If you are a landlord considering carrying out substantial works to a residential building, check that you are complying with service charge consultation requirements. The following case at the Upper Tribunal considered the landlord’s plan to carry out substantial works to a residential building.
The Upper Tribunal (Lands Chamber) recently considered in the case of Ashleigh Court Right To Manage Company Ltd v De-Nuccio and others  UKUT 258 whether a landlord had complied with the service charge consultation requirements under section 20 of the Landlord and Tenant Act 1985 (LTA 1985). The case considered the landlord’s plan to carry out substantial works to a residential building.
A Qualifying Long Term Agreement (QLTA) is an agreement entered into, by or on behalf of the landlord or a residential tenant, for a term of more than 12 months1:
1. The cost of qualifying works will exceed 250 for any one tenant; or
2. The amount payable by any one tenant for services to be provided under a QLTA will exceed 100 in any one year.
The landlord must consult with the tenants and by notice to the tenant, specify the place and hours at which the estimates may be inspected2.
In this case, the management company decided to carry out qualifying works to 30 flats and initiated the process of consultation with the tenants3. The cost of works was to be reclaimed from the tenants through the service charge provisions in their leases.
The consultation involved serving two notices, the first of which was properly served. In their second consultation notice to the tenants they specified when the stage 2 consultation period would end but stated that estimates could only be inspected at the management company’s registered office between 9-12pm any weekday and they required 48 hours’ notice prior to inspection. The Tribunal held this requirement was unreasonable.
The managing agents should have allowed the tenants a period of 30 days beginning with the date of the landlord’s notice of the estimates to make observations on those estimates. Furthermore, as they specified a place and hours for inspection the management company failed to comply with the requisite consultation requirements4 because:
The place and hours specified in the notice for inspection of the estimates were not deemed reasonable on consideration of the nature and resources of both parties.
A description of the proposed works was not available for inspection, free of charge, at that place and during those hours.
The gravity of the alleged breach was deemed immaterial, as was any prejudice suffered by thetenants. These issues were only relevant on an application by the management company toseek a dispensation order5 which would have enabled the management company to proceedwithout complying with the consultation requirements.
When sending a consultation notice to tenants inviting observations on proposed works, it is
important to remember the following:
Consider carefully what information is given to tenants, and how this is to be madeavailable. Adequate contact details must be given.
Any specified hours must be reasonable i.e. only during working hours is not reasonable
Requiring 48 hours’ notice to inspect the estimates is unreasonable.
Any notice must specify a location where the tenants can inspect the estimates.
Substantial compliance with the consultation requirements, or prejudice to tenants, isirrelevant. The landlord or management company should therefore consider applying for adispensation where substantial compliance would be considered.
“Landlord” includes any person who has a right to enforce payment of a service charge6.
If the landlord does not comply with the consultation requirements, the landlord’s ability topass on its costs to tenants is limited. The maximum that the landlord can recover is7:
250 per tenant for qualifying works.
100 per tenant per year for QLTAs.
If you have any queries, please contact:
1 Section 20ZA(2), LTA 1985
2 Para 4(10), Part 2, Schedule 4 to the Service Charges (Consultation Requirements) (England) Regulations 2003 (SI 2003/1987) (“2003Regulations”)
3 Part 2, Schedule 4 to the 2003 Regulations.
4 Para 2, and para 4(11), Part 2, Schedule 4 to the 2003 Regulations
5 Under section 20ZA of the LTA 1985
6 section 30, LTA 1985
7 Section 20, LTA 1985