qualifying long-term agreements
📖 What is qualifying long-term agreements? Meaning and definition
Qualifying long-term agreements, often abbreviated as QLTAs, are a specific type of contract that landlords might arrange for properties, particularly those with multiple residential units like blocks of flats. These agreements are 'long-term' because they are not one-off jobs but rather cover ongoing services or supplies over an extended duration. Examples from real cases include agreements for the supply of gas and electricity, or for connection works and heat supply.
The significance of QLTAs lies in the legal requirement for landlords to consult with their tenants before entering into such agreements, especially when the costs involved are passed on to the tenants through service charges. This consultation process is outlined in Section 20 of the Landlord and Tenant Act 1985. The purpose is to ensure transparency and give tenants a say in significant financial commitments that will affect them.
However, there are circumstances where a landlord might seek 'dispensation' from these consultation requirements. This means asking a First-tier Tribunal to waive the need to consult, either fully or partially. Such applications for dispensation are made under Section 20ZA of the Landlord and Tenant Act 1985. The Tribunal will then decide whether to grant this dispensation, which can be unconditional or subject to certain conditions.
In practice, if a landlord fails to comply with the consultation requirements for a QLTA, they may be limited in the amount they can recover from tenants for the costs of that agreement. Seeking dispensation from the Tribunal is a way for landlords to regularise the situation, especially if consultation was impractical, urgent, or inadvertently missed, ensuring they can still recover the costs from tenants.
📋 Requirements
- The agreement must be for a 'long-term' period, implying ongoing services or supplies.
- The agreement typically concerns services or supplies for properties with multiple residential units, such as blocks of flats.
- The agreement's costs are usually recoverable from tenants through service charges.
- Landlords are generally required to consult with tenants before entering into such agreements under Section 20 of the Landlord and Tenant Act 1985.
📝 Procedure
- A landlord intends to enter into a qualifying long-term agreement (QLTA).
- The landlord is typically required to consult with tenants regarding the proposed QLTA.
- If consultation requirements have not been met, or if prospective dispensation is sought, the landlord applies to the First-tier Tribunal.
- The application for dispensation is made under Section 20ZA of the Landlord and Tenant Act 1985.
- The Tribunal reviews the application and decides whether to grant dispensation from the consultation requirements, either unconditionally or to a specified extent.
💡 Examples
- A landlord of a large block of flats intends to sign a new five-year contract for the building's gas supply, which is a QLTA.
- An application was made to the Tribunal for dispensation from consulting tenants about a prospective QLTA for the supply of electricity to a property.
- A luxury development of apartments and penthouses required a Connection Works and Heat Supply Agreement, which was considered a QLTA.
- The Tribunal granted dispensation for a landlord who had not fully complied with consultation requirements for a QLTA concerning energy supply.
📚 Legal basis
- Landlord and Tenant Act 1985
❓ Frequently asked questions
What is the main purpose of a Qualifying Long-Term Agreement (QLTA)?
QLTAs are agreements for ongoing services or supplies to a property, and their main purpose in a legal context is to trigger consultation requirements with tenants, especially when costs are passed on through service charges.
Why do landlords need to consult tenants about QLTAs?
Landlords need to consult tenants to ensure transparency and give them a say in significant financial commitments that will affect their service charges, as mandated by Section 20 of the Landlord and Tenant Act 1985.
What happens if a landlord doesn't consult tenants about a QLTA?
If a landlord fails to comply with the consultation requirements, they may be limited in the amount they can recover from tenants for the costs of that agreement, unless they obtain dispensation from the Tribunal.
What does 'dispensation' mean in relation to QLTAs?
Dispensation means that the First-tier Tribunal waives the requirement for the landlord to consult with tenants regarding a QLTA, either fully or partially, often applied for under Section 20ZA of the Landlord and Tenant Act 1985.
Can a QLTA be for future services?
Yes, the case excerpts show that applications can be made for 'prospective dispensation' for a landlord's intention to enter into QLTAs, indicating they can concern future or upcoming agreements.
Where do landlords apply for dispensation from QLTA consultation?
Landlords apply to the First-tier Tribunal for dispensation from the consultation requirements related to QLTAs.