Nicholas Faulkner of Stiles Harold Williams: Phillips v Francis – New Section 20 Procedural Guidance
A recent High Court case has changed the historic interpretation of when s20 consultation is required for major works costing in excess of £250 for any single leaseholder. The Court’s decision has far reaching effects upon the way properties are to be managed and upon the consultation process to be followed. Leasehold Life is very pleased to publish a procedural practice guide by new guest contributor Nicholas A. Faulkner BSc (Hons) FRICS MIRPM, Head of New Developments at independent property advisory company Stiles Harold Williams.
Failure to adopt a new fuller consultation process in the future will mean a possible inability to collect more than £250 per leaseholder towards all annual repairing and maintenance costs. Qualifying works now appear to include any day to day repairs and maintenance, as well as major, one off items. Qualifying Works do not include repeat services such as gardening and cleaning.
In effect, if the aggregate of qualifying works in a year adds up to more than the level of £250 for any single leaseholder, then a full s20 consultation should occur before that threshold level of expenditure is exceeded. Leaseholders have the right to nominate different contractors and Landlords must obtain quotations from them for such diverse elements of work as lift maintenance, fence repairs and roof works.
In order to safeguard the Landlord’s position (whether they are third party or Resident Management Company) the following procedure is suggested:-
- At the start of the new financial year, Notices of Intention can be served to cover the generality of repairs and maintenance as well as any proposed major works.
- Thirty Five days after the start of the new financial year, the second Notice can be served, which will be based upon a schedule of hourly rates for all service suppliers to each managed property.
- Further second Notices for any major works that are proposed can be served at the appropriate time during the financial year (as would previously have been the case).
- All leaseholders can be notified that, where a maintenance contract is already in place, whilst quotes from other suppliers nominated will be obtained to comply with the consultation requirements, costs associated with breach of any contract will need to be taken into account in assessing any placement of order.
- Where emergency work is required, correspondence can be sent to all leaseholders, confirming the urgency of the matter and, with their support, a s20za application for dispensation will be made to the Leasehold Valuation Tribunal.
This case has received widespread coverage in the professional press. ARMA has met with officials at the Department of Communities and Local Government and a legal advisor from LEASE, to underline the implications of this judgement in terms of the practicalities of managing leasehold properties. Unless or until this decision is overturned by a higher ruling from the Court of Appeal, any challenges to s20 consultation brought either through the County Court or through the Leasehold Valuation Tribunal will have to be bound by this interpretation of the required s20 consultation process.
The impact of this High Court decision is that it is no longer just any single item of major works above £250 per leaseholder that requires consultation, but an aggregate of all the repair works in each service charge year, irrespective of how many disparate trades and contracts are involved in the relevant service charge year.
For further information on this and the services offered by Stiles Harold Williams please contact Nicholas on:
T. 02392 290293
M. 07940 503377