Buying a holiday home should be a dream moment. But for people who bought chalets at the Oxwich Leisure Park in South Wales over the last few decades, that dream has turned into a financial nightmare.

In Britton v Arnold [2015] UKSC 36, the Supreme Court had to grapple with the important question of whether service charges which a landlord demands have to be a true reflection of the costs actually incurred in maintaining a property.

The Supreme Court was faced with two possible interpretations of a service charge clause: one (the landlord's preferred interpretation) was that the service charges to be paid were a specified amount which would increase by 10% every year. When many of the leases were entered into (in the 1970s), with inflation rising rapidly, a 10% increase seemed fair.  However today, with inflation low, that interpretation is very harsh for the leaseholders and leaves them facing service charge bills of over £1m per year by the end of the lease term. The leaseholders therefore argued for an alternative interpretation: that the service charges must be a fair proportion of the actual costs expended by the landlord in looking after the land and that the specified amount contained in the lease was a cap on what could be charged rather than the actual figure to be charged.