The High Court has confirmed that residential landlords need to take a genuine approach to improvement works if they hope to pass costs on to their tenants. The court held that qualifying works under the Landlord and Tenant Act 1985 must be considered as a whole when seeking recovery of the cost of the works from tenants via the service charge. The decision makes it clear that:
- There is no longer any scope for the works to be identified as different “sets of qualifying works”.
- The assessment of works that fall beneath a “triviality threshold” is no longer a means of removing those works from the overall calculation of costs.
- All of the qualifying works must be brought together to calculate the overall contribution before applying the current limit of £250 per tenant.
Landlords must also comply with the proper consultation process and view the qualifying works as a whole or run the risk of being unable to recover any amounts that exceed the current consultation limit of £250 per tenant. There is no longer any scope for separating the qualifying works into “sets of works” nor treating some work as falling below a triviality threshold and being recoverable separately.
This checklist explains what a service charge is, when consultation is required, what the penalties are for failing to comply with the consultation requirements and what the time limits are for making service charge demands.