A Brief Guide to your rights
Section 20 of the Landlord and Tenant 1985 (as amended by the Commonhold & Leasehold Reform Act 2002) set out the three-stage consultation procedure to follow when major works are needed to your building. The cost of the major works will exceed the sum of £250.00 for any one leaseholder, then the landlord is required to consult with tenants under s.20 of the Landlord & Tenant Act 1985.
If your Residents’ Management Company (RMC) is looking to carry out works, or enter into a long term agreement of this nature, then consultation must take place with all the flat owners.
What are Major Works?
The term “major” or “qualifying works” is the term used when the cost of completing work on a building or any other premises is recoverable from the Tenant under the terms of the Lease through the service charge.
The cost will not be paid from the annual service charge but is normally an additional charge on top of this. Potentially there is a “reserve fund” or “sinking fund” that has been built up which can be used to pay some or all the costs, depending the work that is to be conducted.
Within your Lease, it should state when the major works charge can be made, it may have to coincide with the annual service charge or the lease may allow it to be charged on demand when necessary.
The major works will usually be the responsibility of the landlord but it could also be the Right to Manage Company or Residents Management Company if one of these is in place.
What are the requirements to consult under S.20?
The requirement may be for full consultation where the Tenant will be able to make “observations” on the proposed works and nominate a specific contractor for the Landlord to obtain an estimate from. Alternatively, it may the version of consultation where there is only one stage of consultation for observations to be made but the Tenant does not have the right to nominate a Contractor.
The abridged version applies where the landlord has a “qualifying long term agreement” in place. Essentially, this means a contract for services with a contractor of more than 12 months. There is a separate consultation requirement before the landlord enters into such a long-term contract. Most Housing Associations or local authority landlords will have such an agreement in place.
The consultation process also involves the landlord describing the works, although a full specification does not have to be given. The Landlord should also “have regard” to any observations made and reply as appropriate.
Dispensation from the need to consult
A landlord may apply to the First-Tier Tribunal (Property Chamber) (FTT) for a dispensation from the need to consult. They may do this because the work is urgent, and it is not possible to wait the 2 months that consultation can take.
Such an application can be made prior to the work being carried out, or even sometimes retrospectively.
Understandably, many flat owners will struggle to find the funds. Most landlords will offer some form of payment plan. They also have the power to waive and reduce charges for major works under statutory regulation. Discretionary reduction of major works service charges for leaseholders of social landlords.
In 2011, an Upper Tribunal decision in 2011 determined that when considering the reasonableness of charges for major works, whether the landlord had considered the financial impact of tenants for commencing the works can be taken into account. For an example, whether the work could be done in stages, to reduce the financial impact.