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Residential service charges and the duty to consult

residential service charges and the duty to consult

6 March 2013

The Supreme Court has granted a landlord dispensation from the service charge consultation requirements (the ‘Requirements’) contained in the Landlord and Tenant Act 1985.

Under this Act, unless dispensation is granted, a residential landlord who fails to comply with the Requirements cannot recover more than £250 from each tenant. In this case, although the cost of the works was £280,000, the landlord could not have recovered more than £1,250 (five tenants paying £250).

The landlord’s failure was that it only provided the tenants with a priced specification for one of the two tenders it obtained. The Supreme Court dispensed with the Requirements and reduced the tenants’ liability by just £50,000. Its reasoning was that the landlord’s failure to comply caused no significant prejudice to the tenants (they just lost the chance to make a case for proceeding with the other tender).

This surprising decision seems to “drive a coach and horses” through the statutory service charge protection available to residential tenants.

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