Guide · Running your block

Collecting unpaid service charges (arrears)

What a self-managed block can do when a leaseholder doesn't pay: check the demand, remind, agree a plan, the pre-action letter, Breathing Space and court.

Last reviewed 22 October 2026 by Phil, founder3 min readPlain text (Markdown)

The short answer

First check the demand was valid: if it lacked the landlord's name and address or the summary of rights, the leaseholder may not have to pay until it's corrected. Then remind, talk and offer a payment plan; if that fails, send a letter before claim under the Pre-Action Protocol for Debt Claims, giving 30 days to reply, before claiming in the county court. An RTM company can never forfeit a lease, and disputes about whether a charge is reasonable go to the First-tier Tribunal.

Key facts

Check the demand first: if it lacked the landlord's name and address or the summary of rights, re-serve it.
The Pre-Action Protocol for Debt Claims gives an individual 30 days to reply to a letter before claim.
During a Breathing Space, you must stop interest, charges, enforcement and requests for payment.
Interest and collection costs can only be charged if the lease allows, as administration charges with their own summary.
An RTM company can never forfeit a lease; for other landlords forfeiture is a last resort with strict legal limits.

Step 1: check the demand

Before chasing anyone, make sure the money is actually due:

Did the demand include the company's (landlord's) name and address?
Had the leaseholder been given an address for service in England and Wales?
Was it accompanied by the summary of rights and obligations?
Was it for the right share, on the lease's payment date, and served as the lease requires?

If anything was missing, send a corrected demand. The charge becomes due from then. See What a service-charge demand must contain.

Step 2: remind and talk

Most arrears in small blocks are oversights or short-term money trouble.

Send a friendly reminder soon after the due date, then a firmer one.
Talk to the leaseholder. Ask whether something is wrong with the bill, the building or their circumstances.
Offer a payment plan if they're struggling, and confirm it in writing.
Keep a dated record of every contact.

If the leaseholder has a mortgage, their lender may pay arrears to protect its security. Check the lease and data protection rules before contacting a lender, and tell the leaseholder first.

Step 3: letter before claim

If reminders don't work, send a letter before claim. Where the leaseholder is an individual, follow the Pre-Action Protocol for Debt Claims:

set out the amount, how it's made up, and how to pay;
enclose the protocol's information sheet and reply form;
give them 30 days to reply before you start proceedings.

Courts expect this, and can penalise a creditor who skips it.

Breathing Space

If you receive notice that the leaseholder is in a Breathing Space (the Debt Respite Scheme), you must, for its duration, stop adding interest and charges, stop enforcement action, and stop contacting them to ask for payment. Anything done in breach is void. Contact the debt adviser named in the notice.

Step 4: court or tribunal

Claim the debt in the county court, for example online through Money Claim Online. The court can order payment and, if the lease allows, interest and costs.
If the leaseholder disputes the amount (says the costs weren't reasonably incurred, or the work was poor), the question of what's payable can be decided by the First-tier Tribunal (s.27A). The court may transfer that part to the tribunal.

Interest and costs

You can only add interest, late fees or collection costs if the lease allows them. They are administration charges: they must be reasonable, and each demand needs the administration-charge summary of rights. Leaseholders can ask the tribunal to limit them.

Forfeiture

An RTM company can never forfeit a lease (s.96(6)(b)). It recovers debts like any other creditor.
For a freehold company or other landlord, forfeiture for unpaid service charges is a last resort with strict legal limits: for example, the amount must first be agreed or decided by a court or tribunal (Housing Act 1996, s.81). Always take legal advice.

This is general information, not legal advice. Every building and lease is different. For free initial advice, contact LEASE (The Leasehold Advisory Service): https://www.lease-advice.org/

Questions people ask

What happens if a leaseholder doesn't pay their service charge?

The company can remind them, agree a payment plan, and if necessary claim the debt in the county court after a letter before claim. If the leaseholder says the charge is unreasonable, the First-tier Tribunal can decide what's payable. Leases may allow interest and recovery costs as administration charges.

Is there a time limit for recovering service charge arrears?

Yes. Service charges reserved as rent generally have to be claimed within six years (Limitation Act 1980, s.19). Where they're not reserved as rent, a longer period may apply because leases are usually deeds. Take advice on older debts, and remember the separate 18-month rule for making the demand.

Is a new owner liable for the previous owner's service charge arrears?

Generally not: arrears are a debt of the person who owed them. For leases granted since 1996, a buyer isn't liable for breaches before the sale (Landlord and Tenant (Covenants) Act 1995, s.23). Conveyancers usually ask for a statement and settle arrears on completion, so answer their enquiries promptly.