Question: Can I challenge higher repair costs?
I am the tenant of a flat in a converted house. External works have recently been carried out to the property including the replacement of all windows. The section 20 notices served before the works started referred to the “repair” of the windows. My landlord is now asking me to pay almost 50% more than the estimated cost of carrying out the works. The overall cost of the works seems higher than it would have been had the landlord carried out works at an earlier date. Can I challenge the sums claimed?
Answer
If your landlord has complied with the statutory consultation procedure and consulted on the works actually carried out, it can recover the costs of the works subject to the costs being reasonable. Where the landlord has neither consulted on the works carried out, nor obtained a dispensation from the tribunal, recovery is limited to £250 per tenant. In order to challenge the cost of works on the ground of neglect you must be able to prove that the delay in carrying out repairs has resulted in increased cost.
Explanation
A landlord who carries out works of repair and seeks to recover the costs pursuant to the service charge provisions of its tenants’ leases will need to comply with the consultation requirements imposed by section 20 of the Landlord and Tenant Act 1985 (the “Act”). A landlord who fails to comply will only be entitled to recover £250 per tenant in respect of the works unless the tribunal grants a dispensation from the consultation requirements.
It is not uncommon for a landlord to discover, while carrying out works, that more extensive work is needed than was anticipated at the time of the consultation, as a result of which the works will cost more than the original estimate. A landlord in this situation is not necessarily required to stop the works and to carry out a further consultation. Provided that the further work falls within the scope of the original consultation, the landlord may carry out the works and claim the additional cost, subject to the tenants’ right to challenge the reasonableness of the additional cost or the standard of the works.
In Southwark London Borough Council v Oyeyinka [2014] UKUT 258 (LC); [2014] PLSCS 225, the landlord’s consultation notices described the works as “window repairs/renewals” and stated that the tenant could inspect the detailed estimates at its offices. The detailed estimates included two alternatives, depending on the extent to which the windows needed to be replaced. The lower estimate was given in the consultation notice itself because the landlord intended to carry out the cheaper alternative. However, during the works, the window frames were found to be so rotten that it was necessary to carry out extensive replacement. As a result, the final cost was 75% greater than the original estimate.
The Lands Chamber, allowing the landlord’s appeal from the First-tier Tribunal, decided that the more extensive works both fell within the description of “window repairs/renewals” and were adequately set out in the alternative estimates available for inspection at the landlord’s offices. The landlord had therefore complied with the consultation requirements in respect of the additional works and did not need to stop the works and carry out a further consultation. It was still open to the tenant to challenge the reasonableness of the service charges under sections 19(1) and 27A of the Act, but he had not in fact produced any evidence to show that the works or their cost were unreasonable. The landlord was therefore entitled to recover the additional costs of the more extensive work carried out. Consequently you may be liable for the higher sums claimed.
Even if it is determined that your landlord has failed to comply with the statutory consultation requirements, he may apply to the tribunal under section 20(1) of the Act for a dispensation from those requirements. Unless you, and the other tenants, have suffered any prejudice because of the lack of consultation, an unconditional dispensation is likely to be granted. If there is prejudice, then a dispensation may be granted on condition that the landlord compensates the tenants for that prejudice, for example, by an appropriate deduction in the recoverable charges and payment of their costs of any dispensation application: Daejan Investments Ltd v Benson [2013] UKSC 14; [2013] 1 EGLR 34.
It is generally difficult to challenge service charges on the basis of historic neglect by a landlord. Section 19(1)(a) of the Act allows a landlord to recover service charges only to the extent that they have been reasonably incurred. In Continental Property Ventures Inc v White [2006] 1 EGLR 85, the Lands Tribunal held that an allegation of historic neglect does not touch on the question whether costs have been reasonably incurred because the reasonableness of incurring the cost of repairs cannot depend on the reasons why repairs are needed.
In Daejan Properties Ltd v Griffin [2014] UKUT 206 (LC); [2014] PLSCS 172, the Lands Chamber made it clear that an allegation of historic neglect can only provide a defence to a claim for service charges if the tenant can show that the landlord’s failure to repair a particular defect promptly has increased the cost of repairing that defect, or has led to consequential defects requiring repairs that would otherwise have been avoided, giving rise to a claim for damages that the tenant can set off against the liability for service charges. Such damages and set-off may include both the increased costs of repairs, and any general damages for inconvenience or discomfort if the demised premises were affected by the breach of covenant.
Louise Clark is a partner at Charles Russell LLP and Robert Duddridge is a barrister at Enterprise Chambers
Questions on any topic can be e-mailed to egq&a@enterprisechambers.com and egq&a@charlesrussell.co.uk
