Service Charge Warning - Mixed-Use Building

Where a landlord imposes a service charge on a mixed-use building it is open to challenge from an individual residential tenant if it does not follow the more stringent procedures relating to residential service charges. * This is the case even where the residential tenant is an undertenant and not the direct payer to the landlord.

This could have quite a significant impact on schemes where, for example, the landlord lets a residential block above commercial premises to an investor or a registered social landlord who in turn lets the individual units to residents. The landlord cannot be sure to have satisfactorily passed on all service charge costs to such an investor or RSL, without subsequent challenge, unless the stricter residential procedures have been adhered to.