Question 1

Roof Repairs

Accepted Answer

Q: I am one of four leaseholders who have an interest in a small (four units) residential property which requires a programme to replace the roof. Although the Freeholder wished to replace the roof this year, three separate surveyors (one of which was commissioned by the Freeholder) have stated that the replacement is not urgent and could be delayed for some time with judicious reactive repairs in the meantime. The freeholder has been convinced that the repairs and cost can be spread over a number of years. However, the agent has recommended that the lease needs to be changed to accommodate an associated “sinking fund” for S20 repairs to the roof. There are three questions that we have regarding this situation:

Is there an alternative financial mechanism which does not require a change in the lease that will give the Freeholders the confidence that the required funds will be available for the roof in four-six years, whilst giving the Leaseholders the confidence that the monies will only be spent on the roof repairs? If a change in the lease is recommended, can this be done without a joint application to the FTT?
What control/influence do the Leaseholders have in the process for, or final selection of the professionals to be used in the roof repair (under Section 20)?
Are surveyors fees exempt from S20 process, as our agents are insisting on using their sister organisation

Stuart Merrison of Bishop & Sewell replies: Whether or not leasehold covenants for repair/maintenance necessitate a replacement is a matter for a surveyor to determine in accord with the terms of the lease. In general terms if there is no provision for a sinking fund then a Landlord can only impose one by order of the First Tier Tribunal or agreement of the Leaseholders. There may well be other financial arrangements that could be made between Leaseholders and Landlord , but it would make sense to take advantage of the statutory provisions that apply to the holding of such funds by a Landlord and in particular the fact that funds necessarily are to be held on trust for the Leaseholders. Any amendments to the Leases could make reference to a sinking fund purely for example in respect of ‘plant and machinery’ or some other phraseology that ring fences what purpose the fund is to be applied to. Contributions to the fund would need to be reasonable as determined in statute and it is likely that the Landlord in that situation would need to show some detailed calculations showing how demanded sums are calculated and will finance a repair project a number of years down the line. Further information on good practice can be found in The RICS Service Charge Residential Management Code. Section 20 consultation allows Leaseholders to propose contractors for major works to be undertaken through the service charge. A Landlord is bound to consider the nominations but is ultimately able to nominate their preferred contractor as long as the nomination is reasonably made. It is generally assumed that professional fees will not be qualifying works that require section 20 consultation, unless possibly they form an integral part of the actual physical works. This is not a clear definition and the best approach is to consult on both contractors and professional fees.” [Submitted May 2016]

Question 2

Roof Repairs

Accepted Answer

Q: I am one of four leaseholders who have an interest in a small (four units) residential property which requires a programme to replace the roof. Although the Freeholder wished to replace the roof this year, three separate surveyors (one of which was commissioned by the Freeholder) have stated that the replacement is not urgent and could be delayed for some time with judicious reactive repairs in the meantime. The freeholder has been convinced that the repairs and cost can be spread over a number of years. However, the agent has recommended that the lease needs to be changed to accommodate an associated “sinking fund” for S20 repairs to the roof. There are three questions that we have regarding this situation:

Is there an alternative financial mechanism which does not require a change in the lease that will give the Freeholders the confidence that the required funds will be available for the roof in four-six years, whilst giving the Leaseholders the confidence that the monies will only be spent on the roof repairs? If a change in the lease is recommended, can this be done without a joint application to the FTT?
What control/influence do the Leaseholders have in the process for, or final selection of the professionals to be used in the roof repair (under Section 20)?
Are surveyors fees exempt from S20 process, as our agents are insisting on using their sister organisation

Stuart Merrison of Bishop & Sewell replies: Whether or not leasehold covenants for repair/maintenance necessitate a replacement is a matter for a surveyor to determine in accord with the terms of the lease. In general terms if there is no provision for a sinking fund then a Landlord can only impose one by order of the First Tier Tribunal or agreement of the Leaseholders. There may well be other financial arrangements that could be made between Leaseholders and Landlord , but it would make sense to take advantage of the statutory provisions that apply to the holding of such funds by a Landlord and in particular the fact that funds necessarily are to be held on trust for the Leaseholders. Any amendments to the Leases could make reference to a sinking fund purely for example in respect of ‘plant and machinery’ or some other phraseology that ring fences what purpose the fund is to be applied to. Contributions to the fund would need to be reasonable as determined in statute and it is likely that the Landlord in that situation would need to show some detailed calculations showing how demanded sums are calculated and will finance a repair project a number of years down the line. Further information on good practice can be found in The RICS Service Charge Residential Management Code. Section 20 consultation allows Leaseholders to propose contractors for major works to be undertaken through the service charge. A Landlord is bound to consider the nominations but is ultimately able to nominate their preferred contractor as long as the nomination is reasonably made. It is generally assumed that professional fees will not be qualifying works that require section 20 consultation, unless possibly they form an integral part of the actual physical works. This is not a clear definition and the best approach is to consult on both contractors and professional fees.” [Submitted May 2016]

Roof Repairs

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