Guide · Running your block

The 18-month rule for service charges (Section 20B)

How the 18-month rule works: when costs count as incurred, the section 20B(2) warning notice, where blocks get caught out and how to stay safe.

Last reviewed 22 October 2026 by Phil, founder2 min readPlain text (Markdown)

The short answer

Under section 20B of the Landlord and Tenant Act 1985, leaseholders don't have to pay service-charge costs that were incurred more than 18 months before they were demanded. The exception is if, within those 18 months, leaseholders were told in writing that the costs had been incurred and that they would be asked to pay towards them later. Unlike most demand mistakes, missing this deadline can't be put right: the money is lost.

Key facts

Costs incurred more than 18 months before the demand aren't recoverable (s.20B(1)).
A written section 20B(2) notice, sent within 18 months, preserves the right to demand later.
Costs are generally 'incurred' when the invoice is received or paid, not when the work is done.
The usual risk is a late year-end balancing charge, not the regular on-account demands.
Unlike a missing summary of rights, this can't be cured by re-serving.

How it works

The clock starts when a cost is incurred. The Court of Appeal has said that's generally when the invoice is presented or paid, not when the work was done or the service supplied (OM Property Management v Burr, 2013).

From that date you have 18 months to either:

demand the cost from leaseholders as a service charge; or
warn them in writing that the cost has been incurred and that they'll be required to contribute to it later (a "section 20B(2) notice"). You can then demand it after the deadline.

If neither happens, leaseholders don't have to pay that cost. There's no way to revive it.

Where blocks get caught out

Late year-end accounts. If the accounts are finished long after the year end and show an overspend, some of the costs, especially early in the year, may already be past the deadline when the balancing charge goes out.
Big bills paid from the bank balance. A large invoice paid from existing funds, then recharged months later.
A change of management. Costs from before an RTM takeover, or from a previous agent, that nobody demanded.
Insurance excesses and one-flat recharges that sit unbilled.

On-account demands that already covered the costs usually aren't the problem. The risk is the shortfall demanded late.

How to stay safe

Close the books promptly. Aim to have the year-end accounts and any balancing charges out within a few months of the year end.
Keep a running list of costs incurred and the date of each invoice.
Send a section 20B(2) notice whenever you know accounts will be late. List the costs incurred so far, with amounts, and say leaseholders will be asked to contribute under the lease.
Serve it properly, as your lease requires for notices, and keep a dated copy with proof of service.
Bill one-off recharges straight away.

A simple habit for Maple Court: each quarter, the treasurer director checks the list of invoices received. If any cost is more than a year old and not yet covered by a demand, a section 20B(2) notice goes out that month.

Changes on the way

The Leasehold and Freehold Reform Act 2024 will replace the section 20B(2) notice with a prescribed "future demand notice". That part of the Act isn't in force yet. Until it is, the current rule applies.

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 is the 18-month rule for service charges?

It's the rule in section 20B of the Landlord and Tenant Act 1985 that a leaseholder doesn't have to pay costs incurred more than 18 months before they were demanded, unless they were told in writing within that time that the costs had been incurred and would be charged.

What should a section 20B notice say?

That specific costs have been incurred (with the amounts), and that the leaseholder will be required under the lease to contribute to them by a service charge later. It must be in writing and given within 18 months of the costs being incurred.

Does the 18-month rule apply to on-account payments?

Where on-account demands already covered the costs, there's usually nothing left to demand late. The risk arises when actual costs exceed what was demanded on account and the balance is demanded too late.