The Landlord and Tenant Act 1985 requires landlords to consult tenants before undertaking work above a certain value to be included in residential service charges. The Service Charges (Consultation Requirements) (England) Regulations 2003 restrict the amount that tenants can be required to pay for work about which they have not been properly consulted to £250. However, the court can dispense with the consultation requirements if it is satisfied that it is reasonable to do so.
Southern Land Securities Ltd v Hodge [2013] UKUT 0480 (LC); [2013] PLSCS 280 provides useful guidance as to how these requirements apply where the landlord consults before carrying out repairs and subsequently decides that further work is required. Should the tenants be required to pay for the additional work, about which they were not consulted, if the overall contact price turns out to be less than the original tender price (because items of work, about which the tenants were consulted, were omitted because they were found to be unnecessary)?
The regulations require landlords to describe to their tenants “in general terms, the works proposed to be carried out”. The landlord’s notice to the tenants had described the proposed work as “external repairs and redecorations”. It argued that the additional works, which involved treating and redecorating boundary walls and railings, fell within the description provided to the tenant and that it would be unworkable if landlords had to embark on a new round of consultation mid-way through building works.
The Lands Chamber of the Upper Tribunal disagreed. It decided that the landlord should have consulted with the tenants before undertaking the additional works because, although they too were “external repairs”, they were not the repairs that the landlord had originally intended and commissioned.
The tribunal accepted that problems sometimes arise while work is being done, which have to be addressed, or that work turns out to be more extensive, or more expensive, than was envisaged. However, this was not the case here. Nothing hung on the work being done and there was nothing to suggest that these were disrepairs that could not have been foreseen when the landlord consulted with the tenants. Indeed, the boundary wall and railings had been in poor condition for a long time but the landlord had decided not to include the repairs in the programme of works originally planned.
Once upon a time, this might have been the end of the road for the landlord, because it was widely thought that the dispensation procedure was intended to cover situations where consultation is not practicable (for example, for emergency work) and to avoid penalising landlords for minor breaches of procedure that do not adversely affect tenants’ interests. However, the approach has been relaxed following the Supreme Court’s ruling in Daejan Investments Ltd v Benson [2013] UKSC 14; [2013] PLSCS 69 that the tribunal can grant dispensation, despite the severity of any breach, on condition that the landlord reduces its tenants’ service charge contributions by an amount that reflects any prejudice that they have suffered. This means that Southern Land could now ask the tribunal to dispense with the consultation requirements in respect of the additional work and, if its application were to be successful, it will have to satisfy the tribunal that the cost was reasonable.
Allyson Colby is a property law consultant