Long residential leasehold update: Legal developments and practical advice for landlords and managing agents

Varying service charge appointments in long residential leasehold property

On 8 February 2023, the Supreme Court handed down judgment in Aviva Investors Ground Rent GP v Williams [1] and confirmed landlords can vary service charge apportionments themselves, in circumstances where the lease terms are permissive.

The facts were that the leaseholders were required to pay a specific percentage of the landlord’s overall costs “or such part as the Landlord may otherwise reasonably determine“. The landlord sought to re-apportion the service charges under that clause.  The leaseholders objected, arguing that the re-apportionment was unreasonable and void pursuant to section 27A (6) of the Landlord and Tenant Act 1985 Act (the 1985 Act). The Supreme Court decided that the role of the First-tier Tribunal (Property Chamber) (the FTT) in considering the reapportionment of residential service charges is limited to a review of the contractual legitimacy of the landlord’s re-apportionment exercise.  The FTT is not to determine the apportionment itself.

The Court went on to state that Section 27A(6) does not confer jurisdiction on the FTT to determine the service charge apportionment or make other management decisions.  The reapportionment provisions in the leases were therefore not caught by section 27A(6) of the 1985 Act, and were not void.  Accordingly, the landlord was entitled to vary the service charge apportionments.

Tate Modern nuisance decision:  a case of interest to those operating in the long residential leasehold sector

On 1 February 2023, the Supreme Court handed down judgment in the high profile Tate Modern case. The owners of flats adjoining the famous art gallery in London had brought a claim in nuisance, as a viewing gallery enabled visitors to look into their flats. The Supreme Court decided that the Tate, by operating the viewing gallery, was liable in nuisance. The Supreme Court explained that watching/observing can be a nuisance, and that the viewing and photography which took place from the Tate’s building caused a substantial interference with the ordinary use and enjoyment of the flats. The Supreme Court likened it to “being on display in a zoo”. The case has been sent to the High Court to determine the appropriate remedy, so the next decision from Court is ‘one to watch’. It may impact on the future design of buildings, particular those adjoining existing residential blocks.

Long residential leasehold property and RTM claims

In Assethold Ltd v Eveline Road RTM [2023] UKUT 26 (LC) [3], the Upper Tribunal (Lands Chamber) (the UT) decided that a right to manage (RTM) claim does not have to relate to the smallest possible configuration of the relevant property. As a result, the case provides clarification on the extent of the property which can be subject to an RTM claim.

The RTM is governed by the Commonhold and Leasehold Reform Act 2002 (the 2002 Act). It enables qualifying long leaseholders of flats to set up a RTM company to take over the management of their building. Under the 2002 Act, the “relevant premises” means either a self-contained building or a self-contained part of a building. In this case, the RTM company sought to acquire the RTM a property at the far end of a terrace which contained four flats. Outwardly, the property had the appearance of a pair of semi-detached houses. The RTM company argued that the whole of the property comprised “relevant premises“, for the purposes of the 2002 Act, on the basis that it was a self-contained part of a building. By contrast, the landlord argued each   semi-detached house was itself a self-contained part of a building.

It was clear to the UT that the pair of houses, when taken together, were “premises” for the purposes of the 2002 Act, and also that each house was itself “premises” for the purposes of the 2002 Act. The question was therefore whether an RTM company could only claim the RTM in respect of only the smallest possible configuration of the “premises”. The UT decided in favour of the RTM company by ruling that the 2002 Act does not require an RTM company to claim only the smallest possible configuration of the “premises”.

New Fire Safety Regulations for mid and high rise blocks of flats

The Fire Safety (England) Regulations 2022, SI 2022/547 came into effect on 23 January 2023. These Regulations require responsible persons to ensure safety measures are provided in mid and high-rise blocks of flats. Landlords and managing agents of long residential leasehold premises should note:

In high-rise residential buildings, the safety measures include:

• providing the local fire service with updated electronic building plans;
• carrying out monthly checks of fire exits and safety equipment;
• installing a secure information box and wayfinding signage.

For mid-rise residential buildings, ‘responsible persons’ will need to:

• use best endeavours to carry out checks of fire doors at the entrances of individual domestic premises in the building at least every 12 months; and
• check any fire doors in communal areas of the building at least every 3 months.

For these purposes, “high-rise residential building” means a building containing two or more sets of domestic premises that—

• is at least 18 metres above ground level; or
• has at least seven storeys.

A “mid-rise residential building” means a building which contains two or more sets of domestic premises and which is above 11 metres in height.

The identity of the ‘responsible person’ depends on the type of premises, but may include the employer in a workplace, or the owner of the premises.

Reform of Leasehold Law

Michael Gove recently made an announcement in relation to the UK Government’s intentions to reform leasehold. In an interview with Sky News on 29 January 2023, Mr Gove said the government wants to introduce legislation in the final parliamentary session – later this calendar year – to change the leasehold system. After a hiatus in the progress of reform, it appears some impetus is being injected. Walker Morris will monitor and report on future developments in this regard to landlords and managing agents of long residential leasehold property.

Long residential leasehold properties: How we can help landlords and managing agents

Walker Morris’ dedicated Housing Management & Litigation team specialises in advising landlords, management companies, managing agents and leaseholders in relation to all aspects of long residential leasehold law, practice and block management.  For further advice, information or training on any aspect of housing management, please contact Karl Anders or Pawan Pandit.

[1] Aviva Investors Ground Rent GP Ltd & Anor v Williams & Ors [2023] UKSC 6

[2] Fearn & Ors v Board of Trustees of the Tate Gallery [2023] UKSC 4

[3] Assethold Ltd v Eveline Road RTM Co Ltd [2023] UKUT 26 (LC)