The 18-month rule for service charge: when a late demand cannot be recovered, and the notice that saves it

A managing agent is closing a year-end file and finds a roofing contractor's invoice from last March. It was paid from the reserve account, never put through the service charge, and no leaseholder has been told. Can it still be demanded? Section 20B of the Landlord and Tenant Act 1985 decides, and the dates matter to the day.

What section 20B says

I read the section on legislation.gov.uk on 16 October 2026. Two parts matter here.

Subsection (1): if any of the relevant costs taken into account in working out a service charge "were incurred more than 18 months before a demand for payment of the service charge is served on the tenant", then, subject to subsection (2), the tenant is not liable to pay the part of the service charge that reflects those costs.

Subsection (2) is the exception. The rule does not apply if, within the 18 months beginning with the date the costs were incurred, the tenant was notified in writing that those costs had been incurred and that he would later be required under the terms of his lease to contribute to them by paying a service charge.

So two things save an old cost: a demand served inside 18 months, or a written notice served inside 18 months.

The dates, worked

Take a cost incurred on 10 March 2025.

Our arithmetic. The statute says "the period of 18 months beginning with the date", which I read as running to the end of 9 September 2026. To be safe, an office should treat 9 September as the last day and serve well before it, not on it.

What is at stake, for a block of ten flats each paying a 10% share of a £4,800 roofing invoice:

• Each flat's share is 10% of £4,800 = £480.
• Across the block that is 10 x £480 = £4,800, which would have to be met from elsewhere.

Had a notice been served on 1 September 2026, the 18 months would not have been missed. The notice does not need to be a demand. It must say the cost has been incurred and that the leaseholder will be required under the lease to pay towards it.

A diary routine that works

1. List costs, not invoice dates alone. Note the date each cost was incurred. The section I read does not define "incurred", so where the date is unclear (work done in one month, invoiced and paid in another), take the earliest sensible date and say so on the file.
2. Set two reminders for each unrecharged cost: a notice date at 12 months and a hard stop at 17 months.
3. Serve the written notice on every leaseholder, with the cost, the date it was incurred, and a plain statement that the lease will require a contribution.
4. Keep proof of service with the file.

The demand itself must still be valid and the cost reasonable; see the service charge demand validity checker and the year-end checklist. If a leaseholder is behind, the arrears letter template is the next step. Major works have their own consultation steps, in the Section 20 checklist.

I did not read whether the rule differs in Wales, how tribunals have treated the meaning of "incurred", any case law on what a notice must contain, or what a particular lease says about recovering costs. The lease governs what can be charged at all.

Overlyft builds AI staff who join your managing agent's team and keep the list of costs against each block, work out the 12-month and 17-month dates, and draft the protecting notice for the property manager to check and send.

This is general information, not legal or financial advice. Check the source and the lease, or take advice on your own case.