The requirements apply to "qualifying works", and "qualifying long-term agreements" where the relevant contributions of tenants to the cost of the works exceed the "prescribed amount", which is currently set by the Secretary of State, by Regulation, at £250 per tenant for qualifying works, and £100 per tenant for qualifying long-term agreements. Qualifying works are defined as works on a building or any other premises. "Works" are not defined but do not include services, such as the services of a caretaker. Qualifying long-term agreements are defined as agreements entered into by the landlord for a period of more than 12 months. These agreements are more likely to be entered into by public or voluntary sector landlords

Qualifying Works

The consultation regime is as follows where there is no qualifying long-term agreement:

1. A notice of intention is served on each tenant and on the Residents Association where there is one or

2. A notice can be displayed for a period of 30 days in one or more places where it is likely to come to the notice of every tenant and in this latter case a copy of the notice must be given to any tenant who requests it.

3. The notice must:

I) Give a description of the works or specify a place where a description can be inspected.

II) Specify from whom the landlord has obtained or intends to obtain estimates.

III) Invite written observations to be sent to a specified address within a period of 30 days which is the "relevant period" for the purposes of the legislation.

IV) Invite the tenant and the Residents Association to nominate a person or persons from whom the landlord should obtain an estimate.

4. The landlord then obtains a minimum of two estimates (one of which must be from a person entirely unconnected with the landlord) and where the tenants have nominated somebody from whom to obtain an estimate the landlord must try to do so. Where the tenants have nominated more than one person a formula is set out in the Act on how the landlord should set about obtaining estimates.

5. Having obtained the estimates the landlord must then serve a further notice which:

I) summarises at least two of the estimates which have been obtained together with notice of where the estimates can be inspected.

II) Invites written observations to be sent within 30 days to a specified address.

6. The landlord is obliged to consider the observations but is free to enter into a contract for the works if the contract is either with a person nominated by the tenants or with the person who has supplied the lowest estimate.

7. If the landlord decides to enter into a contract with a contractor other than referred to in 6 above he must within twenty-one days of entering into the contract serve a further notice on the tenants stating his reasons for awarding that contract, setting out the observations that he has received, and his response to those observations.

Qualifying long-term agreements

The landlord must:

1. Serve a notice of intention describing the goods or services to be supplied or works to be carried out and the reasons for wishing to enter into the agreement, inviting the tenants to send written observations within 30 days to a specified address, and to make nominations for the obtaining of estimates.

2. Then obtain a minimum of two estimates and must try to obtain one from any party nominated by the tenants.

3. Then prepare at least two proposals for the carrying out of the works or services, which must:

where it is reasonably practicable to do so estimate the relevant contribution from each tenant with a statement of that contribution, or the total amount of expenditure again with a statement, or the hourly or daily rate applicable,

if the landlord proposes to appoint an agent details of membership of any professional body or trade association and adherence to any code of practice

details of any provision for variation of any amounts set out in the agreement, and details of the landlord's responses to any observations which have been made.

4. The landlord is obliged to consider any observations but is free to enter into a contract if it is with a contractor nominated by the tenants or with the contractor who has given the lowest estimate. Otherwise the landlord must within twenty-one days of his entering into the contract serve a further notice on the tenants stating his reasons for entering into that contract, setting out the observations he has received, and his responses to them.

Once a qualifying long-term agreement has been entered into the consultation requirements in relation to qualifying works carried out under that long-term agreement are much truncated with the landlord merely having to serve notice of intention on all tenants describing the works, inviting observations, and replying to them within twenty-one days, but otherwise being free to carry out the work.

There are different requirements were a landlord is proposing to enter into a qualifying long-term agreement which is subject to public procurement requirements which are not relevant for the purposes of this article.

Consequences

The consequence of a landlord not complying with the above requirements is that the contribution payable by the tenant in relation to the work in connection with which there is a non-compliance is limited to the relevant amount, that is currently £250 in the case of qualifying works.

The sole method by which a landlord can avoid complying with the regulations is by making application to the Leasehold Valuation Tribunal to dispense with complying, the test being whether it is reasonable to dispense with the requirements, not, as under the old law, whether the landlord has acted reasonably. If a position arises where during the course of carrying out works, it is found that further works are necessary, which are qualifying works, then a further consultation process must be gone through, which may create contractual and practical problems depending upon the stage the contract is reached. The well advised landlord in circumstances where it is considered that this problem may arise, could consider dividing the work up into two or more parts as appropriate so as to avoid possible crisis management.

These regulations therefore provide substantial protection for the tenant against the incompetent or rapacious landlord, whilst presenting to the residents company which has enfranchised, a considerable challenge to surmount in the collection of service charges. This article does not set out the extent of the regulations in full, but is an overview, and must be read in the context of many other extremely complex regulations which must be adhered to before service charges become legally payable. The regulatory service charge regime in my view is such that any residents management company should be very wary of managing without the services of a competent managing agent.

Whilst, (subject to some criticism) legislation has made it easier to enfranchise, it has simultaneously created a much more difficult service charge regime for the enfranchising lessees to comply with once enfranchisement has been achieved. Especially where the lessees’ motivation to enfranchise has been driven by a wish to run their own affairs, this may seem a bitter coating upon an otherwise sweet pill, but to provide protection without making management by enfranchised lessees difficult and unduly complicated is a difficult balance to strike. Perhaps it isn't quite there?

Alan Edwards is a Partner at Alan Edwards & Co Solicitors, a firm that specialises in the field of housing, landlord & tenant and local

government law.

Tel 020 7221 764;

Fax 020 7243 1076; www.aedwardssolicitors.co.uk