Major works RESIDENTIAL LEASEHOLD EXPERTS
THE BASICS • Your Landlord has a duty to you and all Leaseholders in the property, to properly and continually maintain the fabric, structure and any other specified aspects of the Building / Estate, to an adequate standard in line with the terms of all Leases in place. • A good Landlord will run a Planned Preventative Maintenance Schedule (PPM) for each of their properties individually. • A good Landlord will operate a Reserve Fund / Contingency Fund which is basically a savings pot which every previous owner of the flat will have been paying into since the original Lease was granted. • When you buy a property you should enquire as to the value of the reserve fund. If there is no reserve fund in place then beware, this is usually a very good indicator of poor and haphazard management. • You should not have to pay towards years of neglectful management.
PLANNED PREVENTETIVE MAINTENANCE (PPM) The Planned Preventative Maintenance Scheme / Schedule is usually created in conjunction with Building Condition Surveys undertaken by a qualified Building Surveyor and Mechanical and Electrical Engineering Experts. This Scheme is basically the handbook for the ongoing health and planned maintenance of the Building / Estate. The PPM Schedule estimates in line with industry standards the life cycle of certain key elements of the property such as the roof, windows, lifts etc. This document is absolutely key to the standard levels of good management practice which every Leaseholder should expect and demand from their Landlord. If your Landlord does not operate a Planned Preventative Maintenance Scheme / Schedule then you should be very wary of their long term management skills. You are entitled to know what expenditure is coming, what options have been considered and how much the next round of works is going to cost.
RESERVE FUND / CONTINGENCY FUND The Reserve or Contingency Fund can be referred to by various names but they are all essentially the same thing. The fund is basically a pot of money which is accrued by the Landlord and held strictly in Trust in anticipation of Major Works / Expenditure. Several separate sections of the fund can be put in place contributing to specific items of future expenditure. Think of this fund as an insurance policy; where every previous owner of your flat has been paying into it during the course of their ownership. You will then do the same in anticipation of any project of works which is to cost a large amount of money. If for instance each flat had contributed £10,000 into the pot and a project of works becomes necessary costing £10,000 then you would not have to find your contribution as it would have already been accrued. Now consider the scenario where such a fund does not exist and the same bill needs to be paid for .......... If you are reading this guide we suspect you are already familiar with this concerning situation.
CONSULTATION – WHAT IS THE MINIMUM I SHOULD EXPECT? There are several consultation processes which should be applied in different circumstances. We will lay out and briefly explain the full Schedule 4 Part 2 Consultation requirements as they are the most common. The basic extracted stages of this consultation are as follows: • Notice of Intention • Regard to observations • Landlord to seek estimates • Notice of Estimate / Paragraph B Statement • Notice accompanying Paragraph B Statement • Regard to observations • Notification of reasons
NOTICE OF INTENTION 1 Notice of intention to carry out qualifying works is given to each Leaseholder and any recognised tenants' association RTA, as defined in Section 29, Landlord & Tenant Act 1985. The notice must describe in general terms the proposed works, or specify a place and hours where the description may be inspected. The notice must state the reasons for the works, and invite written observations, specifying where they should be sent, over what period (30 days from the notice), and the end date. Further, the notice must contain an invitation for nominations of persons from whom the manager should obtain estimates.
REGARD TO OBSERVATIONS 2 Where, within the relevant period (as specified but usually a minimum of 30 Days), observations are made, in relation to the proposed works by any tenant or recognised tenants’ association, the Landlord shall have regard to those observations.
LANDLORD TO SEEK ESTIMATES 3 The Landlord must seek estimates: i) from a single nominee of an Registered Tenant’s Association (RTA) (whether or not any are received from individual Leaseholders); • from a single nominee of only one Leaseholder (whether or not one is made by an RTA); • if single nominations are made by more than one Leaseholder (whether or not any are made by an RTA), the Landlord must seek an estimate from the person with most nominations, or, if there is no clear leader but there are two or more who tie for first place, from one of those. If the result is not even that clear (for example, there could be five nominees with one vote each), an estimate must be obtained from one of them. If multiple nominations are received from any Leaseholder and more than one from the RTA, the Landlord must request an estimate from at least one person nominated by a Leaseholder and at least one nominated by the RTA.
NOTICE OF ESTIMATE / PARAGRAPH B STATEMENT 4 The Landlord then issues a statement (free of charge) setting out the estimated cost from at least two of the estimates and a summary of the observations received and his responses to them. The statement is issued with a notice (see next section). At least one of the estimates shown in the statement must be from a person wholly unconnected with the Landlord. If any estimates were received from Leaseholders' nominees, they must be included in the statement. There is no need to attach copies of estimates; indeed, the regulations state that all the estimates must be made available for inspection. If the Landlord intends to attach copy estimates to help Leaseholders, he should also make it clear that they are all available for inspection.) The regulations call this the 'paragraph b statement'.
NOTICE ACCOMPANYING PARAGRAPH B STATEMENT 5 The statement must be sent out with a notice, detailing where and when all of the estimates may be inspected and inviting each Leaseholder and any RTA to make written observations on any of the estimates, specifying an address where they should be sent, the consultation period (30 days from the notice) and the end date.
REGARD TO OBSERVATIONS 6 Where, within the relevant period (as specified but usually a minimum of 30 Days), observations are made, in relation to the proposed works by any tenant or recognised tenants’ association, the Landlord shall have regard to those observations.
NOTIFICATION OF REASONS 7 Unless the chosen contractor is a Leaseholder's or RTA nominee or submitted the lowest estimate, the Landlord must give notice within 21 days of entering into the contract to each Leaseholder and any RTA, stating his reasons for the selection, or specifying a place and hours for inspection of such a statement. The Landlord must also summarise any observations made and his responses. There is no requirement for inspection of the summary and responses in this case.
CONCLUSION As demonstrated by this brief step by step tutorial you as a Residential Leaseholder have multiple rights. If these rights and procedures are not adhered to strictly by your Landlord then there is a very good chance that you do not have to pay more than the Statutory Cap of £250 towards any Major Works Project. SO WHAT DO I DO NOW?
CONTACT US Landmark Residential specialise in representing Residential Leaseholders in disputes against residential Freeholders / Landlords. We are by far the most successful company in this sector offering professional representation to Leaseholders and we pride ourselves in driving positive results for our clients. Call now to arrange a free, no obligation telephone consultation with one of our surveyors. Can you afford not to? 0845 475 2002