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Leases, Lights & Lifts – Major Works Explained

We often receive emails asking questions similar to this…

“We manage a block of flats and the lifts need some major repairs. What happens next?”

Maintaining blocks of flats and apartments is a requirement of a landlord. The landlord may well have the property looked after by an individual person, the local authority, an assigned managing agent, or an RMC (residents’ management company).

Major Works on blocks of flats - property law with LMP Law
IN THIS INSTANCE the block of flats is looked after by a MANAGING AGENT.

As agents for your landlord, you should know the ins and outs of the lease assigned to the residents. As managing agents per se, you will (should!) have a full understanding of the lease’s structure and meaning; understand legislation surrounding the Landlord and Tenant Act, and will be able to help the residents (leaseholders) understand their rights and obligations.

The team here at LMP Law totally appreciate that many residents buy their flats without truly understanding service charges and ground rent, which is why we write in many magazines such as Flat Living to help agents and residents’ alike. It’s all begins with……

THE LEASE

Managing agents are a total asset and we love working and learning from them – we know the law of the lease (it courses through our legal veins!) and it’s paramount to us to work in tandem to ensure that together, we can help with issues surrounding where responsibilities lie and any complicated questions surrounding leasehold law.

Leases are the most important document when it comes to a resident owning a flat. It’s always a good idea (if you manage apartments, blocks etc) to introduce yourselves to new residents and explain who you are in relation to the landlord. It’s a great opportunity to bullet point the necessities of what you, as a managing agent, will look after, when the service charges are due, together with ground rent – what they both mean and what they actually cover.

Conveyancers or solicitors helping a leaseholder buy their flat, should check any outstanding obligations surrounding a lease; their responsibilities can be bizarrely trickier than buying a freehold home as there can be many complexities surrounding leases. The team at LMP Law are often brought onto legal disputes that have stemmed from issues arising out of a lack of understanding on lease tenures – major works being one of the biggest causes for litigation.

MAJOR WORKS

Lighting and lifts – do they come under the term “major works”? The definition of “major works” (Section 20 Leasehold Major Works), sometimes known as ‘qualifying works‘, is the major works of maintenance, repairs or improvements to a building that the freeholder is responsible for and towards which the relevant leaseholder/s is/are required to contribute under the terms of the lease.

In answer to the question at the beginning of this blog, the lighting and lifts (extra examples of major works would be gates, fitting a new roof etc) would most likely come under Major Works.

WHO PAYS?

The Section 20 (under Section 20 of the Landlord & Tenant Act 1985) says that freeholders must consult with leaseholders if the works are set to cost any one leaseholder more than £250.

RESERVE FUNDS

Most blocks of flats will have lights, lifts, gates and other communal services that need to be maintained, not just for aesthetics or convenience, but for safety too. Sometimes these items require additional repairs (outside the normal services charges). Where does this money come from? Who pays?

Major Works - Reserve Funds Property Law with LMP Law and Laura Severn

 

 

Leaseholders may pay into a sinking fund or reserve fund over a number of years, which will be stipulated in their lease. If the repair of the lighting or lifts (as an example) costs MORE than £250 for any ONE leaseholder, then the landlord must consult with his/her leaseholders under Section 20 (as mentioned previously).

SECTION 20

The landlord will instruct you, as managing agents, to serve three main notices on the leaseholders under a Section 20 Notice, as follows:

  1. Notice of intention:   This Notice must describe the proposed works to the leaseholder; why the works are being considered; and you must offer an invite to your leaseholders for them to make written observations within 30 days.
  2. Notification of estimates: When the 30 day consultation period expires, it’s time for you to obtain at least 2 estimates (either by you or the landlord) from contractors to carry out the works. You must then provide to the leaseholder a Statement of Estimates setting out details of quotes obtained together with a summary of observations (received within the consultation period). You then invite the leaseholders to make observations (in writing) of those estimates within 30 days.
  3. Notification of award of contract: Clarification to the leaseholders as to why you (or the landlord) chose the contractor for the repair of the “major works”. There are many variables to consider when gaining estimates from contractors, and sometimes the cheapest isn’t the best one, so it’s up to you to explain this to the leaseholder.

SECURITY

A great managing agent, will ensure its leaseholders’ security and safety is paramount when any major works are going to be carried out. We’d remind all agents and freeholders (and leaseholders themselves) to be extra vigilant when it comes to keeping secure and safe when the works are being carried out.

We would recommend freeholders and managing agents to remind all the residents that they should notify their insurers and ask the contractors to provide specific procedures for managing access and maintaining controls during the out-of-hours times.

COMMENCEMENT OF WORK

Work with a solicitor who knows this law inside and out.  If the works are likely to contravene the lease covenants, the freeholder and managing agent can be open to challenges from leaseholders. You may or may not have gone through a Section 20 consultation process before, but if you have you will know the process is complex and increasingly the subject of disputes. Not only might costs be hard to recover, there could also be considerable delays which will hinder contractual agreements.

CONCLUSION

The law requires the landlord (or instructed managing agent) to consult its leaseholders BEFORE carrying out any “major works” or entering into a long-term agreement for the provision of services.  To avoid any disputes we’d recommend speaking to one of our team to make sure you are not in breach of the terms of the lease.

The team here at LMP Law are passionate about helping property managing agents, block managers and leaseholders alike when it comes to understanding major works and ensuring you are legally tight.

You can contact us any time for a chat – we welcome your questions!

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