Is an apportionment of a residential management charge reasonable if each tenant is charged the same? (Upper Tribunal (Lands Chamber))

The Upper Tribunal (Lands Chamber) held that a landlord had not acted unreasonably, pursuant to section 19 of the Landlord and Tenant Act 1985, where it had recovered from each tenant the same amount in respect of a global management charge via the service charge. The landlord had not carried out a precise apportionment of the management charge for each tenant in respect of their premises and had not weighted this particular service cost to take account of the different buildings it covered.

The landlord, a council, had delegated the management of its housing stock, which was thought to be in the region of 6,000 properties, to an arm's length management organisation (ALMO). The long residential lease did not require the tenants to pay a stipulated percentage but "a proportionate amount" of certain reasonable expenses and outgoings that the landlord incurred or would incur. The landlord did not pay identifiable separate amounts for the management of particular buildings to the ALMO.

A couple of tenants applied to the Leasehold Valuation Tribunal, alleging that the management charges for their flats were excessive. They were initially successful in getting the charges reduced, but the matter came before the Upper Tribunal, by way of a rehearing. After the tribunal concluded that the management charge was contractually payable, it further held that:

It is often thought that a reasonable apportionment of service costs will reflect the size of a tenant's flat and the works carried out to different areas covered by the costs, but this decision indicates that simpler apportionments may sometimes be valid and appropriate.

Case: Blackpool Borough Council and another v Cargill [2013] UKUT 377 (LC) (27 August 2013).