As a residential or commercial landlord, it’s almost inevitable that at some point you’ll have to spend money on a leasehold property. However you should be aware of the importance of reviewing all the factors before carrying out improvement works.
When a landlord of a leasehold property carries out works – either to comply with their obligations or for general improvement – costing more than £250, it’s reassuring to know they should be able to recover that cost from their tenants, but they must comply with the relevant legislation.
Section 20 of the Landlord & Tenant Act 1985, as amended by the Commonhold & Leasehold Reform Act 2002, gives leaseholders the opportunity to inspect and make observations on the proposed works, the cost and the proposed contractors. If this procedure is not followed the landlord will be unable to recover more than £250 from each leaseholder. Tenants also have the ability, under Section 19 of the Landlord and Tenant Act 1985, to apply for a determination as to the reasonableness of service charge demands. This is something landlords need to bear in mind.
Unreasonable costs of improvement works
The Court of Appeal case of The London Borough of Hounslow v Waaler (2017) should be compulsory reading for any commercial or residential landlords looking to carry out improvement works. This is partly because of the distinction drawn between obligatory repair works and discretionary improvements, but more importantly because of the factors – put forward by the Upper Tribunal and approved by the Court of Appeal – which landlords need to take into account when carrying out improvement works.