Painsmith Landlord and Tenant Blog

A practitioners landlord and tenant law blog from PainSmith Solicitors

Consultation process…

The Leasehold Valuation Tribunal (the LVT) in Southall Court v Tiwari reduced a landlord’s claim for service charge contributions from 48 leaseholders from £2,053.42 to £482.50 per flat. The Landlord was granted permission to appeal to the Upper Tribunal.

The landlord had fulfilled its obligations under Section 20 of the Landlord and Tenant Act 1985, the leaseholders’ however failed to comment in response to the consultation process for substantial works to the roof. The leaseholders’ claimed that the reason for failing to reply was because it was obvious that the matter would be referred to the LVT. The reason for this we assume is because in the report it is stated that “Southall Court has probably been the subject of more applications to the Tribunal than any other property in the country”. On appeal the Upper Tribunal held that where the leaseholders have failed to comment then the landlord is entitled to assume that there are no objections to the works. This is the case even where it is obvious that the matter would be referred to the LVT. The Upper Tribunal held that it was the duty of the leaseholders’ to respond during the consultation process and that in this case where no comments were made the landlord had acted reasonably throughout.

At the LVT the landlord’s expert gave evidence and confirmed that there were no current leaks in the roof and that it could have staggered on for a few more years. The LVT inspected the property and agreed with the expert’s oral evidence. However the Upper Tribunal held that the landlord had a wide discretion as to the programme of works it adopted and applying that principal to this case came to the conclusion that the LVT was not entitled to find that the landlord’s works were unreasonable. This was especially so given the expert findings that the roof had only a further 12-18 months useful life.

The leaseholders’ attempted to argue that the existence of a sinking fund was irrelevant in this matter. However, the Upper Tribunal disagreed with this and dismissed the leaseholders’ attempt to argue that given the small sinking fund it was unreasonable to carry out the works. The Upper Tribunal found instead that the fund made very little difference between the reasonableness of a decision to re-cover the roof now or in 12-18 months time.

The landlords appeal was accordingly allowed and the leaseholders’ were ordered to pay £2,053.42 each.

We have had many agents undertaking block management contact us about the consultation process and we hope that this blog emphasises how important it is for agents to advise leaseholders’ to take part and comment in time.

Filed under: England & Wales, England only, , ,

Shareholders and Leaseholders- Different Obligations

In Morehead Mansions Ltd v Di Marco the Court of Appeal has held that there is a difference between a tenants obligation to pay service charges and an arrangment made by a shareholder to pay into a company fund by seperate agreement.

The Defendant in the case was a shareholder in a company which owned the lease of a series of flats. Simultaneously, the Defendant held one of those leases. The shareholders had agreed to pay into a new ‘recovery fund’ in two tranches in a sum which varied according to their respective shareholdings.

The Court held that the payment was not related to the Defendants role as a tenant and so was not governed by the limitations imposed by the Landlord & Tenant Act 1985. Equally, failure to make such a payment, as it was not a lease-related matter, was enforceable as a normal breach of contract and did not give rise to the normal forms of enforcement and recovery used by a landlord against a tenant such as forfeiture of the lease.

It is important therefore where a company is set up to run a block and is, in effect, owned by the block residents whether payments into that company are being levied by way of service charges, in which case all the normal requirements of consultation and the like must be carried through, or whether they are to be levied by way of contractual agreement with shareholders, avoiding consultation but giving up the more powerful enforcement options.

Filed under: Uncategorized, , ,

Categories

Enter your email address to subscribe to this blog and receive notifications of new posts by email.

Join 51 other followers

Have you tried the PainSmith toolbar?

Useful links and access to the PainSmith blog in a convenient toolbar within your web browser. Available from: painsmithlettingshelper.ourtoolbar.com/