Freehold landlords take note of your consultation responsibilities

Freehold landlords of residential premises and their managing agents should take note of the recent decision of the Upper Tribunal (Lands Chamber) in Various Occupational Leaseholders of Foundling Court and O’Donnell Court, Brunswick Centre, London v (1) Camden LBC (2) Allied London (Brunswick) Ltd and others [2016] UKUT 366 (LC).

In this important decision, the Upper Tribunal held that where a freehold landlord intends to carry out qualifying works or to enter into a qualifying long term agreement, the proper construction of the consultation requirements under section 20 of the Landlord and Tenant Act 1985 (the LTA 1985) requires that:

1. The freehold landlord and not the intermediate landlord must comply with the consultation requirements; and

2. The freehold landlord must consult and give notice to each of its direct tenants of a dwelling and each of its own tenant’s sub-tenants of a dwelling or dwellings who are liable to contribute towards the costs of the works i.e. not just the intermediate landlord but also each individual flat tenant.

The decision follows the spirit of the consultation requirements under sections 20 and 20ZA of the LTA 1985 and Part 2 of Schedule 4 of the Service Charges (Consultation Requirements (England) Regulations 2003 by ensuring that the individual flat tenants, who are ultimately responsible for paying for the costs of the works, are consulted on the extent of the works and the identity of the contractor who will carry them out.

Practical difficulties

The Upper Tribunal recognised that consulting the flat tenants might be difficult where the freehold landlord does not know the details of each such person. In the event that this proved to be an insurmountable problem, it suggested that the freehold landlord should seek dispensation from the First-tier Tribunal Property Chamber (the FTT) before placing any contract. The FTT could grant dispensation on terms as to alternative methods of consultation (e.g., placing a notice in the common parts) so as to ensure that the rights of flat tenants were properly protected.

By way of reminder

Where the statutory consultation requirements have not been satisfied or dispensed with, sections 20(6) and (7) of the LTA 1985 limit the relevant contributions of each flat tenant to a prescribed amount. This is currently £250 for qualifying works.

Accordingly, the failure by a freehold landlord to comply with its statutory obligations to consult will, if dispensation has not been granted, severely restrict its ability to pass on the costs of works to the flat tenants. This could be an extremely costly mistake.

Rebecca Turnbull-Simpson partner in the firm’s leasehold enfranchisement and disputes department