Service charge limit for remediation works LTA 1985 s. 20D
Landlord must seek grants, insurance, or third-party funding for remediation works; if not, tenant can apply to tribunal to reduce service charge.
This section applies to works of a prescribed description (“remediation works”) on a building in England of a prescribed description. The landlord must— take reasonable steps to ascertain whether any grant is payable in respect of the remediation works and, if so, to obtain the grant; take reasonable steps to ascertain whether monies may be obtained from a third party in connection with the undertaking of the remediation works and, if so, to obtain monies from the third party; take prescribed steps relating to any other prescribed kind of funding. In subsection (2) (b) the reference to obtaining monies from a third party includes obtaining monies— under a policy of insurance; under a guarantee or indemnity; pursuant to a claim made against— a developer; a person involved in the design of the building or of works to the building; or a person involved in carrying out works in relation to the building. Where any funding of a kind mentioned in subsection (2) is obtained, the amount of the funding is to be deducted from the remediation costs (and the amount of any service charge is to be reduced accordingly). In the case of a failure to comply with subsection (2) , a tenant may make an application for an order that all or any of remediation costs are not to be regarded as relevant costs to be taken into account in determining the amount of any service charge payable by— the tenant, or anyone else specified in the application. An application is to be made to the prescribed court or tribunal. The court or tribunal to which the application is made may make such order on the application as it considers just and equitable in the circumstances. Nothing in this section requires the landlord to do anything mentioned in subsection (2) before carrying out remediation works. The Secretary of State may issue guidance about the taking of steps under subsection (2) , and may revise or withdraw any issued guidance. Where on an application under this section it is alleged that a person failed to comply with subsection (2) — proof of a failure to comply with any applicable guidance may be relied on as tending to establish that there was such a failure, and proof of compliance with any applicable guidance may be relied on as tending to establish that there was no such failure. In this section— “ developer ”, in relation to a building, means a person who undertakes or commissions the construction or conversion of the building with a view to granting or disposing of interests in the building (or parts of it); “ prescribed ” means prescribed by regulations made by the Secretary of State; “ remediation costs ” means costs incurred or to be incurred in carrying out the remediation works; “ third party ” means a person other than a tenant.
Text in force at .
Source: legislation.gov.uk — The National Archives (legislation.gov.uk), reproduced under licence Open Government Licence v3.0.
What it actually says
This section applies to remediation works on buildings in England of a type prescribed by regulations. The landlord must take reasonable steps to get any grants, insurance payouts, or money from third parties (such as developers or builders) that could cover the work. If the landlord gets any such funding, it must be deducted from the remediation costs, and the service charge reduced accordingly.
If the landlord fails to take these steps, a tenant can apply to the court or tribunal for an order that some or all of the remediation costs are not to be counted as relevant costs for the service charge. The court or tribunal can make any order it considers just and equitable. The Secretary of State may issue guidance on what steps are reasonable, and that guidance can be used as evidence in court.
The section does not require the landlord to delay the work while seeking funding. It applies only to works and buildings that are 'prescribed' – meaning set out in regulations made by the Secretary of State.
When it applies
- A landlord carries out essential fire safety remediation works on a block of flats but never applies for a government grant that was available for such work.
- An insurance company pays the landlord for damage caused by a defective building element, but the landlord still charges the full remediation cost to the tenants.
- A tenant discovers that the landlord could have made a claim against the developer for faulty construction that caused the need for remediation, but the landlord did not do so.
- The landlord obtains a grant for part of the remediation costs but fails to deduct it from the service charge, charging the tenants the full amount.
What this section does not say
- This section does not cover all service charges generally – see s.19 for the general test of reasonableness.
- It does not apply to consultation requirements for major works, which are dealt with in s.20.
- It does not apply to works in Wales or to buildings that are not of a prescribed description.
- It does not set time limits for making service charge demands – that is covered by s.20B.
Related sections
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This page reproduces the text of LTA 1985 s. 20D in force at the date shown and explains it in general terms. It is not legal advice and takes no account of the circumstances of your case, which can change the answer completely. For a live dispute, for limitation periods, and before taking any step in court, consult a qualified lawyer in England and Wales.