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Service Charge Consultation: JB Leitch secures dispensation from section 20 consultation requirements for landlord client

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J B Leitch represented the applicant landlord in its successful application to the First-tier Tribunal for dispensation from the consultation requirements under section 20 Landlord and Tenant Act 1985, in relation to fire safety works.

The background

In this matter, J B Leitch’s client was the landlord of a purpose-built 20 storey residential block. The building’s external wall system was found to contain combustible materials, posing a risk of fire spread. Works were therefore required, which included remediation of the external wall system, balconies, and other associated works.

The landlord applied to the First-tier Tribunal for dispensation from the service charge consultation requirements under the Landlord and Tenant Act 1985. The application was made on the basis that, although the landlord had started the consultation process by sending a Notice of Intention to leaseholders; the complexities of the design and build procurement route were incompatible with section 20 consultation and so as not to prejudice the application for funding via the Government’s Building Safety Fund.

A group of leaseholders, whilst not opposing the application, asked the Tribunal to impose a number of conditions upon any grant of dispensation. The conditions sought included:

  1. The landlord to provide evidence that the selected contractor’s tender represented fair value by obtaining comparables and an expert opinion;
  2. The landlord to provide leaseholders with copies of further reports, documentation submitted in connection with the Building Safety Fund application, and copies of the Design & Build Contract;
  3. The leaseholders to be afforded the opportunity to obtain expert advice on the scope of works and design, which will be paid for by the landlord.

By way of reply, the landlord agreed to provide copies of documentation, relevant summaries, and updates to leaseholders within a reasonable period, whilst emphasising that it did not consider the proposed conditions of dispensation to be appropriate. The landlord submitted a condition compelling the landlord to contribute towards the leaseholders’ expert advice was neither appropriate nor reasonable.

The decision

Having considered the submissions of both parties, the First-tier Tribunal granted unconditional dispensation of the consultation requirements. Whilst the Tribunal acknowledged its ability to grant dispensation on terms it sees fit, it stated that the landlord is entitled to decide the identity of the contractors and the amount. The safety net for leaseholders is to be found in sections 19 and 27A of the Landlord and Tenant Act 1985.

The Tribunal did, however, make an order under section 20C of the Landlord and Tenant Act 1985.

The decision referenced Daejan Investments Limited v Benson and others, finding that the facts of the case differed insofar as works had not commenced in the current case and the application for dispensation was unchallenged. The landlord’s proposals to provide documentation and to communicate with leaseholders were accepted by the Tribunal as being appropriate and an indication of good management.

The Tribunal found no evidence that prejudice would be suffered by the leaseholders if dispensation was granted; the landlord was proceeding with works in a manner which did not cause prejudice by virtue of the Building Safety Fund application which must be in the leaseholders’ benefit. Furthermore, the Tribunal was satisfied that the Design and Build concept is reasonable and does not sit with the consultation process under section 20.

Advice and action for landlords

J B Leitch is pleased to have delivered a satisfactory conclusion for our client. It is clear from the Tribunal’s decision that the approach taken by the landlord in this case was reasonable and appropriate in the circumstances.

The First-tier Tribunal granted unconditional dispensation of consultation requirements. The FTT found that no evidence that prejudice would be suffered by the leaseholders if dispensation were granted, and that the landlord’s proposals to engage with leaseholders in respect of the works within reasonable timeframes were reasonable.

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