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What are the statutory residential service charge requirements; when do they apply and what are the practical implications of this case?
The £250 recovery limit for residential service charges, where the statutory consultation requirements have not been complied with, does not apply to payments by way of service charge requested in advance for intended works. It was open to the landlord
in question to correct the lack of compliance —here, insufficient estimates.
Landlord and Tenant Act 1985, s 20.
The case related to the statutory consultation requirements for residential service charges. A landlord must consult with its tenants before:
Where works of repair, maintenance or improvement involve costs requiring each tenant to pay more than £250, the landlord must follow the two-stage consultation procedure.
The landlord must serve notice on the tenants. The notice must:
The tenant must be given 30 days from the date of the notice in which to submit observations and to suggest alternative contractors. The landlord must then obtain at least two estimates for the work, one from a contractor wholly unconnected with the landlord.
The landlord must obtain an estimate from any contractor that a tenant has nominated.
The landlord must then prepare a statement for at least two of the estimates, setting out the estimated costs of the works and providing a summary of the observations received together with its response. Any estimate that the landlord has obtained from
a contractor nominated by the leaseholders must be included in this statement.
The statement must be attached to a notice and sent to the tenants. The notice details where and when all estimates may be inspected and invites each tenant to make written observations, to which the landlord must have regard. It must also specify an
address to which any observations should be sent and the timescale for doing so (30 days from the date of the notice).
It was not in dispute that:
However, the landlord had not complied with the obligation to provide a statement setting out the estimated costs of the works. The amounts specified in the statement were not the estimated cost of just the proposed works. They included additional works.
The issue was whether this limited the landlord to recovering £250 as an amount in advance in respect of the works.
The judge confirmed that:
The judge identified the following factors in assessing whether the first part of the two-stage reasonableness test had been satisfied:
The judge confirmed that the current failure to comply with the consultation requirements was by no means fatal to the landlord's claim for reimbursement of the sums expended on the works. It was open to it to obtain further estimates in the light of
this decision. Therefore, it was reasonable for there to be a payment of an advance service charge.
Southall Court (Residents) v Tiwari  UKUT 218 (LC)
Property disputes lawyers should take note when advising tenant clients. The judge agreed with the judge's comment in Southall where he emphasised:
'the need for tenants who are unhappy about the proposed works to make their concerns known to the landlord within the appropriate period. In the absence of such objections the landlord is entitled to conclude there is no serious objection to the
Court: Upper Tribunal (Lands Chamber); Judge: His Honour Judge John Behrens; Date of judgment: 16 August 2016
0330 161 1234