If you own a flat on a long lease and you pay an annual variable service charge, then the Landlord/Freeholder must consult you before they carry out works above a certain value or enter into a long-term agreement for the provision of services.
Section 20 Landlord and Tenant Act 1985 (as amended by s151 of the Commonhold and Leasehold Reform Act 2002) sets out the precise procedures landlords must follow; these are the Service Charges (Consultation Requirements) (England) Regulations 2003 (‘the Regulations’).
The requirements in the Regulations are defined under three headings:
- Qualifying Work
- Qualifying long-term agreements
- Qualifying works under long-term agreements.
Each of the above categories has a separate consultation procedure in which the Landlord must consult the Leaseholders on any works or long-term agreements before they are commenced.
Should the Landlord not follow the consultation procedure precisely then the Landlord may only recover £250.00 from the Leaseholder.
In essence the Regulations are in place to protect the Leaseholder from unscrupulous Landlords from using preferred contractors, charging inflated prices, or from carrying out unnecessary works.
With repair and maintenance works to properties and communal areas often running into tens of thousands of pounds an unexpectedly large service charge can place many leaseholders under financial pressure. So should the Landlord fail to follow the consultation procedure laid down by the Regulations the Leaseholder may only have to pay £250.00 towards the cost of the maintenance or repair works.
If the Freeholder does serve a notice it is important you respond to it.
The procedure applies equally to management companies as it does to outside freeholders, although it is usually when there is an outside freeholder that trouble occurs.
Any dispute relating to this area of law is dealt with by a specialist body called the Leasehold Valuation Tribunal.
This is a very useful peace of legislation and is not as widely known as it should be.