First-tier Tribunal Approves Lease Variation for Reserve Fund

OUTCOME: Allowed

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FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY) Case Reference :  LON/OOAP/LVT/2021/0008

Property :  [ADDRESS], [POSTCODE] Applicant: [redacted] :  [APPELLANT]

Respondent: [redacted]

[NAME] of [ADDRESS] [POSTCODE]

Representative :  NA Type of Application :  For lease variation under Part IV of the Landlord and Tenant Act 1987 Tribunal Members :

Judge Shepherd Trevor Sennett FCIEH

Date of Determination :  14th March 2022

Determination

1. The Applicants, [APPELLANT] (The Applicants) are seeking a variation of the lease granted to [NAME] of [ADDRESS], a 24 unit block in Tottenham. The application is made pursuant to s. 37 of the Landlord and Tenant Act 1987 (see the annex attached). The variation sought is an addition of a provision allowing the collection of a reserve fund in order to deal with major works.

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2. The Applicants are the freehold owners of the building which is let on 24 long leases to various [NAME]. A surveyor’s report by LBB dated 30th April 2021 has detailed defects in the roof which need to be rectified. The tiled roof of the building has reached the end of its serviceable lifespan. The roof needs to be retiled along with other new roof coverings. The rainwater goods also need replacement as do the porch roofs. The brickwork needs to be repointed. The total cost of the proposed works is approximately £80000. The Applicants don’t have sufficient funds to carry out this work in advance of payment and the lease does not allow on account recovery.

Accordingly, the Applicants have sought to vary the lease to provide for a reserve fund so that funds can be collected prior to work being carried out. This seems to be an entirely prudent course to take.

3. The Applicants have put in evidence their accounts which confirm that they would not be able to cover the cost of the works prior to recovery from the [NAME]. They have also canvassed the [NAME], 20 of whom have consented to the variation proposed. There is no evidence that the [NAME] would be prejudiced. Even if the lease was not varied the works would have to be carried out and the [NAME] would need to contribute their share of the cost. Further a reserve fund will allow other unforeseen works to be carried out in the future once sums are raised. The Applicants appear to appreciate their responsibilities to keep the reserve fund in Trust for a particular purpose. They will also be aware that they will need to consult on the works proposed notwithstanding the fact that the works are being funded from the reserve fund.

4. The criteria for variation in s.37 are met and the proposed variation appears to meet the object sought. Accordingly, the Tribunal approves the variation proposed to the Third Schedule to the Lease by the addition of a clause 3, the terms of which are detailed at pages 515 & 516 of the bundle.

Judge Shepherd

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14th March 2022

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ANNEX - RIGHTS OF APPEAL Appealing against the tribunal’s decisions

1. A written application for permission must be made to the First-tier Tribunal at the Regional tribunal office which has been dealing with the case.

2. The application for permission to appeal must arrive at the Regional tribunal office within 28 days after the date this decision is sent to the parties.

3. If the application is not made within the 28-day time limit, such application must include a request for an extension of time and the reason for not complying with the 28-day time limit; the Tribunal will then look at such reason(s) and decide whether to allow the application for permission to appeal to proceed despite not being within the time limit.

4. The application for permission to appeal must state the grounds of appeal, and state the result the party making the application is seeking. All applications for permission to appeal will be considered on the papers 5. Any application to stay the effect of the decision must be made at the same time as the application for permission to appeal.

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Annex – s 37 Landlord and Tenant Act 1987

37.— Application by majority of parties for variation of leases. (1) Subject to the following provisions of this section, an application may be made to [the appropriate tribunal] in respect of two or more leases for an order varying each of those leases in such manner as is specified in the application. (2) Those leases must be long leases of flats under which the landlord is the same person, but they need not be leases of flats which are in the same building, nor leases which are drafted in identical terms. (3) The grounds on which an application may be made under this section are that the object to be achieved by the variation cannot be satisfactorily achieved unless all the leases are varied to the same effect. (4) An application under this section in respect of any leases may be made by the landlord or any of the tenants under the leases. (5) Any such application shall only be made if— (a) in a case where the application is in respect of less than nine leases, all, or all but one, of the parties concerned consent to it; or (b) in a case where the application is in respect of more than eight leases, it is not opposed for any reason by more than 10 per cent. of the total number of the parties concerned and at least 75 per cent. of that number consent to it. (6) For the purposes of subsection (5)— (a) in the case of each lease in respect of which the application is made, the tenant under the lease shall constitute one of the parties concerned (so that in determining the total number of the parties concerned a person who is the tenant under a number of such leases shall be regarded as constituting a corresponding number of the parties concerned); and (b) the landlord shall also constitute one of the parties concerned.