A Court of Appeal decision provides a clear warning to landlords to ensure they comply fully with the detailed service charge consultation requirements. This is particularly important where the works are major, as non-compliance can result in a drastic reduction in the amount a landlord can recover from its tenants.
In this case, the landlords of a block of shops and flats gave notice to the long leaseholders of the flats that they intended to carry out major works amounting to £270,000. However, they failed to comply with the consultation requirements and, therefore, the liability of the five tenants was restricted to £250 each. The landlord was left to bear the remainder of the total cost of £270,000.
We have published a checklist explaining what a service charge is, when consultation is required and what the penalties are for failing to comply with the requirements.