There have been 2 significant reported cases this year regarding leases and improvements.
I) WAALER v THE LONDON BOROUGH OF HOUNSLOW [2015] UKUT 0017 (LC) 4
1.This case was about whether particular improvements to a property carried out by a landlord should have been carried out. Ms Waaler is a leaseholder on the Ivybridge estate in Hounslow where the number of flats let out on secure tenancies is around 7 times as large as the number of leasehold flats. The Council decided that the block needed substantial work- new roofs, new cladding, new windows, and the removal of asbestos. Ms Waaler was asked to pay £55,000 for that work which sum amounted to 62% of the insurance value of the flat.
2. One of the Ms Waaler's arguments was that it was unreasonable for the costs of the work to be levied in one year. That argument relied on Garside and Anson v RFYC Limited and BR Maunder Taylor [2011] UKUT 36. In that case the Upper Tribunal held that in considering whether costs have been reasonably incurred, it may be necessary to consider whether the works could have been carried out over a number of years and in deciding on that, the wishes and the means of the leaseholders will be relevant considerations as well as the urgency of the works. But as the Judge in the present case said, there is no question of Garside saying that 'the means of individual leaseholders could be determinative of the reasonableness of cost nor that works must always be phased to accommodate those means'; it was simply a matter of whether there was reason to carry out the works over a longer period on account of the tenants' limited means. Usually, the limited means of the tenants is irrelevant: 'this is subject to the limited circumstance where an unexpected increase in service charges and the financial impact of such an increase may well be relevant considerations in a decision on how and when to effect repairs.'
3. But if the means of the leaseholders are usually irrelevant in assessing the reasonableness of repairing costs, the Court found that they may well be relevant in assessing the reasonableness of improvement costs. In this case, the Court found that the Council paid no attention to what the Judge called 'the financial impact on the lessees' of replacing the window and the cladding.
4. Perhaps that lack of attention came about because by far the largest proportion of the costs of the works came not from the leaseholders but from Central Government under the 'Decent Homes' initiative. In any case, that failure to consider the financial impact of a bill for £55,000 landing on leaseholders' doorsteps was a major reason why the Court allowed the appeal.
Comment: This case is important: many leaseholders have leases which allow improvements and here at last is a decision which supports the view that the opinions and the means of the leaseholders are relevant factors which should be taken into account in deciding whether improvements should be carried out.
II) OLIVER V SHEFFIELD CITY COUNCIL [2015] ULUT 0229
In 2011 and 2012 certain leaseholders in Sheffield were asked to contribute to the cost of improvements to the structure of their blocks of flats. Their leases allowed the Council to make improvements. Some of the costs of the improvements (which was largely a matter of the replacement of cladding material) was funded by a grant from an energy company though not all the work was eligible for the grant. When leaseholders challenged the reasonableness of the service charges, the LVT found for the Council: it had incurred costs which were reasonable and that the leaseholders were indeed obliged to contribute.
The leaseholders appealed and the Upper Tribunal held that the improvement had no bearing on the reasonableness of the decision to commission the work. But it did have a bearing on how a landlord should demonstrate the reasonableness of the decision. Where improvements are allowed under a lease, the landlord will be expected to consider the interests of the leaseholders who have to contribute and to consult them accordingly. That is a step further than Waaler and Hounslow above.