The definition of a service charge in Section 18, Landlord and Tenant Act 1985, is amended to include costs of improvements. So, where a lease includes a liability for costs of improvements (usually common in Council or Housing Association leases), these must now be subject to the requirements of reasonableness, can be challenged at a Leasehold Valuation Tribunal and must be included in any formal consultation carried out by the landlord under Section 20.

These are costs that relate to matters that were not clearly within the definition of service charge and include the landlord charging for costs of approvals / consents under leases, charges for providing information, legal charges arising from the tenant failing to pay by a due date or costs in dealing with alleged breaches of the lease.

Demands for administration charges must be accompanied by a statement of the leaseholder's rights and the demand is not valid without this.

The costs must be reasonable and may be challenged at the Leasehold Valuation Tribunal.

For further information please refer to the publication Service Charges, Groundrent and Forfeiture.

S20 of the Landlord & Tenant 1985 Act has been amended, broadening its scope to long term contracts and giving the LVT power to consider issues relating to alleged breaches of the section by the Landlord.

The landlord is required to consult any tenant paying variable service charges if he proposes to

carry out works to a cost to the leaseholder of £250 or more enter into a long-term contract likely to cost the leaseholder £100 per year, or more. Where the landlord fails to carry out the consultation process he is unable to recover any cost arising from the works or contract above the £250 or £100 statutory limits.

The new procedure is intended to provide a realistic form of consultation by the landlord on his proposals and to provide the tenant with a genuine opportunity to comment or to propose a contractor. There is a statutory period of 30 days in which the comments or proposals may be made.

The landlord must serve at least two notices, sometimes three:

Notice of intention - a general outline of the proposed works or contract and why the landlord considers them to be necessary; there will be no prices at this stage. The tenant's views are invited and every tenant has the right to propose a contractor. Notice of proposals - full details of the proposals or contract, the costs and the proposed contractor. This notice must also contain a summary of the comments the landlord received in response to the notice of intention and his response to them. The tenant's further views are invited. Notice of award - when the landlord lets the contract he must formally notify all the tenants (unless the contractor is one proposed by a tenant or who provided the lowest tender). The landlord may apply to the Leasehold Valuation Tribunal for dispensation from the need to comply with the procedure (for example, in the case of urgent works). Equally, tenants can challenge the procedures before the Tribunal on the grounds that the service charge is not payable if the procedure was not fully complied with.