Part 4 - Regulation of leasehold Section 53: Extension of regulation to fixed service charges
Section 53 makes a number of technical amendments to the 1985 Act to extend part of the existing regulatory framework to cover fixed service charges. Under current provisions there is no regulation of fixed service charge, which are those charges where the charges are fixed at the start of a 12-month accounting period. This can be based on a prescribed formula, or a regular landlord assessment of cost, or some other mechanism.
	Subsection (2)(b)(1) amends Section 18 of the 1985 Act to provide a new definition of "service charge" as an amount payable by a tenant which is payable, directly or indirectly, for the purposes of meeting, or contributing towards relevant costs, and "variable service charge" as a service charge the whole or part of which varies or may vary according to the relevant costs. Subsection 2(b)(2) defines relevant costs as costs incurred, to be incurred by or on behalf of the landlord or superior landlord, in connection with services repairs, maintenance, improvements or insurance, or landlord’s cost of management. Subsection (2)(c) replaces "a service charge" with "a variable service charge" in Section 18(3)(b) of the 1985 Act.
	Subsections (3), (4) and (5) then amend various provisions of the 1985 Act to ensure that certain obligations only remain applicable with regard to variable service charges. These include subsection (3)(a) which requires service charges to be reasonable or that work carried out for the cost incurred is of a reasonable standard, subsection (4)(b) which sets out consultation requirements under Section 20 of the 1985 Act, and subsections (4) (e)-(h) make changes in respect in respect of obligations introduced under Parts 4 and 5 of the Building Safety Act 2022 ("the 2022 Act"). Subsection (5) amends Section 30E (3) of the 1985 Act.
	Subsection (6) makes changes to the index of defined expressions to include variable service charge.
	Subsections (7) – (10) amend various provisions of the 1987 Act to ensure that certain obligations only remain applicable with respect to variable service charges, while subsection (11) makes changes to Section 167 of the 2002 Act so that forfeiture provisions only apply to variable service charges.