When things fail, it’s always an unpleasant surprise. That’s why it pays to be prepared in order to avoid being stuck with further problems. Legal Director, Phil Parkinson & Associate, Katie Edwards of JB Leitch explain.

In the context of this issue’s focus on lifts, lighting and gating, JB Leitch’s Legal Director Phil Parkinson & Associate Katie Edwards reflect on the responsibilities and options for landlords and managing agents when communal services or facilities fail and urgent action may be needed to restore access or egress from a property.

Background:

Commonly, service charges will allow a landlord to recover the costs of providing services such as maintenance under the lease – typically including repairs, maintenance and possibly improvements to communal areas or the building structure. Lighting, lift maintenance and other electrical or mechanical equipment maintenance such as security gates are common elements of service charge alongside the general running costs, specific to each property.

The service charge covenants may factor repairs and maintenance, from lift insurance to fire equipment maintenance for example.

In the instance of unforeseen or emergency matters such as a lift getting stuck, or a gate remaining locked, there are various points to consider.

Additionally, continual breakdowns of electrical facilities at a high cost may result in long term solutions including replacement and improvements being required.

Point for Landlords and Managing Agents to Consider:

Urgency

In the event of urgent or unforeseen costly repairs being needed, which require compliance with all or part of the lengthy three stage consultation requirements that would be required under Section 20 of the Landlord and Tenant Act 1985 (“LTA”) an application could be made to the First-tier Tribunal (FTT) for dispensation which effectively dispenses with the need to consult, resulting in the works commencing without delay.

Specifically “Section 20” stipulates that landlords need to consult the leaseholders before carrying out major works which will cost any individual leaseholder more than £250 in any annual period. If consultation is not undertaken the landlord cannot recover more than a capped amount of £250 from each leaseholder towards the cost of the works as recoverable via the service charge – unless the FTT dispense with consultation, when the leaseholders will be obliged to meet the full costs of the works, on top of the service charge obligations set out in the lease. It is fundamental that dispensation is obtained in the absence of consultation to ensure that the service charges are not capped to £250 per leaseholder when dealing with urgent works, especially where there is an identified health and safety risk.

Reasonable Response Times

What is deemed a reasonable time to enact the repair will vary – weighted, for example, by factors such as the immediacy of a hazard to health and safety. In relation to the points above, it is worth noting that applications for dispensation to the FTT can also be made retrospectively according to the urgency of the matter at hand. Secondly, it is advisable that the incident response / call out times of contracted suppliers such as lift engineers should be explicitly set out and agreed from the point of procurement.

Preventative Measures

Developing a planned preventative maintenance (PPM) schedule may also be considered beneficial, particularly as it can ultimately prove more cost effective to schedule planned maintenance activities than having to bear the costs of reactive works that could have been easily mitigated. A detailed schedule will also allow property managers to minimise disruption by providing tenants with ample notice for planned works and operationally, provide a detailed plan that meets all statutory health and safety obligations – and that secondly, provides a visible assurance for residents.  Such a plan will also provide a reference framework for any agreed sinking or reserve fund with the service charge. 

Upgrades and Improvements

In some cases, electrical items can breakdown on numerous occasions and continual one off repairs may not be cost effective, for example an old lift may no longer be efficient and reliable. A long term solution may be required, such as an upgrade to the lift shaft and cars, which ultimately may be more cost effective and an investment to the building resulting in an overall service charge saving. Despite the benefit that an upgrade may give, the leases which govern the service charge may not provide for improvements and/or renewal of services. Where improvements are desired and are adequately provided for within the lease, many disputes turn on whether patch repairs or ongoing maintenance are more reasonable in the circumstances. Another example of improvements is altering the communal lighting to more cost effective LED lighting that may be sensor monitored, resulting in less energy consumption and ultimately providing a saving to leaseholders.

An application under section 27A LTA to the FTT can assist in providing clarity in respect of whether the costs of the improvements and/or renewal of the facility are payable and reasonable. The FTT will weigh up the evidence and an analysis will need to be made in respect of whether the benefit of the improvements are reasonable in the circumstances.

Clarity & Managing Expectations

In summary, and as in many cases, the key point is to comprehensively understand what is in the lease. 

Landlords and managing agents should have a robust and clear understanding of their obligations, and in relation to lifts and gates and lighting, what specifically is contained pertaining to repairs, maintenance and improvements. 

In balance, leaseholders should also apply sufficient diligence prior to agreeing and signing the terms of the lease, as this represents the contractual requirement to meet the service charge, what is in or out of scope and what additional costs and liabilities may potentially be incurred.