Lauren Fernandes | Associate
Litigation & Dispute Resolution | Bishop & Sewell
Disputes between landlords and leaseholders are a common feature of the leasehold system of England & Wales. Many disputes arise from misunderstandings, poor communication, or a failure to follow correct legal procedures.
Below, you will find examples of some of the most common areas of conflict between landlords and leaseholders of residential properties and some practical measures which can help resolve disputes between the parties.
Service charges
A major source of contention between landlords (sometimes via their agent) and leaseholders is transparency over service charges.
The list of services provided by the landlords and the leaseholder’s obligations to pay these charges should be set out in the lease. Service charges must be properly demanded to be due, should be reasonable and ought to relate to works / services carried out to a reasonable standard and which are permitted under the terms of the lease.
You may be familiar with the term ‘section 20’ works. This refers to ‘major works’ which the landlord intends to carry out to the building and which will cost each individual leaseholder £250 or more. The landlord must follow a compulsory consultation process under section 20 of the Landlord and Tenant Act 1985 before commencing major works. If the landlord does not follow this process, they risk only being able to recover a maximum of £250 per leaseholder for the works. Leaseholders should actively engage with the consultation process and attempt to raise any concerns with major works as early as possible. This is a consultation process and it is not for leaseholders to agree or not agree to the works. Contributions towards major works may be recoverable from a ‘sinking’ or ‘reserve’ fund which leaseholders pay into and / or from additional service charges.
Complaints often arise where leaseholders believe service charges are unreasonable or poorly explained. Where the service charge is a variable charge (i.e. not fixed) leaseholders can apply to the First-tier Tribunal (Property Chamber) to determine whether the charges are reasonable and how much is payable.
Where a leaseholder has concerns about service charges, they may wish to consider paying them under protest. This requires the leaseholder to communicate to the landlord / managing agent that payment has been made but it is made under protest. This reserves the leaseholder’s right to challenge the sums paid in court or the tribunal.
If sums remain unpaid, landlords can issue court proceedings to recover unpaid service charges from leaseholders.
Court and tribunal proceedings can be complicated and it is recommended that expert legal advice is sought as early as possible.
Repairs and maintenance
It is common for leases to place an obligation on a landlord (or a management company if appointed) to repair and maintain the exterior, structure and common parts of a building whereas leaseholders are often responsible for repairs and maintenance to the internal parts of their flat.
However, the terms of each lease should be carefully considered before repairs and maintenance are carried out by either party as the allocation of responsibilities is sometimes unclear. For example, there are certain items, such as windows, pipes and balconies which may fall into a “grey area” where it is more difficult to establish which party is responsible for repairs and maintenance.
Once responsibility has been established, complaints often arise over a failure or delay to carry out certain works. For example, leaseholders may argue that their landlord has failed to carry out repairs which has caused existing damage to escalate. Sometimes, disputes arise over the standard of repairs / maintenance carried out.
Where a party is uncertain as to its responsibilities or feels that a party has not complied with its repair and maintenance obligations, legal advice should be sought to interpret the terms of the lease.
Alterations
Sometimes, a leaseholder may be able to carry out certain internal alterations to their flat if permitted under the terms of their lease but with restrictions and usually with the landlord’s consent. Landlords should properly consider a leaseholder’s request for alterations whilst balancing their interest in protecting the structure and value of a building. Disputes often arise when a leaseholder carries out works without consent or when a landlord unreasonably withholds consent to a leaseholder’s request to carry out works.
The terms of each lease should be carefully considered to understand what works a leaseholder may be entitled to carry out. Leaseholders should request consent if required under the terms of their lease. They have the right to challenge a landlord’s refusal or delay in giving consent to the works, particularly if the lease states that a landlord’s consent should not be unreasonably withheld.
Landlords may seek to charge an administration fee for providing consent and entering into a licence to alter with the leaseholder. Landlords should be aware that the charges should be “reasonable” and leaseholders have a right to challenge excessive fees.
Where disputes arise over alterations, negotiation or mediation can often resolve issues at an early stage. However, if the landlord’s consent is delayed or withheld, leaseholders can apply to the court for a declaration that consent has been unreasonably withheld and that the works can be carried out. A landlord may be able to apply to the court for an order that works must cease and / or that a leaseholder must reinstate their flat if works have proceeded without consent.
Leases can be complex and parties can have differing views on the interpretation of a clause. It is therefore recommended that expert legal advice is sought on any of the matters set out in this article.
Landlords, managing agents and leaseholders should also keep abreast of ongoing changes to leasehold reform. Whilst current legislation and tribunal / court proceedings provide methods for resolving disputes, it is expected that leasehold reform will significantly impact how the issues set out in this article are managed and resolved.
Lauren Fernandes is an Associate Solicitor in Bishop & Sewell’s Litigation & Dispute Resolution team.
Email: [email protected] | Tel: +44 (0)207 631 4141
