Transparency of service charges and administration charges
Most leaseholders and some tenants, particularly assured tenants of social housing landlords, are required to pay a service charge to their landlord in return for services carried out to manage, maintain, repair, insure and, in some cases, improve their building (commonly known as "management functions"). For assured tenants, they will only pay for services carried out to manage and maintain the building and will not be responsible for the payment of charges to repair, insure or improve the building. Details - for example on the way service charges are to be organised, what landlord may or may not be charged for, the proportion of the overall change individual leaseholders must pay, and the frequency of payment - are set out in individual leases.
	Leaseholders and tenants who pay a variable service charge have some protection. Under Section 19 and 27A of the 1985 Act, variable service charges must be reasonably incurred and, where costs relate to work or services, those works or services must be of a reasonable standard. Leaseholders and tenants may challenge the reasonableness of the service charge by making an application to the appropriate tribunal (the First-tier Tribunal (Property Chamber) in England and the Leasehold Valuation Tribunal in Wales) who can make a legal determination on the reasonableness of the service charge. There are also two Government approved codes of practice – Royal Institution of Chartered Surveyors Code of Practice 1 , and the Association of Retirement Housing Managers Code of Practice 2 - which outline best practice for managing agents, landlords or other relevant parties in relation to residential leasehold property management. Both documents can be taken into account  as evidence at court and First-tier Tribunal hearings, including hearings on the reasonableness of service charges.
	Those leaseholders and tenants who pay a variable service charge also have other rights. For example, the demand must contain an address in England or Wales which can be used to send notices to the landlord. The landlord must demand the service charge within 18 months of the relevant costs having been incurred or provide notice in writing that those costs have been incurred and that the leaseholder or tenant will subsequently be required to contribute to them by the payment of a service charge. Leaseholders and tenants may ask for a summary of the service charge account for the last accounting year or, if accounts are not kept by accounting years, the past 12 months. Leaseholders and tenants also have the right to inspect documents relating to the service charge to provide more detail on the summary.
	The measures in the Act seek to drive up the transparency of financial and non-financial information that leaseholders and tenants receive. This includes how service charge costs are presented; the provision of key information – such as insurance costs; greater financial information through the annual preparation of written statements of account; and the ability to compel landlords to provide other relevant information that the tenant needs to know as an occupier of a building where a service charge is payable. Some of these measures will be extended to those who currently pay fixed service charges.
	Another charge most leaseholders and some tenants may be liable to pay is a variable administration charge. The lease or tenancy governs the situations where a variable administration charge may be payable and include, for example, obtaining permission to carry out alterations to the flat, or payment of the landlord’s legal fees incurred incidental to any action taken in respect of non-payment of rent and service charge or for other alleged breaches of the agreement.
	Variable administration charges are subject to a statutory limitation that any charge is payable only to the extent that the amount of the charge is reasonable, and again the reasonableness of the charge may be challenged through an application to the appropriate tribunal. Landlords have discretion, albeit not unfettered, as to the amount that is payable. Leaseholders and tenants may be aware that a cost may be payable, but do not know in advance how much these fees will be. The measures in the Act seek to drive up the transparency of administration charges that leaseholders and tenants may face.