A historic legal ruling that hampered councils’ efforts to cut the cost of housing refurbishment projects has been overturned by a property court.
In a landmark ruling released this week, the Upper Tribunal has ruled that public sector landlords can use so-called ‘framework agreements’ to appoint building contractors.
The ruling, by tribunal president Siobhan McGrath, ends years of uncertainty caused by a previous decision by the leasehold valuation tribunal that was handed down in 2007.
This earlier ruling rejected an application by a London-based buying club to skip a key part of a consultation that all public bodies must run before billing leaseholders for work on their homes.
The London Area Procurement Network, which brought the 2007 case, had requested the dispensation in order to establish framework agreements on behalf of its London local authority members.
The 2007 case threw the legality of using framework agreements into doubt, creating years of uncertainty for council landlords that use them to help reduce their bills for major refurbishment work.
The case was brought by Kensington and Chelsea RBC in relation to four framework agreements that it proposed entering into on behalf of Kensington & Chelsea TMO, the tenant management organisations that manages its homes.
The total value of the framework agreements ran to £130m.
Rock Feilding-Mellen (Con), deputy leader of the council and cabinet member for housing, said the ruling would be welcome by all public sector landlords.
“Framework agreements can offer significant advantages for landlords, tenants and leaseholders, so this judgement brings some useful clarity to a highly complex area of law.”
Rebecca Rees, a partner at law firm Trowers & Hamlins, described the case as a “victory for common sense”.
“[It] irons out an anomaly in the law that created difficulties for councils and housing associations,” she added.
“This is good news for local authorities and registered providers [housing associations] seeking to use frameworks to procure leaseholder works in a cost efficient manner.
“Framework agreements can be extremely cost efficient as they can provide contractors with a pipeline of work that they can price and plan.
“They are a popular method of procurement that is well used by central and local government and the previous uncertainty over whether they could be used for leaseholder works hampered their use by local authorities.”