Landlords of residential properties can get stung for very significant sums as a result of the tenant protections in the Landlord and Tenant Act 1985. These protections can severely restrict what the landlord can recover via service charges for costs which it has incurred. This blog looks at two cases which consider whether a landlord undertook works which were “reasonable”. Any client managing residential property needs to be aware of the implications of these cases.
Landlords of residential properties need to be mindful at all times of the tenant protections in the Landlord and Tenant Act 1985 when carrying out works. In addition to requiring landlords to consult before incurring costs, the Act limits what a landlord can recover from a tenant in respect of the cost of repairs or improvements to costs which are “reasonably incurred” and works and services which are provided to a “reasonable standard”.
How does this operate where a landlord is faced with a decision whether to repair or to replace, and must decide which to do? Two cases decided this year, both concerning the repair or replacement of windows provide landlords with some comfort that provided what they have done is reasonable, the tribunal will not substitute its own decision whilst underlining what considerations will come into “reasonableness”.
In March, the Court of Appeal in Waaler v Hounslow LBC [2017] EWCA Civ 45 considered whether substantial costs incurred in replacing windows in the Appellant’s block of flats were reasonable. The replacement had also necessitated the replacement of the exterior cladding and removal of asbestos and the cost was considerable.
The replacement of the windows amounted to an improvement. The Court of Appeal held that in deciding whether to repair or replace, the landlord should have considered the availability of less expensive alternatives and the views and the financial means of the tenants who would be paying for them. The Court underlined that the landlord should have considered not only its decision making process but also the outcome. Where works are improvements rather than repairs, different considerations might come into the equation.
Thus the court held that the costs were not reasonable on the basis that the landlord should have taken into account the interests and financial resources of the lessees and their views. The court did however emphasise that had both options been reasonable, it would have been for the landlord, not the tribunal to decide which works to do.
This latter point was demonstrated last month in De Havilland Studios v Peries and another [2017] UKUT 322. Again, the landlord was faced with a decision about what to do with the windows in the property. It opted for repair – the tenants wanted a replacement which would have cost significantly more.
The First Tier tribunal appeared to accept that both options were reasonable, but that the replacement option was “more reasonable” and so found for the tenants. The Upper Tribunal overturned the decision, finding that having decided both options were reasonable, it was down to the landlord to choose and the tribunal should not substitute its view as to what was “most reasonable”. In considering reasonableness, the tribunal took into account expert evidence, the assets which the landlord had to fund the works and the fact that the repair would extend the life of the windows by 15 years.
The cases provide some insight into the factors which will come into play when deciding whether works are reasonable, and the relevance of the financial situation of both landlord and tenant is interesting. What they also show is that each case will depend on its own facts and the question of reasonableness can be hard to pin down.
