Service charges and other issues
A guide to service charges, administration charges, ground rent, recognised tenants associations and forfeiture.
By Simon Tye, Legal Adviser
Health and safety in blocks of flats, and in particular, fire safety risk assessments, are very much on the radar following the tragic events at Grenfell Tower. There are legal requirements in buildings containing flats as regards fire safety and checks for asbestos. The question that often arises in leasehold properties is who is responsible, and who pays for, the statutory requirements to carry out such checks and to undertake any work.
Although there are other statutory requirements, such as to comply with legislation against disability discrimination, this article will deal with the two that arise most frequently.
Fire risk assessment
The Regulatory Reform (Fire Safety) Order 2005 is the relevant law.
The regulations will apply to “Premises” which the order defines to include “…any place…” in particular a workspace, although not to “domestic premises”. This does sound confusing, but essentially means that common parts of a building containing dwellings will be covered but not premises occupied as a private dwelling, such as the flat itself.
The duty is on the “responsible person” who will generally be the person responsible for managing the common parts. This can include the freeholder, a Right to Manage Company, a Residents Management Company and also managing agents contracted to act on behalf of any of the above.
There is duty on the “responsible person “to “…take such general fire precautions as may reasonably be required in the circumstances of the case to ensure that the premises are safe”. The fire safety risk assessment duty of the “responsible person” is to evaluate the risk to people from fire, taking into account existing fire safety measures and to determine whether additional measures are necessary.
The legislation states that “Any such assessment must be reviewed by the responsible person regularly so as to keep it up to date…” Presumably the frequency of the risk assessment may depend upon the building concerned. For example, the age and size of the building.
The legislation is enforced by the local fire and rescue authority that can carry out inspections and serve enforcement notices on the “responsible person” in the event of non-compliance.
As the duties under the Fire Safety Order (FSO) are extensive, there will often be cost involved in compliance, such as the cost of the inspection itself, replacement of communal doors, fire extinguishers, means of escape etc.… Whether these costs can be passed on to leaseholders by the freeholder or other responsible person depends on the terms of the lease, in particular, the service charge provisions.
More modern leases will include an obligation on the freeholder to comply with statutory requirements, with a right to recover the cost of this from leaseholders. Some leases will also have a clause requiring leaseholders to comply with statutory requirements in respect of their own demised premises e.g., if the FSO requires them to install new fire doors to their flats.
Even if the lease does not contain the above clause specifically allowing the freeholder to recover the cost of complying with the FSO, the freeholder may be able to rely on other clauses in the lease, for example, a “sweeping up clause”.
“Sweeping up clauses” are a widely drafted service charge provision clause allowing recovery of costs for unforeseen items of expenditure. An example would be “expenses incurred for the benefit of the building” or “expenses incurred in the interests of good estate management”.
Such clauses do not automatically allow recovery of all such charges and there has been a lot of case law on the wording they need to contain. However it is likely that such expenditure would fall within a comprehensive “sweeping up clause“.
The cost of work carried out by a freeholder in respect of a statutory obligation still has to be reasonable under the Landlord & Tenant Act 1985 and carried out to a satisfactory standard. However, it would be hard to argue that it is unnecessary if required to be done by statute.
Consultation with leaseholders, under section 20 of the Landlord & Tenant Act 1985 is still, of course, required if the works exceeds the cost of £250 for any one leaseholder.
In a similar way to fire safety, there is a legal duty on the person responsible for managing the maintenance and repair of common areas in buildings containing flats to “manage” asbestos.
The requirement is in the Control of Asbestos Regulations 2012 and applies only to common areas such as foyers, corridors, staircases, lifts.
The duty is to ascertain whether the premises contain asbestos and if so where it is and what condition it is in, to assess the risk and to make a plan to manage the risk and act on it.
The regulations are enforced by the Health and Safety Executive and local authorities
According to the HSE website, any building prior to 2000 could contain asbestos and was extensively used as a building material between the 1950s and 1980s.
Recovery of the cost of the survey and necessary work resulting from this is based on similar principles as set out above for fire safety. The lease may specifically allow for recovery as a service charge, or the freeholder may be able to bring the cost within a “sweeping up clause”.
A final point as to why it is beneficial to leaseholders to have these checks is that on sale of a flat, the purchaser’s solicitors will ask for confirmation that a risk assessment has been carried out for fire safety and asbestos as a matter of course and ask to see evidence of this. It may cause a problem with a sale if this is not available.