Section 20 of the Landlord and Tenant Act 1985 (as amended) lays down statutory consultation requirements, which must be followed by landlords whenever they are seeking to carry out ‘qualifying works’ (defined in the Act) and recover such costs from their tenants as part of a residential service charge. Failure to comply can have significant implications. Unless the landlord obtains dispensation from the Leasehold Valuation Tribunal (LVT), the amount recoverable from each tenant is capped at the sum of £250. The LVT has traditionally applied a rigid ‘all or nothing’ approach to exercise of its power to grant dispensation and in extreme cases, landlord have found themselves out of pocket to the tune of thousands of pounds for mere technical breaches.

Such landlords will therefore welcome the decision of the Supreme Court in Daejan Investments Ltd v Benson [2013] when it overturned the earlier decisions of both the LVT and a lower court. In doing so, the Court set out relevant principles to be applied by the LVT when dealing with such applications including a discretion to grant dispensation subject to conditions, reducing the amount that the landlord can claim and ordering the landlord to pay leaseholders’ reasonable legal costs. Provided the tenants can be put in the same position as they would have been had the landlord complied, dispensation should be granted.

Whilst re-affirming the importance of following the statutory consultation process and the requirement to apply for dispensation from the LVT for failure to do so, the Court has attempted to add some flexibility to the power to grant dispensation and give a fairer balance between the interests of the parties.