LTA 1985 s. 20B

18-Month Rule for Service Charge Demands: LTA 1985 s. 20B

Tenants are not liable for service charge costs incurred more than 18 months before a demand, unless notified in writing within 18 months (LTA 1985 s. 20B).

Official text LTA 1985 s. 20B — United Kingdom

If any of the relevant costs taken into account in determining the amount of any service charge were incurred more than 18 months before a demand for payment of the service charge is served on the tenant, then (subject to subsection (2) ), the tenant shall not be liable to pay so much of the service charge as reflects the costs so incurred. Subsection (1) shall not apply if, within the period of 18 months beginning with the date when the relevant costs in question were incurred, the tenant was notified in writing that those costs had been incurred and that he would subsequently be required under the terms of his lease to contribute to them by the payment of a service charge.

Text in force at 2026-07-24.

Source: legislation.gov.uk — The National Archives (legislation.gov.uk), reproduced under licence Open Government Licence v3.0.

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What it actually says

Section 20B is two sentences and it disposes of a great many old bills. If any of the relevant costs taken into account in a service charge were incurred more than eighteen months before a demand for payment is served on the tenant, the tenant is not liable to pay so much of the charge as reflects those costs. The clock runs from when the cost was incurred to when the demand was served, and what is lost is not the whole demand but the portion attributable to the out-of-time costs.

Subsection (2) is the escape, and it is a real one. The bar does not apply if, within the eighteen months beginning with the date the costs were incurred, the tenant was notified in writing that those costs had been incurred and that he would subsequently be required under the terms of his lease to contribute to them by way of service charge. Both elements are needed: notification that the cost has been incurred, and notification that a contribution will be sought. A general warning that works are planned, or an estimate issued before the money was spent, does not obviously do the job.

The difficult question the section does not answer is when costs are "incurred" - whether on presentation of an invoice, on payment, or otherwise. That has been litigated and the answer can turn on the facts. What the section does make clear is that a landlord who spends money and then says nothing for two years is at risk, and that the routine year-end statement of account is often what saves the position.

When it applies

A demand arriving long after the works were finished and paid for.
A managing agent catching up on several years of unbilled expenditure at once.
A newly appointed freeholder billing for costs incurred by the previous one.
A leaseholder checking whether the interim statements they received counted as notification under subsection (2).
Major works completed years ago that suddenly appear in a final account.

What this section does not say

It does not wipe out the whole demand. Only the part reflecting costs incurred more than eighteen months before the demand falls away.
It is not a limitation period for the landlord's claim. It is a rule about liability for particular costs, and it operates whether or not any proceedings are on foot.
It does not require the demand to be for a fixed sum. What matters is when the underlying costs were incurred relative to the demand.
It does not define when costs are "incurred". The section leaves that open, and the answer can depend on the facts of the expenditure.
It says nothing about reasonableness. A demand served in time can still be challenged under section 19.

Worked examples

Invented situations, written to show how the wording bites. They are not real cases, not judgments and not precedent, and nothing here predicts what would happen in yours.

Illustrative example

A managing agent issues a demand covering roof works completed and paid for more than three years earlier. Nobody had told the leaseholders at the time that there would be a charge for them.

How the wording applies

Subsection (1) says a tenant is not liable for so much of a service charge as reflects costs incurred more than eighteen months before the demand was served. Subsection (2) is the escape, and it has two limbs that must both be met: within the eighteen months the tenant must have been notified in writing both that the costs had been incurred and that a contribution would subsequently be required. The fact this case turns on is whether anything sent at the time did both of those things - an estimate issued before the money was spent does not obviously qualify.

How the parties settled it

The agent withdraws the part of the demand attributable to the out-of-time costs and the leaseholders pay the remainder within thirty days, with the agent adopting a written notification routine for future works.

Illustrative example

A newly appointed freeholder bills for expenditure incurred by the previous owner. The leaseholders received annual interim statements during those years but nothing that said a further charge was coming.

How the wording applies

The clock runs from when the cost was incurred to when the demand was served, and what falls away is the portion reflecting the out-of-time costs, not the whole demand. Two facts decide it: when the costs were 'incurred', which the section deliberately leaves open and can turn on invoicing or payment, and whether the interim statements amounted to notification under subsection (2) - which needs both elements, not just a figure in a column.

How the parties settled it

The freeholder and the leaseholders agree a cut-off date, with charges attributable to costs before it written off and the balance payable in four quarterly instalments.

Related sections

LTA 1985 s. 18 What counts as a service charge: LTA 1985 s. 18 LTA 1985 s. 19 Service charges capped at reasonable costs: LTA 1985 s. 19 LTA 1985 s. 20 Caps contributions without consultation: LTA 1985 s. 20 LTA 1985 s. 27A Challenge paid service charges: LTA 1985 s. 27A

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We copy this text from the official publisher and re-check it against that source on every page load, but we cannot guarantee it is complete, current or free of error, and we accept no liability for any reliance on it. An amendment can take effect before a consolidation catches up. The publisher's own copy is linked below; where the two differ, it is the official one that counts.

This page reproduces the text of LTA 1985 s. 20B in force at the date shown and explains it in general terms. It is not legal advice and takes no account of the circumstances of your case, which can change the answer completely. For a live dispute, for limitation periods, and before taking any step in court, consult a qualified lawyer in England and Wales.

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