Q: We are discussing replacing our balconies which are the responsibility of the company. We think we should charge the 16 flats concerned with the actual costs for their balcony but there is some comment that it should be paid from the service charge. This would be unreasonable as eight ground floor flats do not have balconies, two corner flats have two large balconies and two other flats also have a single large balcony. Would the communal area exclude flat balconies?
FPRA Hon Consultant Cassandra Zanelli replies:
The starting point for the answer to your query is the lease. The lease sets out the property which has been specifically demised to each leaseholder, and also sets out what is not being demised, and therefore is either a retained or common part.
The fourth schedule to the lease describes the extent of the demise, which is essentially the interior rooms of the flat, together with the garage.
The lease sets out what the landlord’s covenants are. They include an obligation to maintain, repair and renew the main structure which, for the sake of clarity, includes the balcony.
I take the view therefore that, based on the lease, the balconies are not demised to the leaseholders but are instead part of the main structure that the landlord is responsible for the maintenance, repair, and renewal of.
This is subject to the payment on the part of each leaseholder of their contribution to the service charge pot. Clause 4(ii) requires the leaseholder in the specimen lease I have been provided with to contribute a 1:24 part of the costs, expenses etc incurred by the landlord in its maintenance, repair and renewal of the main structure.
Therefore, any repair works undertaken to the main structure (which the balconies form part of) are works for which service charge monies should be used.
While I take on board the comments with regards to the seeming unfairness of the situation because some flats don’t have balconies and others have larger balconies, this is, unfortunately, how the leases are drafted. It is not unusual for certain flats to contribute towards the costs of service for which they derive no benefit whatsoever. The common example that is often cited is the ground floor flat that contributes towards the maintenance of the lift and yet derives no benefit from the lift itself.
I am therefore very clear in my advice that there should be no deviation from the service charge mechanism set down by the lease. Although it may seem morally unfair, the contractual position is that each leaseholder will need to contribute towards the costs of the work even if they don’t have a balcony or if their balcony is not as large as that of their neighbours.
Question submitted July 2018