It’s now going to cost how much to change a lightbulb in my block?!

A frosty chill settled on managing agents, landlords and flat owners across the country in January 2013 - and it was not caused by the snow.  Instead, the impact of the recent High Court decision in Phillips v Francis has caused confusion, doubt, despair, and even anger as a coach and horses was effectively driven through the existing major works regime.  

Giving one of his final judgements before retiring on 10th January 2013, Sir Andrew Morritt, the Chancellor of the High Court ruled that, without appropriate dispensation, all qualifying works in a building are subject to consultation in advance if they will cost any flat owner more than £250. Previously, the accepted position under Section 20 of the Landlord & Tenant Act 1985 was that consultation was only required on a per project basis if the specified limitations were reached.

The decision has caused serious concern from all corners of the industry.  Michelle Banks, Chief Executive of ARMA, the trade association for managing agents commented:  "This decision has overturned accepted legal views on how landlords and their agents should comply with S20 consultation. Whether the High Court’s views are right or wrong in law, the decision is likely to have adverse consequences for everyone involved with residential leasehold dwellings. For leaseholders it could mean delays in getting essential works done and rising management fees; for landlords it may lead to uncertainty on when to consult; and for managing agents, it is likely to be unworkable."

Bob Smytherman, Chairman of the Federation of Private Residents’ Associations, also expressed concern: "We are extremely concerned that this poor decision will unnecessarily drive up maintenance costs for our members, and delay important day to day maintenance works being carried out to their apartment buildings.  This surely cannot be in anyone's interest? Our legal advisor Dr Nick Roberts has prepared a briefing document for our members available on our web-site and will be featured in our next newsletter to help them deal with this on a practical basis until such time as the decision is reviewed or overturned, itself costing time and money better spent on real reforms for the leasehold sector."

The decision is binding authority on the Upper Tribunal (Lands Chamber), and the Leasehold Valuation Tribunal until overturned by the Court of Appeal, or Parliament redresses the position through legislation. ARMA, the FPRA, RICS, LEASE and the Department of Communities and Local Government are currently working together on the effect of this important ruling. Further information about this decision can be found on newsontheblock.com.