Works to the building - what Landlords and Tenants need to know
Residential Tenants with long leases know they have to pay for work carried out to the building in which they live through their service charge. By section 20 of the Landlord & Tenant Act 1985 they have the opportunity of considering estimates and making representations to the landlord before expensive works are carried out to the property.
If a landlord wishes to carry out works on the property that will cost more than £250 per flat then he has to go through a statutory procedure of consultation, otherwise his recovery is limited to £250 for each flat.
A landlord carrying out maintenance and repairs to the building will find very quickly he reaches the limit of £250 per flat. What then does he do about future work? What happens if there are emergency repairs to protect his tenants? What if the cost is trivial? Does he go ahead and risk not be able to recover the cost, or does he delay and get estimates and consult?
In 2012 a court decided that, as soon as the accumulating costs incurred by a landlord reaches the figure of £250 per flat in any one year, the landlord would have to embark on the long and potentially expensive exercise sending out estimates and consult with the tenants each and every time any work was carried out (however trivial) before any work was carried out, or risk recovering only £250 per flat for all work on the building carried out in the financial year.
On 31 October 2014, the Court of Appeal handed down its judgement in Francis v Phillips.
This judgment has fortunately clarified the position. The Court has confirmed that a landlord can consider each separate set of works to the building in deciding whether or not the £250 limit is reached. This means that a landlord could have several separate sets of works in a year. If each set is below the £250 limit per flat, he does not have a problem. He can charge up to £250 per flat for each set of works.
Only if a set of works will cost more than £250 per flat does the landlord have to go through the consultation procedure.
This also helps tenants as the landlord can get on quickly with urgent repair work and tenants will avoid having to pay for the expense of numerous consultations through the service charge.
Bill Duncan is a Solicitor in the Commercial & Regulatory Disputes team. For more information please contact Bill via email at firstname.lastname@example.org or by telephone, on 01392 687460.