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Landlord ‘didn’t have to consult tenants again’ over service charges

Landlords must consult tenants over service charges for work carried out on their homes but how far does that obligation go?

The Court of Appeal provided a useful insight in a recent case involving property company Reedbase Ltd and some of its tenants.

An asphalt roof needed to be repaired, which involved removing tiles.

Some of the tiles were in poor condition and the landlord proposed to replace them all. It consulted all the tenants by circulating the proposals and estimates for the work.

Complications arose, which led to the landlord agreeing to more expensive tiles than those in its original proposal. This increased the cost of the works by 6%. The cost of the works was added to the service charge paid by all tenants.

The tenants submitted that the landlord had breached the Service Charges (Consultation Requirements) (England) Regulations 2003 by not repeating part of the consultation when the proposals concerning the tiles changed.

The Court of Appeal ruled in favour of the landlord. It held that the relevant test for deciding whether a stage of the consultation should be repeated was whether the tenants had been given sufficient information by the first set of estimates. The estimates had not included the additional cost of the tiles or the system for fixing them, but that single factor was not a material change.

The tenants knew about the change in the works and had approved it, without contending at the time that there should be a fresh tender.

The change in cost was relatively small in proportion to the full cost of the works and it was unrealistic to think that contractors who had not obtained the contract would be likely to tender for the small part of fixing the tiles.

There was no evidence that there would have been any cost saving and re-tendering would have caused delay which might have prejudiced other tenants.

Please contact us if you would like more information about the issues raised in this article or any aspect of commercial property law.

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