Residential leasehold property – consultation requirements

Landlords of residential property will already be aware that they are required to consult with tenants before carrying out qualifying works or entering into qualifying long term agreements.

In the recent case of Leaseholders of Foundling Court and O’Donnell Court v The Mayor and Burgesses of the London Borough of Camden and Others [2016] UKUT 366 (LC)*, the Upper Tribunal provided further clarification as to the consultation requirements of landlords.

In this case the superior landlord (Allied London (Brunswick) Ltd) had served section 20 notices on its tenant (The London Borough of Camden) and whilst Camden had sent the notices to its sub-tenants and invited their observations, the sub-tenants brought tribunal proceedings for a determination of the extent to which they were liable to contribute to the cost of works and other costs. One of the issues in the case was who ought to have consulted the leaseholders.

The Upper Tribunal determined that it is only the landlord who intends to do the work who is required to consult, and not a subordinate landlord who has no such intention.  In this case it was Allied, as the landlord with the intention to carry out the works, rather than Camden, who was required to carry out the consultation process.

The Upper Tribunal also considered who should be consulted with. They determined that the landlord intending to carry out the works or enter into a qualifying long term agreement must give notice to each of its direct tenants of a dwelling, and to each sub-tenant of a dwelling or dwellings if they are liable to contribute to the costs of the works.

The Upper Tribunal recognised that the requirement to consult with sub-tenants could pose a real practical difficulty to the superior landlord who may not know the identity of the sub-tenants, but put forward three possible courses of action

• deliver a consultation notice addressed to “the leaseholder” to each flat in the building or development (although the lease provisions as to service of notices ought to be checked)
• obtain the necessary information from the intermediate landlord(s)
• seek  dispensation from the consultation requirements.

A reminder was also given to intermediate landlords that they might be thought to have a vested interest in providing the information since, if they do not and the consultation requirements are not satisfied, the service charge which they are contractually entitled to collect from their sub-tenants will be limited to £250 per dwelling unless a dispensation can be obtained. An uncooperative intermediate landlord might think that the limitation of £250 per dwelling would apply to its own liability to the superior landlord  but that could not be guaranteed.

Final thoughts

• Landlords (both superior and intermediate) ought to keep up to date records of all tenants with whom consultation ought to be undertaken
• Landlords intending to carry out works must first investigate who would be liable to contribute to the cost of the works
• Intermediate landlords ought to co-operate with superior landlords in providing information
• Landlords intending to carry out works must ensure that they consult with all relevant tenants, including sub-tenants.

Leaseholders of Foundling Court and O’Donnell Court v The Mayor and Burgesses of the London Borough of Camden and Others [2016] UKUT 366 (LC).