Leaseholders don't have to pay for upkeep of whole estate

The leaseholders of several flats have had their service charges overturned because the money was used to pay for the upkeep of neighbouring buildings.

The flats were situated in an estate of five blocks. Each block was managed by its own Right to Manage (RTM) company in line with the Commonhold and Leasehold Reform Act 2002.

However, the five RTM companies employed a single agent, who managed the five blocks and the communal grounds.

Service charge demands were issued to the leaseholders for the maintenance of the whole estate, on the basis that it was managed as a single site.

The leaseholders challenged the reasonableness of service charges demanded between 2012 and 2020.

The Upper Tribunal (Lands Chamber) said the key issues to consider were whether the leaseholders were required to contribute to the costs incurred across the whole estate, or merely to the costs that related to their own block.

The lease was considered carefully and although it wasn’t drafted particularly well, its intentions were clear.

Each RTM company managed one building and had no power to enforce obligations in relation to a different building.

Please contact us if you would like more information about the issues raised in this article or any aspect of commercial property law.

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