The Landlord and Tenant Act 1985 lays down rules that apply to residential service charges. It seeks to protect tenants against paying more than is reasonable for services and requires landlords to consult with them before carrying out certain types of work or entering into qualifying long-term agreements.
The Services Charges (Consultation Requirements) (England) Regulations 2003 explain the requirements in more detail. They provide that, if a landlord proposes to carry out works that would cost an individual tenant more than £250, the landlord must formally consult all those expected to contribute. If the landlord fails to consult, or is not given a dispensation from the Leasehold Valuation Tribunal, he will be unable to recover more than the statutory limit of £250 from each tenant. Similar provisions apply where a landlord intends to enter into a qualifying long–term agreement for the provision of services, save that the costs cap in such cases is £100.
We know that the legislative safeguards protect both intermediate landlords and their sub-tenants: Oakfern Properties Ltd v Ruddy [2006] EWCA Civ 1389. However, until Lessees of Foundling Court and O’Donnell Court v Camden London Borough Council [2016] UKUT 366 (LC); [2016] PLSCS 233 we did not know exactly how the regulations applied. Is it the superior landlord who intends to carry out qualifying work, or to enter into a qualifying long term agreement, who needs to satisfy the consultation requirements? Or is it the intermediate landlord, who will be collecting service charge contributions from the sub-tenants, who must do so instead?
In other words, can a freeholder comply with the regulations by consulting with its own tenant and leave it to do the rest? This would mean that the freeholder could consult with the intermediate landlord, and leave it to play postman, passing all the information provided and any comments made by the sub-tenants backwards and forwards along the chain.
The freeholder tried to persuade the tribunal that the legislation does not require “leap frog” consultations between superior landlords and sub-tenants. Indeed, the lack of any statutory mechanism to ensure that superior landlords have sufficient information about sub-tenants means that it would be difficult for superior landlords to comply.
The tribunal accepted that there was a lacuna in the statutory scheme, but ruled that the regulations apply to landlords who intend to carry out work, and not to subordinate landlords with no such intentions. So the freeholder’s obligation to consult tenants did not stop with the intermediate landlord; it should have consulted with the sub-tenants too. To hold otherwise would frustrate the legislation and deprive those who are ultimately liable to pay for the work of the opportunity to make their views known.
The tribunal’s ruling makes it clear that superior landlords will need to ask intermediate landlords for the names and addresses of sub-tenants before carrying out work, or entering into long term agreements for the provision of services, in order to comply with the regulations. If an intermediate landlord proves uncooperative, the tribunal suggested that superior landlords could deliver consultation notices addressed to “the leaseholder” to every property in a building or development instead.
Allyson Colby is a property law consultant
