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Service Charges – There’s Nothing Flexible About Consultation Rules

There is nothing woolly or flexible about the consultation requirements placed on residential landlords before they can lawfully levy service charges on tenants. The Upper Tribunal (UT) resoundingly made that point in leaving a landlord to shoulder most of the cost of substantial external works to a block of flats.

After the landlord sought to recover the £36,517 cost of the works from the block’s seven long leaseholders, three of them challenged their service charge bills on the basis that the landlord had failed to comply with its obligations under the Service Charges (Consultation Requirements) (England) Regulations 2003.

The tenants’ case was rejected by the First-tier Tribunal on the basis that the landlord had endeavoured to carry out some consultation. Having encountered resistance from some tenants, it had obtained further quotes for the works. The cost of the works was in any event not wholly excessive and the tenants’ interests had not been materially prejudiced by any shortcomings in the consultation process.

Upholding the tenants’ appeal against that outcome, the UT noted that the requirements of the Regulations are strict and require landlords to take a number of steps in sequential order. There is no room in the clear wording of the Regulations for a flexible approach to be taken to their interpretation.

The landlord’s managing agents had circulated a notice of intention to do works to all the tenants and further notified them of two estimates it had received. However, another quote had been submitted by a company of which one of the tenants was the sole director. The landlord considered that quote but it did not, as it should have done, issue a fresh notice of estimates.

The landlord’s failure to take that step amounted to a clear breach of the Regulations. It was not enough for the landlord to say that it did its best to comply and the question of whether the tenants had been prejudiced was irrelevant. The tenants each had their service charges in respect of the external works reduced from £5,342 to £250, the latter sum being the maximum that landlords can demand without having to comply with the Regulations.

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Published
11 October 2021
Last Updated
22 October 2021