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Long residential leasehold/block management update

There has been a recent run of reported decisions in relation to the law and practice surrounding long residential leaseholds and block management.  Walker Morris’ Housing Management & Litigation specialists, Karl Anders, Pawan Pandit and Asia Munir explain several cases, all of which will be of interest to residential management companies, block managers and landlords.

Flats and block management subject to long residential leaseholds

Block management tip: Be faithful to the lease terms when setting service charges

In Howe Properties (NE) Ltd v Accent Housing Ltd [1], residential leasehold service charges in respect of management fees of £300 were payable by flat owners under long leases. Other properties on the landlord’s estate (including the freeholders), were charged £150 per annum and the assured tenants were charged a percentage of the rest of the service charges, being 15%. The flat owner in the case argued that the £300 was excessive, as it didn’t represent value for money and was inequitable compared with the assured tenants’ 15%. The Upper Tribunal decided that the lease required that each item of the annual service charge should be calculated as a single proportion or fraction of a global sum. There was no basis on which the landlord could charge a flat rate for the management fees that was determined by the tenure of the property. The management fee of £300 had not been calculated by reference to expenditure since it had been advertised as a flat rate on several estates. The Upper Tribunal therefore decided that the flat owner was correct that the fee was not payable because it was not charged in accordance with the terms of the lease.

Limit on residential leasehold landlord’s ability to recover costs in relation to S166 ground rent notices

A landlord’s costs of preparing and serving a notice requiring payment of ground rent [2] could not be recovered from a leaseholder as part of an administration charge clause in a lease which expressly referred to the landlord’s costs incurred in respect of “the collection of rents”.  So decided the Court of Appeal in Stampfer v Avon Ground Rents Ltd [3].  Although ground rent did not become due until a section166 notice was served, and although giving the notice was a necessary prerequisite to the collection of ground rent, the act of serving a notice was not, in itself, the collection of rent. The Court of Appeal explained that, while making the rent due and collecting rent were both part of the means by which the landlord obtained the rent, they were conceptually distinct stages.

Landlords’ right to positive co-operation to secure access to a residential leaseholder’s flat

In Dorrington Residential Ltd -v- 56 Clifton Gardens Ltd [4], the Upper Tribunal considered a residential leaseholder’s covenant to permit access to the landlord.  The Upper Tribunal explained that the First Tier Tribunal had correctly concluded that the residential leasehold flat owner was in breach of the covenant because an obligation to ‘permit’ access did not just require passive consent.  Rather, the obligation had to involve the leaseholder in doing what was reasonably required to facilitate the landlord’s access. The Upper Tribunal explained that, where the premises had been sublet, the leaseholder could not be said to have complied with its obligation if it simply did nothing when the landlord requested access.

Block management, building safety and hindsight: Ability to recover interim waking watch costs

Assethold v Adam [5] concerned the recoverability of waking watch costs. One of the recommendations in a fire risk report obtained by the landlord was to set a waking watch. It later came to light that the relevant report had been incorrect.  The First Tier Tribunal concluded that the cost of the waking watch, incurred in reliance on that report, could not have been reasonably incurred. However, the Upper Tribunal noted that the First Tier Tribunal’s decision had been made on the basis of hindsight.  In a decision that will be of particular interest to landlords in the context of building safety, the Upper Tribunal found that the costs of a waking watch, incurred by the landlord as an interim measure [6] and in reliance on expert advice, had been reasonable at the time the waking watch was put in place.

How we can help with long residential leasehold matters and block management

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

 

[1] [2022] UKUT 273 (LC)

[2] pursuant to section 166 of the Commonhold and Leasehold Reform Act 2002

[3] [2022] EWCA Civ 1375[2022] All ER (D) 70 (Oct)

[4] [2022] UKUT 266 (LC)[2022] All ER (D) 31 (Oct)

[5] [2022] UKUT 282 (LC)

[6] until either the report’s main recommendations as to remedial works had been put in place, or until further advice had been obtained as to whether those works were needed

Karl
Anders

Partner

Housing Management & Litigation

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Pawan
Pandit

Senior Associate

Housing Management Litigation

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Asia
Munir

Director

Real Estate Litigation

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