Service Charge: Whether a Landlord Had Conducted Adequate Statutory Consultation with Leaseholders (Ambercrown Ltd v Perrett and another – 2024)

Where a landlord proposed to undertake major works, did it conduct a consultation procedure sufficient to satisfy the requirements of s.20 of the Landlord and Tenant Act 1985?

The background

In Ambercrown Ltd v Perrett and another [2024], the landlord undertook works to the roof of the subject property and sought to recover the costs of such works through the service charge. Each leaseholder would be liable for a sum exceeding £250, and the statutory consultation requirements of s.20 Landlord and Tenant Act 1985 applied.

The First-tier Tribunal found that the landlord had not conducted adequate consultation with leaseholders, ordering that the landlord was only able to recover £250 from each leaseholder. The landlord appealed.

The decision

The Upper Tribunal set aside the FTT’s decision, finding that the FTT had not given reasons to support its finding that the landlord had not undertaken sufficient consultation.

The landlord had argued that it had undertaken consultation in 2019 and 2020, and the UT concluded that the FTT had not considered the landlord’s case, nor explained why these consultations did not meet statutory requirements. The leaseholders had admitted the charges in question, but the UT did not have jurisdiction to determine payability of those charges. As a result, payments made by leaseholders did not have to be reimbursed.

Advice and action for landlords

This decision, albeit determined in the landlord’s favour, is nevertheless a timely reminder that landlords must wholly follow the statutory consultation procedure for comfort that the requirements of s.20 are met.

Appropriate legal advice at the outset ensures the statutory procedure is followed, negating the possibility of expensive litigation later on should the consultation procedure be questioned at Tribunal.

The Ambercrown decision is reassuring however, concluding that the FTT’s failure to explain its reasoning was sufficient to set aside its findings.