Landlords need not consult on leaseholder charges under £250

According to CIH:

The case, Phillips v Francis, overruled a decision in the High Court that required landlords to conduct formal consultations if the cost of works exceeded £250 during the year – a ruling that experts called ‘almost unworkable’ as landlords could not be expected to predict service charges in advance.

Landlords were faced with a situation where, if unexpected repairs were required, they would either be in breach of repairing covenants if they did not carry out repairs, or liable for the costs themselves as they had not consulted before making the repairs.

Responding to the ruling, Lauren Fraser, a solicitor at Speechly Bircham, said: ‘Today’s Court of Appeal judgment means that landlords and residential management companies can finally breathe a sigh of relief regarding their duties to consult leaseholders before undertaking building and maintenance works.’

The Court of Appeal judgement, handed down on Friday, makes clear that landlords will not have to consult leaseholders for a set of works which cumulatively cost over £250, but only for individual projects that exceed the threshold.

There was uncertainty among landlords over the outcome of the case, which has been ongoing for around 18 months.

In Phillips v Francis the landlords, Mr and Mrs Francis, purchased a 25-acre holiday site in Cornwall with 150 chalets and conducted site improvement works which saw the service charge cost rise from £1,478 to £3,117 from 2008 to 2009.

Douglas Rhodes, a property litigation solicitor at Trowers & Hamlins, said: ‘The High Court ruling [if not overruled] would have been administratively unworkable and could have forced delays to necessary but routine maintenance work, which would have caused issues for both landlords and tenants.

‘Ultimately,z today’s judgment restores common sense to the approach as to what constitutes “qualifying works” to which the £250 consultation limit applies.’