In residential property management, the major works consultation requirements kick in if any set of ‘qualifying works’ will cost a leaseholder more than £250. Brady Solicitors explain the circumstances in which you can apply for dispensation from the consultation requirements.
The major works Section 20 consultation process exists to protect leaseholders by giving them involvement in the works carried out at their development, and a say in how their money is spent.
It also gives management companies and managing agents the confidence that they can recover the cost of these works through the service charge.
Major works consultations: a quick reminder
Section 20 of the Landlord and Tenant Act 1985 states that, where leaseholders will be asked to pay more than £250 towards the cost of a set of works, or more than £100 for service contracts lasting longer than 12 months (known as Qualifying Long Term Agreements), then the Section 20 consultation procedure must be followed.
Read the Brady Solicitors Guide to the Section 20 Major Works Notices
Failure to carry out a Section 20 consultation – or even a small procedural error – will mean that every tenants’ contribution is capped at either £250 or £100, as set out above.
This can lead to a significant shortfall which the freeholder – or the management company if they own the freehold – will have to bear.
When can you apply for dispensation from consultation?
In certain circumstances, an application can be made to the First-tier Tribunal to dispense with these consultation requirements.
These circumstances are:
- Where the works are so urgent that there is no time to consult; or
- Where a mistake has been made during the consultation process.
A disregard of the consultation procedures for non-urgent works will not be eligible for an application to the Tribunal!
How does the Tribunal decide whether to grant dispensation?
The only factor that is relevant in deciding whether or not to grant dispensation from consultation is the financial prejudice suffered by the leaseholders. In other words, their financial loss from the lack of consultation.
This was confirmed in the Daejan case. In the case the judge also ruled that it is the leaseholder’s responsibility to show these losses.
What happens once you have secured dispensation from consultation?
If your application to the FTT is successful, you should note that the Tribunal can attach any conditions it sees fit. This is often an order to pay legal costs incurred by the leaseholders, but it can include any other relevant factors at the Tribunal’s discretion.
Got a question? Contact the Brady Solicitors specialist major works team to find out how we can help you.