Frequently Asked Questions

What are obligations of landlords under Section 20 of the Landlord and Tenant Act 1985, which stipulates that leaseholders must be consulted for major works or long-term agreements?

BDW Trading Ltd v South Anglia Housing: Section 20 Consultation

Summary

The case of BDW Trading Ltd v South Anglia Housing is about obligations of landlords under Section 20 of the Landlord and Tenant Act 1985, which stipulates that leaseholders must be consulted for major works or long-term agreements. This case outlines the extent of these consultation requirements and the implications of failing to do so. It emphasizes the requirement that landlords must strictly follow consultation procedures if they are to recover the full cost of major works from leaseholders.

Facts

BDW Trading Ltd (BDW) owned a freehold property and South Anglia Housing was a leaseholder. South Anglia Housing was a social housing landlord that was managing the property and wanted to do major works to the property which would incur a large expense. By Section 20 of the Landlord and Tenant Act 1985, South Anglia had a contractual requirement to consult with leaseholders before the commencement of any qualifying works or maintenance that would be chargeable to leaseholders.

South Anglia did not complete the consultation process by section 20 and without doing so claimed that some of the works were urgent and necessary, so they ploughed on with them and applied for the S20 Landlord and Tenant Act 1985. They carried out the works and sought to recover the same from the leaseholder. The cost was disputed by BDW, which represented the interest of the leaseholder, arguing that since they had failed to properly carry out the consultation, then the cost was unrecoverable.

Issues

The main issues elicited with this case are:

1. Whether South Anglia had fulfilled the consultation requirement pursuant to Section 20 of the Landlord and Tenant Act 1985.

2. Whether the failure to comply with those requirements impacted on the recoverability of the costs of the qualifying works.

3. The construction of the "urgency" provisions and the application of the dispensation from consultation. First Instance

BDW submitted to the First-tier Tribunal that South Anglia had not complied with all the necessary procedures under the law for consultation, which included giving leaseholders notice of the proposed works and giving them an estimate, and regarding such observations or alternative proposals as may be submitted by the leaseholders from the notice. South Anglia contends that the urgency of the works excuses its failing to comply with the requirements of the consultation.

The First–tier Tribunal determined that BDW's application was effective and that South Anglia had not performed the demands of section 20 consultation. The Tribunal also determined that the purported urgency could not be relied on as a reason to sidestep, legislated process—that is, South Anglia could not recover the full offer value from the leaseholders.

Decision on Appeal

South Anglia's appeal went to the Upper Tribunal (Lands Chamber), which found the First-tier Tribunal's decision to be liable to criticisms that it had wrongly applied the urgency provision, consultation duty, and that it erred in law in finding that the case law on the application of the reasoning in the Bingham and Walton case to permit a raft of authorities to be disregarded amounted to a de minimise failure of consultation. The Upper Tribunal looked into the appeal with the central issue being whether an urgency provision.

The Upper Tribunal thus dismissed the appeal and confirmed that the First-tier Tribunal was right to decide that, unless there was an imminent risk either to the property or to the health and safety of the persons residing at the property, in which event consultation might be dispensed with, strict compliance with the consultation requirements of Section 20 was required. The Upper Tribunal concluded that South Anglia had not established any such urgency and therefore failed to meet the statutory threshold.

Comments

The judgment delivered in BDW Trading Ltd v South Anglia Housing exposed many critical features regarding the Section 20 consultation process and its imperative nature in protecting the rights of leaseholders. Salient features from this case are given below:

1. Strict Compliance with Consultation Requirements: The judgment drives the point home that landlords must observe the consultation regime under Section 20 literally. The requirement itself necessitates the giving of information with regard to works, obtaining estimates, and affording leaseholders a chance to make their own observations or comments with regard to repairs.

2. Limited Scope for Urgency Exceptions: The ruling clarifies that urgency procedures may only be applied in conditions of real and immediate danger. Nowhere does it state that the clause allows landlords to flout consultation in order to save themselves the bother or because they are running out of time.

3. Protection for Leaseholders: Section 20 intends to protect the leaseholders from any unforeseen cost, which, in actuality, can hit the leaseholders' pockets quite hard. This case stresses the need at hand to make these protections effective in actuality and also brings in transparency and accountability in the scheme.

4. Consequences of Non-Compliance: The judgment shows that non-compliance can end up as a very costly exercise for landlords and an exercise in which the recovery of substantial costs from leaseholders - where they are recoverable—can be put at risk.

5. Guidance in Future Cases: Will go a long way in giving guidance for landlords and legal practitioners in the interpretation and application o Sec 20. can also provide guidance in relation to cases, in the future, which are concerned with consultation requirements, and whether or not recoverable.

In conclusion, BDW Trading Ltd v South Anglia Housing is one of the key cases that provides an explanation of the duties and powers of landlords under Section 20 of the Landlord and Tenant Act 1985. It zeroes in on ensuring landlords have clear and very detailed engagement with their leaseholders prior to entering serious works, something that will then put them on the safe footing of meeting statutory demands in the recovery of costs effectively.

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