A recent case concerning holiday cottages in South Wales identified how critical it is to obtain expert legal advice before entering into legal obligations.

This is so even where the value of the arrangement you may be contemplating is relatively low.

Most people if asked the question ‘would you pay several hundred pounds or several thousand on legal advice if this might save you a substantially higher cost later on?’, would say ‘yes’.

The tenants of the holiday cottages in question probably wish they had done so!  They signed up to lease which increased the (initially modest) service charge of £90 in the 1970s per annum by 10% each year on a compound basis.e

In the early years of the lease this looked fairy innocuous. However, as time went on the full impact of the compounding provision became all too apparent.

The tenants had, it seems entirely unwittingly, signed up to leases that would result in the service charge being about £1m per annum in the latter stages of each lease and overall the service charge liability payable over the full term of each lease totalling some £11m.

You have been warned!

*Arnold v Britton [2015] UKSC 36

In order to avoid compounding a problem yourself, it is critical to obtain expert legal advice. Whether your issue is family or business, rhw Solicitors in Guildford are available to talk to on 01483 302 000 or you can email us guildford@rhw.co.uk