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When is a Year More Than a Year?

PLEASE NOTE: Information in this article is correct at the time of publication, please contact DFA Law for current advice on older articles.

When a landlord appointed agents to manage properties in London, it did so under an agreement for 12 months, which was specified to continue on a yearly basis until terminated by either party giving the required notice.

The landlord failed, however, to give notice of the arrangement to the tenants. When a tenant fell into arrears, the landlord sought to take action to recover the amount outstanding. This included the tenant’s contribution towards the costs of the managing agents, which were part of the tenants’ obligations.

An argument arose over whether the tenant was liable for the sum charged for the management fees: under Section 20ZA of the Landlord and Tenant Act 1985, a landlord is required to give notice to the tenants if it enters into ‘a qualifying long term agreement’ (QLTA), which is an agreement lasting more than 12 months. Where this is not complied with, the fees are capped at £100 per annum per tenant. A similar section caps each tenant’s liability at £250 in respect of works if appropriate notice is not given.

The landlord claimed that the agreement with the agents was not a QLTA because it was fixed at 12 months. The argument was appealed all the way to the Court of Appeal, which ruled that the arrangement was a QLTA, because the term set out was a year plus an indeterminate additional amount.

Richard Forskitt says “This illustrates two points. Firstly, loose wording in agreements can cause major issues and, secondly, failure to comply with statutory requirements is a big mistake. It is always better to be safe than sorry.”

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