Paying for major works as a leaseholder

What you are liable to pay

Your liability to contribute to major works costs comes from your lease. Most leases contain a service charge clause that requires leaseholders to pay a proportion of the costs of maintaining, repairing, and improving the building. Your share is usually expressed as a percentage or fraction: for example, one tenth of the total cost if there are ten flats, though the exact split varies between leases.

Before any major works begin, it is worth checking your lease to understand: what types of works you are liable to contribute to; how your share is calculated; and whether there are any limits or conditions on when the charge can be demanded. Some leases require service charges to be demanded within a specific accounting period, and a landlord who misses that window may lose the right to recover the cost.

Costs are only recoverable through the service charge if they have been reasonably incurred. This is required under the Landlord and Tenant Act 1985. A landlord cannot simply invoice you for any amount. The works must have been necessary, the cost must be reasonable, and the correct consultation process must have been followed where required.

Sinking funds and reserve funds

A sinking fund (sometimes called a reserve fund) is money collected from leaseholders over time and set aside to pay for future major works. Buildings with a well-managed sinking fund can absorb the cost of a new roof or major redecoration without leaseholders facing a large one-off bill. Buildings without one pass the full cost to leaseholders when the works arise.

Whether your building has a sinking fund depends on your lease. Some leases require the landlord to collect and hold a reserve; others do not. If your lease provides for a sinking fund, check whether it is actually being collected and held properly. Some managing agents collect the contributions but do not maintain a separate designated fund.

If your building does not have a sinking fund, this is one of the first things a self-managing RTM company typically addresses. Building up a reserve over several years before major works are needed is far better for leaseholders than facing a sudden large demand.

When the bill arrives

A service charge demand for major works must be accompanied by a summary of your rights and obligations. This is required under Section 21B of the Landlord and Tenant Act 1985. If the summary is not included with the demand, you are entitled to withhold payment until it is provided.

The summary must be in the prescribed form (the official format set out in regulations). It sets out your right to challenge the charge at the First-tier Tribunal (an independent body that decides service charge disputes), your right to request a written summary of the costs, and your right to inspect the underlying accounts and receipts.

Service charges are only payable within 18 months of the relevant costs being incurred. If your landlord tries to recover costs that are more than 18 months old without having previously notified you that they would be charged, you may be able to challenge the demand on that basis.

If you cannot afford to pay

Major works bills can be substantial. In some buildings, leaseholders face demands of tens of thousands of pounds for large-scale works such as cladding remediation, roof replacement, or structural repairs. If you cannot afford to pay, there are options worth exploring.

For private sector landlords: there is no legal obligation on a private landlord to offer a payment plan, but many will do so to avoid the cost and delay of tribunal proceedings. Write to your landlord or managing agent as soon as possible, explain your situation, and ask whether costs can be spread over 12 or 24 months. Put any agreed arrangement in writing.

For social landlords (local authorities and housing associations): social landlords have more flexibility and in some cases a legal power to waive or reduce major works charges for leaseholders who cannot afford to pay. Contact your landlord directly to ask what assistance is available. Many offer instalment plans as a matter of course.

In all cases: do not simply ignore the demand. Unpaid service charges can lead to lease forfeiture proceedings (where a landlord asks the court to end the lease for serious breach). If you are in financial difficulty, seek advice from Citizens Advice, a housing solicitor, or a leasehold specialist as early as possible.

Challenging costs you think are unreasonable

You have the right to apply to the First-tier Tribunal (Property Chamber) to determine whether a service charge is reasonable. You can apply before or after paying the charge. Paying does not mean you accept the amount as reasonable.

What does "reasonable" mean? The tribunal will consider whether the works were necessary, whether the costs were consistent with market rates for similar works, whether the correct procurement process was followed, and whether there were any irregularities in the consultation process. You do not need to prove the works were unnecessary. You just need to show the cost was more than a reasonable landlord would have incurred.

Useful evidence includes:

• Your own quotes for the same works from independent contractors
• Evidence that your nominated contractor would have been cheaper
• Any concerns you raised at the consultation stage that were not addressed
• Any connections between the chosen contractor and the landlord or managing agent

The tribunal can reduce the charge to whatever amount it considers reasonable. Application fees are capped at £100 and total tribunal fees are capped at £500, though you may also incur professional costs if you instruct a solicitor or surveyor.

Challenging the necessity of the works

As well as challenging the cost, you can challenge whether the works were necessary at all, or whether the scope was larger than required. This is a separate argument to reasonableness of cost but can be made in the same tribunal application.

Common grounds include:

• Works that were carried out prematurely when the existing structure had significant remaining life
• Works that went beyond what was needed to maintain the building in reasonable repair
• Improvement works that were charged as repairs. Improvements can only be recovered if your lease specifically allows for them

If you raised these concerns in your Stage 1 observations and the landlord did not address them, this strengthens your tribunal case. Keep copies of everything you sent.