Brady Solicitors’ mixed-use specialists suggest that the FTT’s jurisdiction should be extended to commercial landlords and tenants.
As we know, there is somewhat of a grey area over the rules that apply to mixed-use properties and developments. Residential property managers are familiar with residential service charge matters and section 20 consultations – and commercial surveyors know the property laws relating to their commercial portfolios similarly well.
However, if you have offices or shops downstairs and flats upstairs, you can end up with situations in property disputes where everyone attempts to pass the buck to each other. This can lead to the temptation for developers and managing agents to stay clear of mixed use portfolios but, with the large and growing number of mixed-use properties under management, there needs to be some certainty on the area.
Historically, commercial landlords have had everything in their favour as their commercial tenants have no clear right to challenge the reasonableness of their service charge. Recently however the cases of Heron Maple House Ltd v Central Estates Ltd and Ruddy v Oakfern have changed the shape of what is defined under s.18 of the Landlord and Tenant Act 1985 to include commercial if it is within the same demise as residential units.
The implication for mixed-use property managers
What this means to property managers trying to navigate mixed use from a commercial angle is that you have to comply with both major works and QLTA statutory requirements. You need to understand:
- What statutory information should be included on service charge demands
- The 18-month rule and, most importantly,
- The ability to challenge the service charge’s reasonableness (read Sam Andrew’s blog on ways to prove your service charges are reasonable)
As we know from residential property matters, if mistakes are made then the tenant can potentially refuse to pay…..but who presides over this grey area when it comes to mixed-use?
In truth, the County Court steers well clear of such arguments transferring the matter as soon as they can to the FTT…. but then the FTT “doesn’t do commercial”.
So what is the answer?
Surely in light of this case law the FTT should now have jurisdiction on commercial units in mixed use developments?
Watch this space!