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Under the Landlord and Tenant Act 1985, landlords must consult with their tenants before undertaking certain works at their property or entering into certain long-term agreements.
Qualifying works is the term used to define major works to a building or other premises. The legal definition is intentionally broad and is intended to encompass a range of items that are often included in service charge costs. Qualifying works can range from day-to-day repairs and planned maintenance to major improvement works.
A Qualifying Long-Term Agreement (‘QLTA’) is defined in the Act as an agreement entered (by or on behalf of the landlord) for a term of more than 12 months. If an agreement is fixed for 12 months or less, then it is not captured by the definition and therefore may not be subject to the consultation procedure. If an agreement takes the form of a 12 month ‘rolling’ contract, however, it may very well be caught by the consultation procedure.
Prior to incurring the significant costs associated with major works and QLTAs, a landlord is required to consult with its tenants and observe a strict consultation procedure. The purpose of the consultation procedure is to include tenants in their landlord’s proposals and to afford real protection that the costs (which the landlord will seek to recover from its tenants via the service charge provided the lease permits recovery) are reasonable and reasonably incurred.
The consultation requirements are triggered when:
Depending on the nature of the landlord and the proposed contract, there are 5 different types of procedure which may apply. There are various stages which must be followed within each procedure, including the service of notices and the collection of estimates (to list a few).
If a landlord fails to comply with the consultation requirements, it may be unable to recover the costs of the works or the QLTA from its tenants. Unless the Tribunal determines that the landlord may dispense with the consultation requirements, the maximum recoverable from the tenants is:
There is no exception to the consultation requirements. However, if urgent works are required, the landlord may apply to the First Tier Tribunal (the ‘FTT’) for dispensation. The landlord may also carry out the necessary works then retrospectively apply to the FTT for the dispensation.
In considering whether to grant dispensation, the FTT will consider whether the tenants are protected from paying forinappropriate works or paying more than is appropriate. It must also ensure that the tenants have not been prejudiced by the landlord’s failure to consult.
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