Opinion Flat Living wHAt tHe expertS tHink
Bob Smytherman
Howeasily canyou avoid Section20?
Whether you are a landlord, residentmanagement company (RMC)directororaproperty manager, Idonot need to tell youthatcomplying with the consultation procedurelaiddown in Section 20 of theLandlord and Tenant Act 1985 is a time-consuming administrative
task.These provisions applytoALL landlords –whichmeans evenwherethe landlord is acompanyownedand runby the leaseholders themselves (asisthe caseinmyblock)the consultation provisions stillstick. AsadirectorofanRMCmyself
Iunderstandthe argument that is oftenput forwardthatcompliance with theconsultationrequirements isworththe timeandeffort:it provides flatownerswiththe opportunity tomake observations on proposedmajorworks and, arguably, preventsthe landlord finding himselfout-of-pocketfollowing completion ofmajorworks.But fromexperience in ourblock,given theratherlowthresholdof£250per flatowner before thelandlordmust consult,weseemto spendnearly allofour valuable timeconsulting evenwherethere is consensus amongleaseholders,ratherthan simply gettingonwithother more importantmanagementissues.
Is there anotherway? Where alandlord has notcomplied with therelevantconsultation provision, theamounttheywillbe able to recoverfrom aleaseholder will be capped at therelevantcost threshold(at present £250formajor worksand £100 forqualifyinglong- termagreements). This isavery draconianconsequence –especially forresidentmanagementcompanies. In order to alleviateany potential problemsthereispower to dispense
34
with the consultation requirements. Section 20ZA of the1985Act
provides landlordswithan opportunitytoapply to the LeaseholdValuation Tribunal (LVT) priortocarryingoutmajorworks and/or consulting
thetenants.This rightwas introduced in 2003 by the Commonhold and Leasehold Reform Act2002, anditallowsthe LVTto remove someor allofthe Section 20 consultation requirements if it is reasonable to do so.
Is dispensation likely to be granted? The case of DaejanInvestments Limited v Benson and Others [2011]EWCA Civ38shouldserve asawarning to alllandlordstomakesurethat they comply with thestatutory consultation requirements in respectofservice charges. AlthoughDaejan hadgiven notice
to theresidents of itsintention to carryoutworks, theleaseholders contendedthatDaejanhad not properly complied with itsstatutory obligations and could not recover all of its outlay. Whilethematter startedinthe
LVT, it has been appealedanumber of timesand endedupinthe Court of Appeal. It is nowin the Supreme Court for permissionto appeal with adecisionexpectedlatethisyear.
Whataretheconsequences of thisdecision? TheCourt of Appeal foundfor the flatownersand it appearsfrom this decision that therewillonly be limitedcircumstanceswhere landlordscan gain dispensation goingforward.One of theseis whereworks need to be carried outurgentlydue to anemergency
situation.Asecond example is wheretheworksare ofavery
Just howeasy is it to avoid theneed to comply with the consultation requirements setout in Section20of theLandlord and Tenant Act1985?Not very!
Former HousingMinister
Grant Shapps was approached by the FPRA on Section 20
specialist nature,and theremay only be onecontractortoappoint. Thethird example iswherethere is
only aminor breachof the Section 20 consultation procedurewhich didnot causeany prejudicetothe tenants. It is likelythatthisthird situationisone whichislikelytobethe subjectofmore courtcases in thefuture, sowatchthis space! However, thefinalexample seems
to suggest that the Court of Appeal were keeping thedoorajartouphold a possibly less rigorous approach to consultationwherethe landlord is abodywhich is controlled by the leaseholders. As canbeseen, evenwherethe
landlord is a companyowned and run by the leaseholders themselves the consultation provisions still stick and dispensation is likelytobegranted only in very rare cases.
Government’sresponse So does thismean the Government andlegislative bodiesseriously need to consider raising the very lowsection 20 cost thresholds so theconsultation requirements stop beingaburdenfor RMCs such asmine? TheFederationofPrivate Residents
Associations (FPRA) haswrittento both the formerHousingMinister Grant Shapps and the former Labourminister IanAustinoverthe lastfewyearsand requested at the very least raising the thresholdfor Section 20 to bringit in line with inflation
trends.Asthe original figure of £250was set during the introduction of the CLRAAct 2002 surely 10 yearson, this is areasonable request?●
BoBSmytherman Chairman, TheFederationofPrivate Residents Associations Ltd
emailbob@fpra.org.uk
Go
towww.fpra.org.ukto find outmoreabout theFPRAand itslegal advice servicewhichis free tomembers.
Autumn2012 Flat Living
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68