Leasehold Matters

Section 20 Consultation where works are being carried out by a superior landlord

Mary Martil, Partner, Housing Management Department

31 August 2016

In many developments, especially in mixed use schemes, the social landlord is “piggy–in-the-middle”. It has been granted a long lease of a block, or part of a block, by a head landlord. In turn, it has granted sub leases of individual flats, often on a shared ownership basis.

Under the head lease, the social landlord will be obliged to pay a service charge to the head landlord, in respect of services to the estate. Under the service charge provisions of the sub leases, the social landlord passes the costs on to its residents.

What if the head landlord proposes to carry out qualifying works to the estate or intends to enter into a qualifying long term agreement? Who must be consulted under the regulations and by whom must they be consulted?

It used to be argued that the head landlord does not need to consult the social landlord on the basis that the social landlord is not “a tenant of a dwelling”. That argument was quashed by the Court of Appeal in Oakfern Properties Limited v. Ruddy [2006] EWCA Civ 1389. It established that even though the social landlord’s lease encompasses multiple flats and common parts of a building, the consultation requirements still apply.

What about the social landlord’s sub lessees? It has often been assumed that there is no need to consult them, or that the social landlord should deal with the matter by passing the consultation papers on to them. In Leaseholders of Foundling Court and O’Donnell Court v. LB Camden & Allied London (Brunswick) Limited & Others [2016] UKUT 366 (LC), the Deputy President of the Upper Tribunal has provided a definitive answer.

This recent case makes it clear that:

  1. Each individual sub lessee must also be consulted.
  2. That consultation must be carried out by the head landlord.
  3. The head landlord should do its best to overcome the practical difficulties e.g. by liaising with the social landlord beforehand to establish the identity of the sub lessees, or by serving notices addressed to ‘The Leaseholder’.
  4. If the head landlord cannot, or has not, complied with the consultation requirements, it should consider applying to the First Tier Tribunal for a dispensation.

 

Contact:
Mary Martil
020 8768 7032

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