Residents’ associations enable tenants who pay variable service charges to speak with one voice. A recognised tenants’ association is an association of qualifying tenants of dwellings, which is recognised for the purposes of section 29 of the Landlord and Tenant Act 1985. Associations that are recognised have rights to receive information about insurance cover and service charges and to be consulted about service charge expenditure, the use of contractors and the appointment of managing agents.
A landlord may recognise an association voluntarily and, if the landlord refuses to do so, the association can apply to the First Tier Tribunal for a certificate of recognition. Recognition is not automatic. However, associations whose rules are fair and democratic, and whose memberships represent a significant proportion of those entitled to join, are eligible to receive a certificate of recognition. Certificates are usually granted for four years.
Rosslyn Mansions Tenants’ Association v Winstonworth Ltd [2015] UKUT 11 (LC); [2015] PLSCS 18 concerned a building comprising 13 residential flats. Some – but not all – of the tenants formed an association, which then applied for recognition under section 29. The association claimed that the management system at the building was archaic and that the landlord was refusing to communicate, consult or engage with the tenants. They also alleged that there was a lack of transparency, as well as signs of neglect and mismanagement.
The landlord took issue with the association’s complaints. It relied on guidance suggesting that an association should represent at least 60% of the flats in the block in respect of which variable service charges are payable, and drew attention to the fact that the association represented only 57% of such tenants.
The association relied on the fact that, between them, its members paid 65% of the variable service charge. It suggested that the guidance was not determinative of the position and pointed to the absence of any statutory requirements based on numerical membership.
The Upper Tribunal ruled that the First Tier Tribunal has a wide discretion under section 29 and must decide whether a certificate should be granted having regard to all the relevant facts of the case. The size of the numerical membership was relevant. However, so too was the proportion of the overall variable service charges that the association’s members were liable to pay. The tribunal cited the example of a building containing three large flats, each paying 20% of the service charge, and five small flats, each paying 8% of the service charge. In considering an application for recognition of an association supported by the tenants of the three large flats plus the tenant of one of the small flats, it would be relevant to take into account not merely that the members numbered only four out of the eight, but also that they paid 68% of the service charges between them.
The history of complaints and the tenants’ lack of confidence in the landlord (whether justified or not) was also relevant, even though the tenants had other statutory rights to fall back on.
The decision will gladden the hearts of critics who argue that the 60% “rule” was difficult to meet, arbitrarily prescriptive, and bore no relationship at all to the statutory provisions.
Allyson Colby is a property law consultant
