Residential management company - £100 capped annual service charge

Residential management company could only recover a maximum of £100 from each flat tenant per year.

Landlords and managing agents should be reminded to consider consulting with tenants before entering into contracts to provide services or carry out works relating to residential properties. In a recent High Court case, Paddington Basin Developments Ltd and others v West End Quay Estate Management Ltd and another [2010] EWHC 833 (Ch), a management company entered into a 25 year agreement with a third party service provider to provide maintenance services for flats (the agreement). The management company did not consult the tenants before entering into the agreement, a management company entered into a 25-year agreement with a third party service provider to provide maintenance services for flats without consulting the tenants. The agreement was a "qualifying long term agreement" under the Landlord and Tenant Act 1985. This meant that the management company could only recover a maximum of £100 from each flat tenant per year. The High Court did not go on to determine whether it was an implied term of the agreement that the management company was only liable to pay the service provider what it could itself recover from the tenants.