It has been nearly 31 years since the Landlord & Tenant Act 1987 received Royal Assent. You might be forgiven for thinking that freeholders and their managing agents should know exactly how and when to give notice for the purposes of Section 47 and Section 48 of that Act.
But no – the First Tier Tribunal and Upper Tribunal are still being called upon to adjudicate on s.47 and s.48 points, and there seems no reason to doubt that leaseholders will continue to have justifiable reasons for withholding service charge payments (and in the case of s.48 notices, ground rent) because of defective notices served by freeholders or their managing agents.
The legal property management specialists at Brady Solicitors offer some useful reminders of what to do and what not to do.
You can also click here to download the Section 47 and Section 48 wording for service charge demands.
Understand the purpose of each notice
A useful starting point is to understand what each notice is intended to do. The purpose of a s.47 notice is to inform the leaseholder of the freeholder’s identity by providing its name and address. A s.48 notice has the sole purpose of stating an address in England & Wales where the leaseholder can serve notices on the freeholder.
Put the correct address on the notice
In the case of s.47, the freeholder’s name and actual address should be provided. If the freeholder is a limited company, the address given should be its registered office or the address where it carries on its business. If it is an individual, then it must be the residential address or the place where he/she carries on their business.
It is not sufficient to give the freeholder’s managing agent’s address as confirmed in Beitov Properties Ltd v Elliston Bentley Martin [2012] UKUT 133.
Don’t leave it to guesswork
The s.47 notice must make it clear that the name given is the freeholder’s name. In Tedla v Camerat Court Residents Association Ltd [2015] UKUT0221 (LC) it was held that a demand which provides the name and address of two or more companies (very common where there is a managing agent) without identifying which is the freeholder does not satisfy the requirements of s.47. A leaseholder is not to be left to guess which party is the freeholder.
The solution lies in straightforward drafting. The s.47 notice should read along the lines of “Your Landlord is… whose address is…”.
Liability to pay a service charge demand
Failure to give a compliant s.47 notice only suspends the leaseholder’s liability to pay an otherwise valid demand for service charges. Once a valid notice is given the service charges become payable. This was confirmed in the case of Tedla v Camerat Court.
In the recent case of Roberts v Countryside Residential (South West) Ltd [2017] UKUT 0386 (LC), the Upper Tribunal held that a solicitor’s letter before action, accompanied by the appropriate summaries of rights and obligations and information required for s.47 and s.48 can be a valid demand. Consequently, such a letter is capable of remedying previously defective demands and brings to an end any suspension of the liability to pay.
Service charges payable to a management company
If the lease provides for payment of the service charge to a management company there is no statutory requirement to give a s.47 notice. This is because s.47 only applies to demands from freeholders and a management company will rarely be the freeholder (ie the party owning the reversionary interest, whether as a result of owning the freehold interest or by being the leaseholder’s immediate landlord by virtue of a head lease).
Similarly, s.48 does not apply since the provision is only concerned where the rent or service charge is “due from the tenant to the landlord”.
In cases where the management company has acquired the freehold interest but where there was a pre-existing right under the lease to collect the service charge it is arguable whether or not either notice need be given. In our experience at Brady Solicitors, prudence suggests it would be wise to include the s.47 and s.48 notices to avoid any future challenges.
Section 48 notices
A s.48 notice need only be given to the leaseholder once; it does not have to be given each time a demand for service charges is made. Practically though it makes sense to do so when giving the s.47 notice as it is makes it clear to all concerned that both notices have been given if they appear on the face of the demand.
As to the address which is provided, this can be the managing agent’s address, the only proviso being that it must be an address in England or Wales.
Compliance with sections 47 and 48 still remains a fertile area for disputes and litigation. For help and advice on any aspect of your service charge processes please contact Brady Solicitors.
* For the purpose of this article we assume the freeholder is the immediate landlord.
