Managing a small development where each lease has a different set of service charge obligations can make for a tricky property management experience. In situations like this, can you apply to vary the lease under Section 35 of the Landlord and Tenant Act 1987?
The 2019 case of Triplerose Ltd v Stride is a reminder that lease variation is not a statutory right, and that muddled drafting is generally not sufficient to allow a variation.
Jeremy Weaver, head of litigation at specialist property management law firm Brady Solicitors explains.
Triplerose v Stride concerned a four-property leasehold development, with one basement flat and three upstairs flats. The three upstairs leaseholders jointly owned the freehold.
Triplerose was the leaseholder of the basement flat, which it let out to tenants. The basement flat had its own access and didn’t share any common parts with the flats above.
The basement lease set out that the leaseholder must contribute towards the external painting and decorating. There were however no other service charge obligations, such as for the overall maintenance of the building or contributions to work carried out by the managing agent.
To make it messier, the three upstairs flats also all had different service charge obligations. For example, only two of them had to pay towards the management costs. In fact, the total amounts recoverable did not add up to 100% in any area except insurance.
The three upstairs leaseholders applied to the FTT to vary the lease of the basement flat and introduce an obligation to contribute towards management costs and general repairs. The FTT allowed the variation, with no requirement to make a compensation payment to Triplerose, the downstairs leaseholder.
Triplerose appealed and the case was heard in the Upper Tribunal.
The UT overturned the FTT’s decision, pointing out that Section 35 exists to correct problems in a lease and is not there to remedy poor drafting. It found no evidence that the different service charge obligations were causing problems in the management of the building and that, if a variation was to take place, that the downstairs leaseholder would need to receive financial compensation. The UT calculated this compensation at £9,500 based on the likely increases to the service charge payment.
What can we learn from this?
In an ideal world, long residential leases are drafted carefully, with the leaseholder and freeholder rights and obligations clearly and consistently set out across each property in the development. More often than not however – and particularly in smaller developments – the leases can be rather more hotch-potch, and the rights and obligations can vary from property to property.
To vary a lease under Section 35 of the Landlord & Tenant Act, you need to be able to provide clear evidence of a problem with the service charge provisions that needs correcting. The right to vary does not exist to correct badly drafted leases.
For help or advice with reviewing a lease or correcting issues relating to rights and obligations, please talk to the specialist leasehold solicitors at Bradys.