Lawbite: take note of consultation responsibilities

• United Kingdom

• Real estate
• Real estate dispute resolution

25-08-2016

Leaseholders of Foundling Court and O'Donnell Court v The Mayor and Burgesses of the London Borough of Camden and others [2016] UKUT 366 (LC), the Upper Tribunal (Lands Chamber)

The Upper Tribunal (Lands Chamber) has clarified that superior landlords of residential premises must consult with subtenants as well as with their immediate tenant when intending to carry out qualifying works or enter into a qualifying long term agreement which trigger the consultation requirements under section 20 of the Landlord and Tenant Act 1985 (“LTA 1985”) and the Schedules to the Service Charge (Consultation Requirements) (England) Regulations 2003 (“2003 Regulations”).

The LTA 1985 and the 2003 Regulations require “the landlord” to consult by way of notification sent to “each tenant”.  Prior to this case, it was not entirely clear whether the requirement fell on the superior landlord who had the intention to carry out the works or the intermediate landlord who was entitled to pass the cost onto the subtenants, or both.  Further, it was unclear whether the requirement to consult with each tenant applied only to the head tenant or, also, the subtenants with whom no direct landlord and tenant relationship existed.    

In this case, concerning the mixed use Brunswick Centre in London, WC1, the superior landlord consulted with its tenant only before carrying out major works in 2005 and 2006. 

The Upper Tribunal held that the intermediate tenant and the subtenants (who ultimately were responsible for paying the service charge) should have been consulted and that it was for the superior landlord as the entity with the intention to carry out the qualifying works to have carried out the consultation.  

Key points

• A common sense decision which reflects the purpose of the LTA 1985 being to give a degree of control and protection to those who are paying the service charge and ultimately receiving the benefit of the services – even where there is no direct relationship of landlord and tenant.
• Landlords should take note as failure to comply with consultation requirements could severely limit their ability to pass on costs to tenants unless the FTT agrees that the consultation requirements can be dispensed with. 
• What if superior landlords do not have sight of the terms of the subleases to know whether the consultation requirement are triggered, or where the identity of the subtenants are unknown to it?  The Upper Tribunal was clear that such potential difficulties should not dominate the interpretation of the section 20 requirements.  It was suggested that a notice addressed to “the leaseholders” at each property could suffice.  Alternatively, superior landlords should seek out the information from their tenant.