How to Challenge Improper Billing by Freeholders

Freeholders and managing agents routinely issue invoices for service charges, major works, insurance costs and other fees to leaseholders. Under the leasehold system in England and Wales, these charges are meant to cover costs properly incurred for the upkeep and management of a building. However, it is not lawful for a freeholder to charge for work outside the scope of the lease, inflate bills without justification, or refuse information about how charges are calculated. Leaseholders have specific rights and legal avenues to challenge what they see as improper billing.

This article explains, step by step, how leaseholders can understand, scrutinise and challenge freeholder bills - including when to seek professional advice, how to use statutory rights to request information, and how to escalate a dispute to the tribunal or other authorities.

What Counts as Improper Billing by a Freeholder?

A freeholder's bill may be considered improper or unlawful if it:

• includes costs not payable under the lease, for example items not specified as recoverable;
• is unreasonable in amount compared to the actual cost of services provided;
• fails to follow statutory consultation procedures for major works or long‑term contracts;
• withholds or refuses proper documentation explaining the basis of the charges;
• uses opaque or unjustified administrative or legal costs.

The key starting point is the lease itself. It determines what services and costs the freeholder can recover from leaseholders. Charges outside the lease's provisions are generally not payable.

Know Your Rights Before Challenging a Bill

Right to Information and Account Transparency

Leaseholders are entitled to:

• a full breakdown of service charges and how they are calculated;
• the opportunity to inspect supporting invoices, contracts and receipts;
• a statement of rights with each service charge demand; and
• consultation on major works or long‑term contracts that will lead to high costs.

Under reforms brought in by the Leasehold and Freehold Reform Act 2024, freeholders will have to provide standardised service charge documentation and increased transparency, making it easier to scrutinise and challenge fees.

If a freeholder refuses to provide information, leaseholders can require disclosure by writing formally to the freeholder and, if necessary, rely on legal procedures for enforcement.

Steps to Take Before Formal Legal Action

Before escalating to a court or tribunal, try the following:

1. Check Your Lease Carefully

Read the wording on which costs can be charged. If the freeholder is billing for work outside those provisions, you may have strong grounds to dispute it.

2. Request a Written Explanation and Evidence

Leaseholders can ask for a detailed summary of service charge accounts, including invoices and receipts. Freeholders are legally obliged to provide this information within a month of a written request.

3. Engage in Informal and Formal Dispute Resolution

Communicate your concerns in writing. If this does not resolve matters, consider alternative dispute resolution (ADR) such as mediation. ADR can be quicker and cheaper than a tribunal.

Communicate clearly that you dispute the charges, and keep records of all correspondence, as this can be important if the dispute is later considered by a tribunal or court.

Applying to the First‑tier Tribunal (Property Chamber)

When informal resolution fails, the main legal route to challenge improper billing is to apply to the First‑tier Tribunal (Property Chamber) in England or the Leasehold Valuation Tribunal in Wales. These tribunals can determine whether:

• the charges are payable under the lease,
• the amounts are reasonable, and
• the procedures (including statutory consultation for major works) have been followed.

What the Tribunal Can Decide

The tribunal has statutory authority to decide:

• whether a service charge is payable and reasonable;
• whether the landlord consulted properly under the Landlord and Tenant Act 1985 (Section 20) for major works;
• the amount payable and payment terms;
• other technical aspects connected with service charges.

Tribunal applications are usually made using prescribed forms available on the UK Government or tribunal websites. There are fees for applications, but in some cases, exemptions or reductions may apply.

Practical Approaches to Common Billing Issues

Unreasonable or Excessive Charges

If the freeholder demands charges that appear excessive compared with actual costs, ask for copies of invoices, contractor contracts, and written justification. If the freeholder cannot justify the figure, this strengthens your case at the tribunal.

Non‑consultation for Major Works

For work expected to cost more than statutory thresholds, leaseholders must be consulted in advance, with sufficient information and time to respond. Failing to follow this process may allow a leaseholder to challenge that part of the bill.

Insurance Charges and Hidden Fees

Insurance commissions or other mark‑ups must be transparent. New obligations, including disclosures under the FCA's requirements for insurance remuneration, help leaseholders identify improper fees.

Cost and Risk Considerations

Tribunal action involves:

• application and hearing fees;
• potential professional costs (solicitors, surveyors);
• time and preparation.

In some cases, freeholders will try to recover their legal costs from leaseholders through service charges; recent reforms now require freeholders to seek approval from the court or tribunal before passing such costs on.

While freeholders and their management agents may have more experience with tribunal procedures, leaseholders can instruct solicitors or advisors and build a robust factual and legal case focused on the lease provisions and statutory controls.

Alternative or Complementary Remedies

Right to Manage (RTM)

Leaseholders who qualify can exercise their Right to Manage, taking control of building management and reducing disputes over service charges directly.

Complaints to the Housing Ombudsman

For social housing providers or certain management practices, complaints can be made to the Housing Ombudsman Service, which can investigate maladministration and poor service practices.

Key Takeaways

Leaseholders in England and Wales have clear statutory rights to challenge improper billing by freeholders, including excessive or unjustified service charges. The process typically begins with reviewing the lease and requesting detailed information about charges, then progressing through informal resolution, alternative dispute resolution, and in the end, a tribunal application if necessary. Tribunals can determine both legality and reasonableness of charges, and recent legislative reforms are strengthening the transparency and rights of leaseholders.