Question 1

Cleaning Contract

Accepted Answer

Q: We are preparing to re-let our cleaning contract and our managing agents have said that they believe that we do not need to undertake a Section 20 consultation even though the contract would breach the £100.00 in a year long term agreement threshold for one of our lessees, whose share of maintenance expenses, for good reasons, is significantly higher than others'. Their basis for this is past guidance from ARMA, of which they are members. However, they have been unable to locate it, which has increased my scepticism. Could you confirm or correct my conclusion that a contract for cleaning that would cost any lessee more than £100.00 a year would not be subject to Section 20 consultation if the contract were for less than a year and this could be achieved without annual re-tendering if the contract had a suitable provision for termination by either party (eg at three months' written notice) and was let for an initial period of up to a year and then would be continued from year to year if neither party terminated. If this is correct, I would welcome any advice on how to word the relevant provisions. I assume this would apply also to other non-works services including gardening and management. I should add that we would keep our lessees informed anyway, as we always do, but not within the rigid process imposed by Section 20, which seems disproportionate for something like cleaning, which anyway costs well under the threshold for most of our lessees. FPRA Hon Consultant Yashmin Mistry replies: A qualifying long term agreement (QLTA) is an agreement entered into by or on behalf of the landlord for a term of more than 12 months. If the landlord seeks to recover more than £100 from any tenant in any accounting period, then the consultation provisions are engaged. In identifying whether an agreement is a QLTA the correct approach is:

Is whether it is an agreement
Made by or on behalf of the landlord
For a term of more than 12 months

If an agreement fails to specify its duration, it is a question of fact for the tribunal whether it is an agreement for a term of more than 12 months. Provision for termination even within the 12 months does not assist in determining the duration of the contract in these circumstances. By contrast, an agreement for a fixed term of 12 months or less is not a qualifying long term agreement notwithstanding the possibility that it could continue for more than 12 months. [Submitted July 2016]

Question 2

Cleaning Contract

Accepted Answer

Q: We are preparing to re-let our cleaning contract and our managing agents have said that they believe that we do not need to undertake a Section 20 consultation even though the contract would breach the £100.00 in a year long term agreement threshold for one of our lessees, whose share of maintenance expenses, for good reasons, is significantly higher than others'. Their basis for this is past guidance from ARMA, of which they are members. However, they have been unable to locate it, which has increased my scepticism. Could you confirm or correct my conclusion that a contract for cleaning that would cost any lessee more than £100.00 a year would not be subject to Section 20 consultation if the contract were for less than a year and this could be achieved without annual re-tendering if the contract had a suitable provision for termination by either party (eg at three months' written notice) and was let for an initial period of up to a year and then would be continued from year to year if neither party terminated. If this is correct, I would welcome any advice on how to word the relevant provisions. I assume this would apply also to other non-works services including gardening and management. I should add that we would keep our lessees informed anyway, as we always do, but not within the rigid process imposed by Section 20, which seems disproportionate for something like cleaning, which anyway costs well under the threshold for most of our lessees. FPRA Hon Consultant Yashmin Mistry replies: A qualifying long term agreement (QLTA) is an agreement entered into by or on behalf of the landlord for a term of more than 12 months. If the landlord seeks to recover more than £100 from any tenant in any accounting period, then the consultation provisions are engaged. In identifying whether an agreement is a QLTA the correct approach is:

Is whether it is an agreement
Made by or on behalf of the landlord
For a term of more than 12 months

If an agreement fails to specify its duration, it is a question of fact for the tribunal whether it is an agreement for a term of more than 12 months. Provision for termination even within the 12 months does not assist in determining the duration of the contract in these circumstances. By contrast, an agreement for a fixed term of 12 months or less is not a qualifying long term agreement notwithstanding the possibility that it could continue for more than 12 months. [Submitted July 2016]

Cleaning Contract

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