Landlords and agents must tread carefully when dealing with major works.
Upper Tribunal decision illustrates possible pitfalls
A look at the requirements of landlords and agents when dealing with major works and a recent Upper Tribunal decision that illustrates the possible pitfalls.
Qualifying works (sometimes referred to as ‘major works’) are caught by the provisions of sections 20 and 20ZA Landlord and Tenant Act 1985. They require the landlord to consult with its leaseholders prior to carrying out any major works (i.e. where each tenant’s contribution to those works is more than £250).
The Service Charges (Consultation Requirements) (England) Regulations 2003 (‘the Regulations’) set out the consultation procedure for major works and require that the following notices are served by the landlord on their leaseholders (and any recognised tenants’ association):
- Notice of Intention—the landlord sets out what works they are proposing to carry out and why. The landlord invites comments and suggestions for contractors from the leaseholders within 30 days.
- Notice about Estimates—the landlord provides the leaseholders with details of at least two estimates (one from a person wholly unconnected to the landlord) for the proposed works within 21 days of receiving them. The landlord must provide details to the leaseholders as to how they can inspect those estimates. The landlord invites comments from the leaseholders within 30 days
- Notice of Reasons—unless the landlord chooses the cheapest estimate, the landlord must explain their reasons for choosing the nominated person to carry out the works and provide a summary of any leaseholders’ comments received (in response to the previous two notices) within 21 days.
Part 2 of Schedule 4 of the Regulations further require that when the Notice about Estimates specifies a place and hours for inspection of the estimates, the place and hours so specified must be ‘reasonable’.
The decision in Ashleigh Court Right to Manage Company v. De-Nuccio  UKUT 0258 (LC)
In this case the RTM company acting as landlord had provided both the Notice of Intention and Notice about Estimates to the leaseholders. However, in the Notice about Estimates the RTM company had given the leaseholders a limited window of time in which to inspect the estimates for the works. The notice only allowed inspection upon giving 48 hours prior notice to the RTM company’s managing agents and then only being able to inspect on weekdays between 9am and 12 noon. No contact details for the RTM company’s managing agents were provided for in the notice and the registered address of the RTM company, while referred to, was not specifically provided.
The Upper Tribunal (Lands Chamber) therefore upheld the decision of the First Tier Tribunal that the section 20 consultation was defective in this instance. The Notice about Estimates did not give the leaseholders a reasonable location or a reasonable time period for inspection of the estimates. The RTM company was therefore only entitled to recover £250 per leaseholder for the proposed works.
Robert Denman, Head of Real Estate and Solicitor at JB Leitch comments:
“This is an important decision from the Upper Tribunal. It reiterates that landlords and their agents must tread very carefully when dealing with proposed major works and must ensure that they strictly comply with the consultation requirements throughout the consultation process. Failure to do so could prove very costly.”
An important decision from the Upper Tribunal that reiterates that landlords must tread very carefully when dealing with proposed major works, strictly complying with consultation requirements throughout. Failure to do so could prove very costly.