible to the payee.

(6)A disposal of the house by the payer does not affect the validity of a request made under this section before the disposal; but a person is not obliged to provide a summary or make the facilities available more than once for the same house and for the same period.

49Information held by superior landlord.

(1)If a request under section 48(1) (information about costs incurred) relates in whole or in part to relevant costs incurred by or on behalf of a superior landlord and the payee is not in possession of the relevant information—

(a)he shall in turn make a written request for the relevant information to the person who is his landlord (and so on if that person is not himself the superior landlord) and the superior landlord shall comply with that request within a reasonable time, and

(b)the payee shall then comply with the payer’s request, or that part of it which relates to the relevant costs incurred by or on behalf of the superior landlord, within the time allowed by section 48 or such further time, if any, as is reasonable in the circumstances.

(2)If a request made under section 48(4) (inspection of supporting accounts, receipts, etc.) relates to a summary of costs incurred by or on behalf of a superior landlord, the payee shall forthwith inform the payer of that fact and of the name and address of the superior landlord; and section 48(4) shall then apply as if the superior landlord were the payee.

50Offences.

(1)If a person fails without reasonable excuse to perform a duty imposed on him by section 48 or 49 (provision of information, &c.), he commits a summary offence and is liable on conviction to a fine not exceeding level 4 on the standard scale.

(2)Subsection (1) does not apply where the payee is—

• a local authority,

• a new town corporation, or

• the Development Board for Rural Wales.

51Meaning of “qualified accountant”.

(1)The reference to a “qualified accountant” in section 48(3) (certification of summary of information about relevant costs) is to a person who, in accordance with the following provisions, has the necessary qualification and is not disqualified from acting.

(2)A person has the necessary qualification if he is a member of one of the following bodies—

• the Institute of Chartered Accountants in England and Wales,

• the Institute of Chartered Accountants in Scotland,

• the Association of Certified Accountants,

• the Institute of Chartered Accountants in Ireland, or

• any other body of accountants established in the United Kingdom and recognised by the Secretary of State for the purposes of section 389(1)(a) of the [1985 c. 6.] Companies Act 1985,

or if he is a person who is for the time being authorised by the Secretary of State under section 389(1)(b) of that Act (or the corresponding provision of the [1948 c. 38.] Companies Act 1948) as being a person with similar qualifications obtained outside the United Kingdom.

(3)A Scottish firm has the necessary qualification if each of the partners in it has the necessary qualification.

(4)The following are disqualified from acting—

(a)a body corporate, except a Scottish firm;

(b)an officer or employee of the payee or, where the payee is a company, of an associated company;

(c)a person who is a partner or employee of any such officer or employee.

(5)For the purposes of subsection (4)(b) a company is associated with the payee company if it is (within the meaning of section 736 of the Companies Act 1985) the payee’s holding company or subsidiary or is a subsidiary of the payee’s holding company.

(6)Where the payee is a local authority, a new town corporation or the Development Board for Rural Wales—

(a)the persons who have the necessary qualification include members of the Chartered Institute of Public Finance and Accountancy, and

(b)subsection (4)(b) (disqualification of officers and employees) does not apply.