The specialist building safety team at JB Leitch provide an overview of the relationship between the process for undertaking major works and the new building safety regime…
As readers will no doubt be aware, the main legislation relating to building major works is Section 20 of the Landlord and Tenant Act 1985. Section 20 provides that, in relation to any “qualifying works” (often referred to as major works) or “qualifying long term agreement”, the relevant service charge contributions of leaseholder tenants will be limited unless the consultation requirements have either been complied with or dispensed with by the First-tier Tribunal.
Qualifying works (or major works) are defined in Section 20ZA of the Act as meaning works on a building or any other premises. Qualifying Long Term agreements are agreements entered into by or on behalf of the landlord, for a term exceeding twelve months.
The Act requires landlords to ‘consult’ with leaseholders before carrying out any major works that would cost any leaseholder at the development more than £250 via their service charge contribution (as set out in Regulation 6 of The Service Charges (Consultation Requirements) (England) Regulations 2003).
The consultation process is set out in The Service Charges (Consultation Requirements) (England) Regulations 2003, specifically in relation to major works, as follows:
Firstly, a landlord must give notice in writing to all leaseholders, and any recognised tenant’s association, of its intention to carry out the qualifying works. This is known as a notice of intention. A notice of intention must describe the works proposed in general terms or specify the place and hours during which a description of the works may be inspected, confirm the reasons why the works are necessary to carry out and invite any leaseholder observations in relation to the proposed works. A notice of intention must also invite the leaseholders to propose, within the relevant period (30 days) the name of a contractor from whom the landlord should try to obtain a quote from.
A landlord must have due regard to any observations received and must attempt to obtain a quote from any contractors nominated by leaseholders within the relevant period.
Secondly, a landlord is to send a statement of estimates to all leaseholders and any recognised tenant’s association detailing at least two of the estimates received (ensuring that at least one is a company wholly unconnected to the landlord and that any estimates received from tenant nominated contractors are included), a summary of the observations received and the landlord’s responses to those observations. A statement of estimates must make all estimates obtained available for inspection and must again, invite leaseholders to make any written observations within a relevant period. A landlord must have due regard to any observations received.
Finally, if a landlord intends to enter into a contract in respect of major works it must send a final notice, unless it is proceeding with a leaseholder nominated contractor or the cheapest estimate.
A notice of award of contract must be sent within 21 days of any contract being entered into and should include the landlord’s reasons for awarding the contract to the specified contractor together with a summary of any observations received in relation to the estimates and the landlord’s responses to them.
It is not always possible for landlords to complete the consultation process for various reasons, in which case it should make an application to the First-tier Tribunal under section 20ZA Landlord and Tenant Act 1985 for dispensation of those requirements.
In order for the First-tier Tribunal to make an order for dispensation, it will consider whether it is reasonable to do so and primarily, whether the leaseholders have suffered relevant (financial) prejudice as a result of the landlord’s failure to consult.
There is an interesting relationship between the legislation governing major works, The Building Safety Act 2022 and the new building safety regime.
- Generally, and for obvious reasons, there is a governmental expectation that fire safety remediation works (which are likely to constitute relevant measures in relation to relevant defects, in accordance with the definitions provided in the Building Safety Act 2022) are to be carried out swiftly. Such works are likely to be major works given their value. In some circumstances, the landlord’s ability to complete the consultation process can be affected.
- Schedule 8 of the Building Safety Act 2022 provides protections for leaseholders in relation to the costs of relevant measures in relation to relevant defects. For example, paragraph 8 of Schedule 8 states that no service charge is payable under a qualifying lease in respect of cladding remediation. Works to remediate flammable cladding will most likely constitute major works and would ordinarily be subject to the consultation process to prevent limitation of the sums payable by the leaseholders via their service charge contributions. However, in relation to cladding works, it is necessary for landlords to carry out the process described in The Building Safety (Leasehold Protections) (Information etc.) (England) Regulations 2022 to ascertain which of the leaseholders own qualifying leases. If it is the case that all leaseholders own qualifying leases, none of the costs in relation to cladding remediation is payable via the service charge and consultation becomes redundant.
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