Consultation with leaseholders and the Statutory consultation processes

Landlords have an obligation to consult with leaseholders and Tenants’ Associations prior to carrying out any major works schemes in line with the Landlord & Tenant Act 1985, though since the Commonhold and Leasehold Reform Act 2002 came into effect in October 2003, that statutory process has changed.

As a matter of course, the TMO and the Council carries out this statutory consultation to a larger
extent than the minimum requirements, and carries out extra consultation with leaseholders outside the limitations of the Act.

Non-statutory consultation is also generally carried out with the assistance of registered Tenants’ Associations where possible, and can include exhibitions of the proposed works and materials, feasibility meetings with residents to establish the scope of works required, project team meetings to progress schemes before, during and after they go ahead, individual surgeries to explain possible financial implications with leaseholders, and the provision of estimated major works recharges for all leaseholders annually, five years in advance.

Regarding cyclical redecoration schemes, there is also a booklet that is given to every resident when a scheme is about to go on site, explaining the processes they will experience. That booklet is provided within this Leaseholder Handbook for your reference purposes.

Statutory consultation processes

Since the Commonhold and Leasehold Reform Act 2002 came into effect in October 2003, the statutory consultation process has covered two stages, each allowing a 30 day period in which leaseholders may submit written observations (comments or queries) on the proposed contract and its contents.

The first stage describes the contract and also invites leaseholders and Tenants’ Associations to submit contractors for inclusion in the tendering process associated with the contract. If contractors are proposed, one will be chosen to be included on the list of contractors invited to tender for the works. If more than one contractor is proposed, the one proposed by the majority of leaseholders will normally be chosen for the list.

In order to comply with financial regulations and standing orders any proposed contractor will normally be required to be registered Constructionline, the Department of Trade and Industry (DTI) register of pre-qualified construction contractors and consultants. The Landlord uses Constructionline for these types of projects because it streamlines procedures by supplying the construction industry with a single national qualifying scheme.

Alternatively, if the Contractor is not Constructionline registered, any proposed contractor will be required to provide, as a minimum depending on the size and complexity of the scheme, the following documents for vetting;

1. Evidence of Public Liability to the value of £5,000,000 and Employer’s Liability of £10,000,000.
2. A copy of the Contractor’s latest annual report, audited accounts and balance sheet for the last three years.
3. VAT registration number (if applicable).

The Contractor will also be asked to provide;

1. Evidence of experience of working in occupied premises.
2. Details of contracts of a similar nature over the past three years where the contract sum was in excess of in excess of certain limits depending on the size of the schemes involved.
3. Contact details for three references.
4. Detail’s of the company’s health and safety policy.
5. Details of out of hours/emergency maintenance services and contact numbers.

There may also be the requirements for the contract to be advertised in OJEC (The Official Journal of the European Community). This depends on the size of the proposed contract.

Prior to inclusion on the tender list our selection procedure currently includes an interview before a panel of officers and resident representatives, where the contractor is given the opportunity to demonstrate his experience and ability to manage the scheme on site.

The second stage happens once the contract has been tendered to a list of contractors, and informs leaseholders and Tenants’ Associations affected by the works of the prices that have been tendered, and recommends a contractor for the list to be appointed to the contract.

That appointment cannot be made though, until this consultation stage has been completed and the TMO Board have approved the contract and contractor.

The Notice should include a brief description of the works, which the TMO often expands on. It should list the contractors who have been asked to competitively tender for the works, together with the prices they have tendered, and should indicate which one it is proposed to accept for the contract. This does not mean that the contract will be (or has been) accepted at that stage.

The Notice should also explain to each individual leaseholder what the share of costs relating to that individual property amounts to, and when it will be invoiced to the leaseholders. The TMO usually invoice quarterly in advance, as per the lease agreement, on set quarter dates but commencing on any one of those dates.

These dates are detailed in the Notice, together with notification of how much each invoice will be for. It is planned that the first invoice date will be the one nearest to the start of the contract, which on occasions may mean that the leaseholder will receive an invoice before the works have actually commenced. However, it also means that the works will generally have ended before all of the invoices have been issued.

The Notice also invites leaseholders to view the specification for the works. Some pages of the specification may sometimes be attached to the Notice, but generally the specification is a large document, and is better viewed with a suitably qualified member of staff in attendance, in order that they may answer any enquiries there and then.

A copy of each “Form Of Tender” received as part of the competitive tendering process, or a suitable estimate/invoice as a replacement, is also attached to the Notice. This gives evidence that the costs have been tendered properly.

The legislation states that at least two estimates are obtained for the works, except in exceptional circumstances, but the TMO has separate limits and procedures that ensure that more are received (or at least invited) for more expensive contracts.

Both stages of this statutory consultation process are carried out under the Landlord and Tenant Act 1985 (as amended) by way of a Section 20 Notice (S20), which will be delivered to leaseholders’ flats by hand, or by first class post to their contact addresses if they do not reside at their leasehold flats and have asked us to correspond with them at alternative addresses.

Both consultation stage Notices will ask for “written observations” from the leaseholders, and will indicate to whom the observations should be submitted and by which date. Observations are basically
comments or queries on the proposed works and/or the associated costs.

The legislation allows a 30 day period in which observations can be submitted for both of these two consultation stages. All observations received will be reported to the TMO Board together with any observations received, and replies will be sent to those observations within 21 days of the TMO Board decision.

Confirmation of receipt of each letter of observation will be sent within 21 days of receipt, assuming that the observations have been sent to the staff member indicated in the Notices.

Leaseholders are asked to be aware that this legislation is necessary, and so where response repairs have been reported but qualify as major works, the statutory consultation process will often have to be followed before the contract can be awarded. There are a very few instances when this consultation process can be shortened in order to get urgently required works on site, but that does not happen often.