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Our resident’s association has appointed a surveyor. Can the managing agent restrict what they can view and stop a member of the association accompanying them to view document?

Reader’s E-mail:

We have discovered some major problems with our managing agents charges and have appointed a surveyor. The managing agents say they will let only the surveyor inspect the documents relating to a major work and that the residents association officers’ visit will ” not be entertained”. They also say we have no rights to see any documents prior to the most recent FY. They also will not let us have the invoice for the insurance policy or the utilities bills. Is this all allowed? They have been very obstructive all the way.

Reply from Service Charge Dispute Guide

1. Recognised residents associations have a right to appoint a surveyor under section 84 of the Housing Act 1996 to:

“to advise on any matters relating to, or which may give rise to, service charges payable to a landlord by one or more members of the association.”

2. Under Schedule 4 of the Housing Act 1996 a surveyor so appointed has the right to:

i. Inspect any documents related to the purpose for which he has been appointed.

ii. Inspect the premises.

3. If the surveyor is not permitted to inspect the relevant documentation or the premises within 1 month of a written request being made, then the surveyor may apply to the County Court for an Order that access be granted.

4. In terms of exercising its legal rights under Section 84 and Schedule 4 of the Housing Act 1996 your resident’s association needs to consider careful whether it has followed the process set down in law and met all the legal requirements.

Requirement 1:

The resident’s association must be ‘recognised’. The meaning of the term ‘recognised’ is given in section 29 of the Landlord and Tenant Act 1985. It means either that:

i. The landlord has recognised the association by sending written notice to the secretary of the association

or

ii. The association has been granted a certificate of recognition from a First Tier Tribunal (or LVT as it was previously known).

Requirement 2:

The surveyor must be ‘qualified’, which means that they must be a fellow or professional associate of the Royal Institution of Chartered Surveyors or of the Incorporated Society of Valuers and Auctioneers, and not have been previously disqualified from undertaking such an appointment.

Requirement 3:

The landlord must have been appointment must have been made in writing to the landlord stating:

i. The name and address of the surveyor.

ii. The duration of his appointment.

iii. The matters in respect of which he is appointed.

It is worth noting that section 84 (5) states notice may be given to someone who collects rent (this includes service charges) on behalf of the landlord.

Requirement 4:

The documents the resident’s association is asking to see relate to the matters which were referred to in the written notice given by the landlord. It may be the case that even if the other three requirements were met, that the letter of appointment only referred to major works and access is being (legally) restricted on that basis. If that is the case then the resident’s association has the option of giving written notice to cease the surveyor’s current appointment and then reappoint them with a wider brief.

5. It is worth noting two further points about Section 84 and Schedule 4 of the Housing Act 1996 which may be relevant to you:

A. Section 84 (1) gives the resident’s association the right to appoint the surveyor to consider “any” matters related to a service charge. It states no restrictions in time or scope. It is worth noting that in the case of Parissis v Blair Court (St John’s Wood) Management Ltd [2014] UKUT 503 (LC) the Upper Tribunal decided that there was no restriction in time when a leaseholder might challenge a service charge under Section 27A of the Landlord and Tenant Act 1985 and this is a strong counter argument to an attempt on the part landlord (or their agent) to argue that a leaseholder has no right, or good reason, to wish investigate several years worth of past charges.

B. Schedule 4 2.(1) states that the surveyor may appoint anyone they wish to assist them in carrying out their functions and schedule 42.(2) states that a person so appointed has the same rights as the surveyor themselves. In theory this means the surveyor could appoint an officer of the resident’s association to inspect. We say in theory because there remains a question mark over whether a Court would enforce this right if the person was appointed was a resident. The legislation is not clear on this point, and there is a marked lack of good case law to confirm this either way, but it is possible that a Court could decide that the intention of Parliament was that the person appointed as an assistant held some kind of technical qualification. For this reason we suggest that if this route was taken careful thought would need to be given to justify why the appointment of an officer of the resident’s association would prove helpful to the surveyor in carrying out their work. Presumably that officer would have intimate and detailed knowledge of the history of the building which might (we guess) convince a Court as to their usefulness.

6. Aside from Section 84 of the Housing Act 1996 it worth considering the other legal right to view documentation given to service charge payers: section 22 of the Landlord and Tenant Act 1985.

i. Section 22 affords residents, and recognised resident’s associations, the right to view supporting documentation within 6 months of receiving a service charge demand.

ii. The right relates only to documentation supporting the particular demand received within the last six months, and as a point of law the managing agent can deny you access to documentation in relation to demands received more than 6 months ago.

iii. We are, however, rather confused as to why they feel the right under section 22 does not apply to the insurance policy or utilities bills. This does not appear to us to be correct so long as they appear as items on your latest service charge demand.

iv. It is worth noting that section 22 applies to service charges as defined by section 18 of the Landlord and Tenant Act 1985:

“(1) In the following provisions of this Act “service charge” means an amount payable by a tenant of a [F1dwelling] as part of or in addition to the rent—
a) which is payable, directly or indirectly, for services, repairs, maintenance [F2, improvements] or insurance or the landlord’s costs of management,”

v. ​Insuran​ce is explicitly defined as being a service charge, and utility bills are often the subject of litigation under Section 27A of the Landlord and Tenant Act 1985, for instance MacGregor v BM Samuels Finance Group Plc [2013] UKUT 471 (LC)​.​

vi. As well as being limited in time, section 22 is also limited in enforceability. In theory a failure to comply by a landlord is punishable by a fine upto level 4 (£2,500) however the Court of Appeal (Morshead Mansions Limited v Di Marco [2014] EWCA Civ 96​)​​​ has decided that only local authorities have the right to bring prosecutions for failure to comply with section 22, which rather takes ‘the teeth’ out of this provision of the 1985 Act.

7. For this reason your resident’s association has taken the right course in appointing a surveyor – their rights are enforceable in a Court by private prosecution – it just needs to make sure it has followed the legal requirements to the letter and then keep on with the task in hand no matter how obstructive the managing agent attempts to be.

Click on the link to read more Reader’s Questions and Answers on Rights to Information