Service Charge Budget: To Consult or Not to Consult?

Abstract

This article examines whether freeholders should be legally required to consult long-leaseholders on service charge budgets before imposing and collecting charges. Using empirical survey data—both qualitative and quantitative—alongside doctrinal analysis and theoretical insights from management studies, I argue in favour of such a requirement. Additionally, I draw upon my experience of over 30 years as both a leaseholder and a freeholder managing the block of flats in which I reside. The discussion is structured around three key arguments. First, I propose that long leasehold contracts include an implied term necessitating consultation on service charge budgets. While legally complex and contentious, this argument establishes the foundation for the broader discussion. Second, I demonstrate that consultation constitutes good practice, as evidenced by professional guidance from management bodies—guidance that is not always adhered to in practice. Third, I advocate for a cultural shift towards greater consultation, arguing that fostering a consultative approach leads to improved outcomes for all parties involved. Empirical data further supports this argument, revealing a clear correlation between the degree of control exercised by leaseholders and the extent of consultation, which in turn enhances their overall experience. The stratified nature of this dataset provides a unique contribution to the debate. Keywords: contract law; contract management; implied terms; relational contract; domestic leasehold contracts/long leases; socio-legal empirical research