19th September 2016
Superior landlord to consult sub-tenants when intending to carry out works to residential properties
The Upper Tribunal (Lands Chamber) has held that responsibility under section 20 of the Landlord and Tenant Act 1985 (“the Act”) lies with the superior landlord intending to carry out qualifying works or enter into a qualifying long-term agreement for residential properties. The superior landlord must consult both its immediate tenants and any sub-tenants, even though it may not have any direct relationship with the sub-tenants.
The penalty for failure to follow the correct procedure when carrying out the qualifying works is that a landlord is unable to recover more than £250 from each tenant for those works. In the case of a long term agreement, the limit is £100 per tenant, as opposed to £250.
Prior to this case it was unclear whether a superior landlord could satisfy this procedure by informing its immediate tenant, who would then be expecting to inform the sub-tenants. As a result of this judgment a superior landlord cannot rely on an intermediate landlord to inform the sub-tenants, there has to be a direct consultation to each party, instead of a chain from one to another.
The facts in Leaseholders of Foundling Court and O’Donnell Court v (1) Camden LBC; (2) Allied London (Brunswick) Ltd and others (2016)
Foundling and O’Donnell Court are residential blocks that form part of a larger, mixed use development, consisting of flats, offices, restaurants and shops. Allied London (Brunswick) Ltd (“Allied London”) was the superior landlord of this development, who granted a lease to the London Borough of Camden (“Camden”). Camden then granted a lease to various people and bodies, becoming an intermediate landlord between the sub-tenants and Allied London.
Allied London intended to carry out qualifying works and served a consultation notice on Camden on 11 June 2004, with a consultation period that expired on 16 July 2004. Camden wrote to its sub-tenants on 17 June 2004 and enclosed a copy of the notice from Allied London. The consultation period for the sub-tenants ended on 14 July 2004, which was 30 days from the date of the letter from Camden.
Allied London sent a second stage notice to Camden on 24 September 2004. This was not forwarded to the sub-tenants by Camden until 4 October and the consultation period was for only 21 days. The sub-tenants argued that because of the failure to consult by Allied London and because Camden provided for less than 30 days in their notice, the contributions of each flat were limited to £250.
The Upper Tribunal (Lands Chamber) held that it was the superior landlord, and not Camden, who should have consulted with the sub-tenants. A main factor in coming to this decision was the fact that only the superior landlord had the relevant intention. The Tribunal came to this decision for the following main reasons:
- Otherwise, “it would frustrate the purpose of the Act and deprive those who are ultimately obliged to pay for qualifying works of the opportunity to be consulted on the extent of the works.”
- Secondly, “it would be inconsistent with section 18(2) and the extension of “relevant costs” to include costs incurred by a superior landlord”, as it would be odd for costs incurred by the superior landlord to be taken into account in determining the service charge, but for those costs not to be within the scope of the consultation requirements.
- Thirdly, “it would be inconsistent with the definition of a “qualifying long term agreement”, in section 20ZA(2), which is an agreement entered into by or on behalf of the landlord or a superior landlord.” This is relevant only to the consultation requirements.
- Fourthly, “paragraph 1(1)(b) of the Schedules to the 2003 Regulations imposes a duty on a landlord who intends to carry out qualifying works to give notice to any recognised tenants’ association… It is therefore not possible to state a landlord only has to consult those it has a direct relationship with.”
- Finally, “it would be strange if the same sub-tenant on whom section 23 confers a right to receive information about the costs which have been incurred by a superior landlord was not also entitled to be consulted before those costs were incurred.”
The Judge accepted that there may be practical difficulties in this; however, various ways to obtain information and overcome the difficulties were discussed. For example, the consultation notice can be delivered to “the leaseholder” at each address as well as requesting the necessary information from the intermediate landlord. Alternatively a landlord could apply for dispensation if there was no reasonable way of obtaining the information of the sub-tenants.
Given the penalties for not following the procedure, landlords who perhaps followed the ‘consultation chain’ system may wish to adjust their previous practices and aim to serve notices on all tenants who need to be consulted under the Act.
Landlords should seek legal advice and take care to ensure that notices are served on the correct interested parties.
For further information, please contact the Real Estate Disputes Team at Hamlins.