The Landlord and Tenant Act 1985 sets out detailed requirements and preconditions which must be observed by landlords where they seek to recover the cost of works to a property from residential tenants by way of service charge.  The dangers of not complying with these requirements has been highlighted in the case of Daejan Investments Limited v Benson. 

The landlord, an owner of a block of shops and flats, gave notice to the long leasehold tenants of the flats of works which it proposed to carry out.  The expected cost of the works was in the region of £270,000. 

The statutory consultation requirements were not observed in their entirety by the landlord.

The question of the recoverability of the service charge demands was considered by the Court of Appeal (following the decision of the Leasehold Valuation Tribunal which refused to waive the statutory preconditions so as allow the Landlord to recover its expenditure from the tenants). 

The Court of Appeal concluded that the consequences for the landlord of being unable to recover the service charge fully was significant and wasn’t a relevant factor when deciding whether or not to waive the consultation requirements.

The liability of the five residential tenants was restricted to £250 each (substantially less than they would have been liable for had the landlord complied with provisions of the 1985 legislation).

The decision in this case serves to emphasise the importance of making sure that the preconditions to claim a service charge from residential tenants are complied with in their entirety especially where the works proposed are substantial. 

If you require any further information or wish to discuss any of the issues raised by this blog please email peter.gammie@parissmith.co.uk.

Tags: Daejan Investments Limited v Benson, Landlord and Tenant Act 1985, service charges