30 Leaseholders unfairly subsidising total project costs Advance charging for refurbishments An external works project across a number of separate blocks on an estate had the access scaffold costs included on the prelims element of the contractor’s proposals, which was then calculated pro-rata across all blocks based on number of dwellings. A leaseholder challenge was raised, since the scope of works varied across the blocks and the extent of scaffold varied significantly between the blocks. It was held that given the variance in scope, the scaffold costs should have been considered on a block by block basis. Costs therefore had to be revised. This case highlights that it is hard to generalise when apportioning costs. A working group member has a client who chose to raise leaseholder charges in advance of refurbishing its large property portfolio. It did so because waiting until completion of the works to recoup the costs would impact heavily on its cash flow. In accordance with Section 20 of the Landlord and Tenant Act, the new charges are based on an initial estimated scope of works and associated costs. A final bill is submitted upon completion of the works and agreement of the final account, at which point adjustment of the account is made. For this all to proceed smoothly, the following issues need careful handling: • The initial scope of work needs to be reasonably accurate, otherwise significant changes in charges between initial and final bills can be open to challenge. • Changing the scope of works during work phases can have a significant change in costs and may require additional Section 20 notices being served, which can lead to delays to the works. • Leaseholders can be out of pocket for significant periods if costs reduce between initial and final bills. Thrive Homes’ environmental improvements, Otley Way, South Oxhey, Watford
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