Longer red tape for landlords
If you manage a block with residential tenants, make a note that your next service charge consultation might be much more complicated. Following a tribunal decision, landlords must now consult with all residential leaseholders, even sub-tenants with whom they have no relationship.
Who consults with whom?
Landlords are required to consult with residential tenants before carrying out certain works or entering into certain long term agreements.
But, where there is a head lease and residential sub-leases, does a superior landlord have to consult only its direct head tenant, or all the residential sub-tenants? That is the question that came up for the tribunal in Leaseholders of Foundling Court and O'Donnell Court v London Borough of Camden and Others.
The freeholder had carried out works that fell within the consultation regime. It had consulted beforehand, but only with its head tenant, the London Borough of Camden. Camden had in turn sent copies of the consultation notice to the residential leaseholders. The tribunal held that the freeholder should have consulted all the tenants direct. Failure to do so means the service charge cannot be recovered in full.
What this means
This is an impractical outcome for landlords. How should they consult with tenants whose details they may not have, and where they may not know the terms of the sub-leases? The head tenant may co-operate and provide information (leaving aside concerns about data protection) but what if they don't? The leases might not all be registered and so the freeholder's information might be very limited.
The tribunal's solution is for landlords to serve notices at each of the flats. Presumably landlords should also check the Land Registry records that are available and serve at the registered proprietor's address if different. Other steps are likely to be advisable to make sure that the freeholder can make a full recovery.
Either way, the burden on landlords just got heavier.