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Service charges are going to be a major bone of contention between landlords and tenants during the recession, as landlords seek to maximise returns from property, and tenants seek to count every penny.

This could lead to a mountain of litigation, all of it protracted, and all of it destined to sour landlord and tenant relations for many years to come. The Royal Institution of Chartered Surveyors is currently working on a new protocol to simplify the running of service charge disputes, to try to take much of the sting out of them, with the emphasis on conciliation rather than litigation.

The aim is to have the dispute driven by managing agents and service charges advisers, rather than by lawyers, and to have disputes resolved by independent service charge experts rather than judges with a pure legal background.

A working party has been formed that includes Guy Willetts, a partner at national law firm Shoosmiths, to produce a working first draft, and it is hoped that this will lead to a workable protocol by the end of the year.

The current draft divides cases into two types: those where the amount in dispute is less than £10,000; and those above that figure.

For smaller cases, a simple 'quick and dirty' scheme is proposed, based on procedures in the small claims court. It is intended to be sufficiently user friendly and straightforward to enable parties to represent themselves. For cases over £10,000 the proposal is that the parties enter into conciliation which, if it fails, will then be succeeded by third party determination.

If landlords and tenants alike buy into the use of this protocol, it will not prevent service charges continuing to be a major source of dispute between landlords and tenants - that will never stop being the case - but should go some way towards making the process of sorting out these disputes less painful for all concerned.

 

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