Withholding service charges: LTA 1985 s. 21A
Tenants may withhold service charges if landlords fail to supply required information under section 21. Lease penalties for non-payment do not apply.
A tenant may withhold payment of a service charge if— the landlord has not provided him with information or a report— at the time at which, or (as the case may be) by the time by which, he is required to provide it by virtue of section 21, or the form or content of information or a report which the landlord has provided him with by virtue of that section (at any time) does not conform exactly or substantially with the requirements prescribed by regulations under that section. The maximum amount which the tenant may withhold is an amount equal to the aggregate of— the service charges paid by him in the period to which the information or report concerned would or does relate, and amounts standing to the tenant's credit in relation to the service charges at the beginning of that period. An amount may not be withheld under this section— in a case within paragraph (a) of subsection (1), after the information or report concerned has been provided to the tenant by the landlord, or in a case within paragraph (b) of that subsection, after information or a report conforming exactly or substantially with requirements prescribed by regulations under section 21 has been provided to the tenant by the landlord by way of replacement of that previously provided. If, on an application made by the landlord to the appropriate tribunal , the tribunal determines that the landlord has a reasonable excuse for a failure giving rise to the right of a tenant to withhold an amount under this section, the tenant may not withhold the amount after the determination is made. Where a tenant withholds a service charge under this section, any provisions of the tenancy relating to non-payment or late payment of service charges do not have effect in relation to the period for which he so withholds it.
Text in force at .
Source: legislation.gov.uk — The National Archives (legislation.gov.uk), reproduced under licence Open Government Licence v3.0.
What it actually says
This provision allows leaseholders to withhold service charge payments if their landlord fails to supply required accounting information or reports within the timeframe specified under section 21, or if the report provided does not meet the prescribed regulatory standards.
The maximum amount a tenant is permitted to withhold equals the sum of the service charges paid for the accounting period in question plus any credit balance existing at the start of that period. Once a landlord provides the correct statement or replacement report, or if a tribunal determines the landlord had a reasonable excuse for the delay, the tenant's right to withhold ends.
While a tenant lawfully withholds funds under this section, any clause in the tenancy agreement regarding non-payment or late payment—such as late fee penalties or interest charges—is rendered ineffective for that period.
When it applies
- Your landlord demands service charge payments without having supplied the accounting summary required under section 21.
- The landlord provides a financial statement under section 21 that fails to conform to the statutory format required by regulations.
- Your landlord attempts to enforce late payment penalties under the lease while you are legally withholding service charges for missing reports.
What this section does not say
- Withholding service charges because you believe the costs or works are unreasonable.
- Withholding ground rent or service charges because of property disrepair or unfinished maintenance.
- Refusing to pay after a tribunal has ruled that the landlord had a reasonable excuse for failing to supply the information.
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This page reproduces the text of LTA 1985 s. 21A 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.