In a recent decision, the Upper Tribunal has provided welcome clarification that the costs of professional reports and surveys are not 'works on a building' for the purposes of s.20 consultation.
In Ian Jonathan Rose v Bracknell Gate Properties Limited [2025] UKUT 386 (LC) the Upper Tribunal (UT) was asked to hear an appeal concerned with the payment of service charges for major electrical works carried out at three mansion block properties in London NW3, comprising 25 flats.
The total costs of the works included sums for the services of professional consultants, being architects, building consultants and an estate management company, together amounting to £28,011.39.
It was agreed at the FTT that no consultation was carried out for the services of the three consultants, who had variously been engaged in the design of the works, the tender process and the section 20 consultation for the works.
Section 20 of the Landlord and Tenant Act 1985 (the LTA) provides a statutory limitation on the service charge payable by leaseholders towards any 'qualifying works' or 'qualifying long-term agreement' if a statutory consultation process is not followed. The limitation is £250 for 'works', or £100 per year under a long-term agreement.
The definition of 'qualifying works' is 'works on a building or any other premises'.
The FTT held that the professional fees were not 'qualifying works' and consultation was not required. The leaseholder appealed to the UT.
It was held by the UT that the professional fees were not 'qualifying works', giving two reasons for this.
Firstly, strictly on the wording of the statute, the UT said that "the question of statutory interpretation is whether 'works on a building' refers only to the physical works, or extends also to professional services associated with those physical works". The UT agreed with the previous judgment of the High Court (Marionette Limited v Visible Information Packaged Systems Limited [2002] EWHC 2546) which considered an earlier form of the LTA, which held that the meaning of 'works on a building' was confined to the physical works carried out and therefore consultation is concerned with such physical works.
Secondly, on the issue of workability, it was held that to include preliminary surveys and/or design work, or the costs of the consultation itself, would lead to "a risk of a multiplicity of consultations in relation to a single project making the process unwieldy", with consultations potentially required for the design works, followed by consultation about the fees for specification on tenders, and then consultation for the work of supervising the contractor, along with the consultation for the costs of works itself. This would ultimately increase the cost burden on leaseholders.
Accordingly, the appeal was refused.
This is a sensible and welcome decision which means that landlords can be clear that the preliminary reports, tenders and consultations for a major set of works are not subject to consultation under s.20 (though recoverability of the costs are subject, as are all variable service charges, to the test of reasonableness, and to the provisions of the lease itself).
