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Service charge consultation – obligations on freeholders and superior landlords have been clarified

United KingdomScotland
05/09/2016
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A common scenario in a leasehold structure is for the superior landlord to carry out major works or enter into a qualifying long term agreement; the intermediate landlord to contribute to those costs; and the sub-tenants of the dwellings to ultimately pay the costs through the service charge.

Section 20 of the Landlord and Tenant Act 1985 and related regulations requires the “landlord” to consult the “tenant” in relation to qualifying works or long term agreements but has led to uncertainty as it does not specify whether responsibility to consult falls on the superior or intermediate landlord. It is important for landlords to know where responsibility to consult lies as if the consultation process is not followed the costs recoverable from tenants are limited to £250 per tenant (in the case of qualifying works) and £100 per year (in the case of long term agreements).

The recent case of Leaseholders of Foundling Court and O’Donnell Court v The London Borough of Camden and others [2016] clarified that the obligation to consult falls on the superior landlord intending to carry out works or enter into a qualifying long term agreement, and not the intermediate landlord. Therefore the superior landlord must consult and give notice to each of its direct tenants of a dwelling and each of its own tenants’ sub-tenants who are liable to contribute towards the cost of the works.

This decision is to be welcomed as it provides the clarity previously lacking.

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