Extreme Service Charges

In a recent decision of the Supreme Court, Arnold v Britton [2015] UKSC36, the occupiers of some of the holiday chalets at the Oxwich Leisure Park, on the Gower peninsula, lost their appeal to have their leases read in such a way so as to avoid payment of exorbitant service charge. Some of the leases, which were granted in the early 1970's, when inflation was running at higher than 10%, much higher than now, obliged them to pay an initial service charge of £90 increasing year by year by 10%. That may not sound too bad, but the leases were for 99 years, and the annual increase of 10% was on a compound basis. As a result, the service charge payable in 2012 was £3,366 and in the final year (2072) will be £1,025,004. A lot of money to pay for having the grass cut and the paths kept tidy.