If the owner of a block of flats (we’ll call them the landlord) wants to carry out ‘major works’, they have to first consult the owners of the flats (the leaseholders). This process can take months, so what happens when urgent major works need to be carried out? For example, works to the cladding where there are fire safety risks to the residents. Here, a landlord can apply for dispensation from the consultation requirements. We have recently worked with a landlord client to obtain dispensation for just such works.
Service charges
Residential leases almost always state that the landlord is responsible for the maintenance and repair of the exterior of the building and common parts (eg hallways, gardens, lifts etc). The lease will also usually provide that the leaseholders pay for the works through a service charge.
There is legislation in place to ensure that landlords cannot charge leaseholders too much service charge. For example, the landlord must demand the service charges in a specific way; and the charges must be reasonably incurred and reasonable in amount.
For the most part, landlords and leaseholders deal with service charges simply and amicably. However, things get a little more complicated when there are major works to be carried out.
Major works
Major works are any works that would cost an individual leaseholder over £250. Such works are usually few and far between, and could be to carry out major renovations to the roof of the building, a rehaul of the lift system, or, something we are seeing a lot of at the moment, recladding of the outside of the building.
If a landlord wants to carry out major works, it must first consult with the leaseholders. This procedure is set out in the Landlord and Tenant Act 1985, and is often referred to as the ‘s20 consultation procedure’. The procedure is rigid and landlords must follow it. If a landlord does not properly consult the leaseholders, the landlord may not be entitled to recover the costs of the works under the service charge and have to pay for the renovations itself.
In brief, the s20 consultation procedure requires the landlord to:
- Give written notice of its intention to carry out the works. It must invite leaseholders to make observations and nominate contractors from whom to obtain estimates for the works
- Obtain estimates for carrying out the works and provide leaseholders with details of the estimates.
- Invite leaseholders to make observations about the estimates, and then have regard to those observations.
- Give the leaseholders written notice as to why the landlord awarded the contract to a specific contractor (if that person didn’t submit the lowest estimate).
The procedure can last many months. So, what can a landlord do if works need to be carried out urgently?
Dispensation from the s20 consultation requirements
There will be some instances where a landlord just doesn’t have the time to follow the s20 procedure. For example, where works are required urgently for health and safety reasons. In these cases, the First Tier Tribunal can give the landlord permission to dispense with the requirements of s20.
The landlord must make an application to the First Tier Tribunal Property Chamber (Residential Property) for dispensation if they wish to avoid the usual requirement to consult. The leaseholders will be a party to the proceedings and can object to the application if they see fit.
The Tribunal will decide whether it is reasonable for the landlord to not consult the leaseholders. In making this decision, the Tribunal will consider whether the leaseholders will “suffer prejudice” as a result of the landlord’s failure to consult.
Ideally, the landlord would make the application before carrying out any works. However, a landlord can make an application retrospectively.
Application for dispensation from the s20 consultation procedure: works relating to fire safety and cladding
We have recently acted for a landlord who wanted to carry out major recladding works to the building. They had received a report that stated that the cladding on the building was not fire resistant, and therefore intended to carry out the works as soon as possible. On top of this, as a result of the Grenfell disaster, there is currently Government funding available for landlords to carry out recladding works. Our client needed to finish the works by a specific deadline to qualify for the funding. Of course, obtaining the funding would directly benefit the leaseholders as the funding would be offset from the amount of service charge payable.
We made an application for dispensation from the s20 consultation requirements on behalf of our client and were able to persuade the Tribunal to make a decision in our client’s favour without a hearing.
The Tribunal stated:
“It is obvious that essential works to ensure the safety of the Property and its occupiers should be undertaken as soon as possible: this is appropriate not only to minimise risk to the health and safety of the occupiers of the Property, but also to maximise the chances of obtaining grant funding for the works in question. We have no hesitation in finding that the balance of prejudice favours permitting such works to proceed without delay.”
This was an excellent result, not only for our landlord client, but also for its leaseholders. The works will begin as soon as possible, and our client’s grant application is being processed.
Service charges and major works can be tricky to navigate. Our property disputes team works with landlords and leaseholders alike on service charge issues. If you are concerned about the cost of recladding or other major works, contact Ed Smith on 0113 297 1875.
