First-tier Tribunal Decision on Service Charges for Damp Proofing Works

OUTCOME: Allowed in Part

FIRST-TIER TRIBUNAL

PROPERTY CHAMBER

(RESIDENTIAL PROPERTY)

Case reference : LON/00AN/LSC/2024/0285

Property : [ADDRESS] [POSTCODE]

Applicants : [redacted]

(2)[NAME_4] : In Person

Respondent : [redacted]

Type of application : For the determination of the liability to pay service charges under section 27A of the Landlord and Tenant Act 1985

Tribunal members : Judge N O’[NAME_8] Mr R [NAME_9]

Venue : 10 [ADDRESS] [POSTCODE]

Date of decision : 21 July 2025

DECISION

Decisions of the tribunal

(1) The tribunal determines that the costs of damp proofing the lower ground floor, including Flats A and B and any external and internal retained or common parts incurred by the Respondent in 2024 are payable by the Applicants as a service charge.

(2) The associated removals storage and accommodation costs incurred by the respondent are not payable by the Applicants as a service charge.

(3) The tribunal makes an order under section 20C of the Landlord and Tenant Act 1985 so that none of the Respondent’s legal costs of or occasioned by the hearing listed on 25 January 2025 may be recoverable as a service charge or as an administration charge.

The application

1. The Applicants seek a determination pursuant to s.27A of the Landlord and Tenant Act 1985 (“the 1985 Act”) as to the amount of service charges payable by the Applicants in respect of damp proofing works to [ADDRESS] [POSTCODE].

The hearing

2. The Applicants appeared in person and the Respondent was represented by Counsel [NAME_6].

3. The matter was initially listed for a final hearing on 25 January 2025. The hearing could not proceed primarily because both parties had failed to file an indexed and paginated bundle consisting of a single PDF as required by the order of Judge Jack dated 10 September 2024. The Applicants’ documents consisted of a series of separate heavily annotated PFDs. The Respondent belatedly filed a bundle consisting of 5 PDFs totalling 917 pages which was not indexed and did not appear to have been arranged in any discernible order. In addition it became apparent that there was a dispute of fact regarding the extent of the works carried out to Flats A and B and to the exterior of the building. The tribunal could not proceed to determine that factual dispute in the absence of any proper bundle. That hearing was adjourned and both parties were given permission to rely on an expert report from a surveyor as regards the extent of the works undertaken and to file statements.

4. At the subsequent hearing the tribunal was supplied with an indexed paginated bundle of documents consisting of 523 pages prepared by the Respondent, together with the Respondent’s skeleton argument. We heard oral evidence from both [NAME_3] and [NAME_10]. In addition we heard oral evidence from [NAME_11] of [NAME_13], the freeholder’s managing agent. We also heard oral evidence from [NAME_15] on behalf of the Respondent, and we also heard brief evidence from the leasehold owners of Flats A and B.

5. The applicants instructed a [NAME_18] of [COMPANY_19] to prepare a report regarding the works which have been carried out and which has been included in the bundle. [NAME_18] was able to access both Flat A and B for the purpose of his report. The Respondent sought to rely on a report, also in the bundle, from [NAME_17] [NAME_17] who is a director of [COMPANY_22] the company which the freeholder appointed to oversee the works to the basement area in 2022. We were initially concerned that [NAME_17] might objectively appear to have a conflict of interest in this case in that he had been engaged by the Respondent to oversee the project which formed the subject matter of this dispute. In addition no permission had been granted for oral expert evidence at the hearing. [NAME_17] was the only witness at the hearing who was familiar with the details of the project. We considered his report but we treated it as a witness statement rather than an expert report to the tribunal. [NAME_17] gave oral evidence and was cross examined by both Applicants.

The background

6. The property which is the subject of this application is a substantial semi-detached Victorian villa which has been converted into 8 self-contained flats, with two of those flats, Flat A and Flat B, located in what would have been the basement/lower ground floor of the house prior to conversion. No 75 is located on the corner of [ADDRESS] and [ADDRESS]. Parts of both Flat A and Flat B are semi-subterranean in that the windows of both Flat A and Flat B which face onto [ADDRESS] are immediately adjacent to and level with the public pavement. Save for the side of the building that faces on to [ADDRESS], the remainder of Flats A and B are on the lower ground floor level.

7. Neither party requested an inspection and the tribunal did not consider that one was necessary

8. [NAME_3] is the leasehold owner of Flat 4 which is on the ground floor. [NAME_23] is the leasehold owner of the First Floor Rear Flat. The dispute relates to the cost of damp proofing works to Flats A and B. The total cost has not yet been finalised as the retention period did not expire until relatively recently, and a final demand has not yet been issued. However the Respondent has served an estimate of the likely total costs on both applicants dated 5 February 2024 and it is common ground that the total estimated cost of the damp proofing works, including making good, VAT, incidental expenses relocation costs and all fees, is likely to be in the region of £11,771 in respect of [NAME_3]’s share and £13,054 in respect of [NAME_23]. It includes as sum which the Respondent seeks to recover as a service charge the costs associated with relocating the occupants of Flats A and B and storing their effects. Flat A is occupied by its leasehold owners, [NAME_24] and [NAME_25]. Flat B is owned by a [NAME_26] and [NAME_27] but at the material time was let to short-term tenants pursuant to an assured shorthold tenancy. The additional costs consist of removals and storage costs for Flat A and removals and storage costs and the cost of alternative accommodation for the tenants of Flat B. The total of these costs again has not been finalised, but [NAME_3] has calculated the total at £16,397 for both flat A and B. It was estimated at £9,000 in the letter of 5 February 2025.

9. In late 2021 in response to reports of damp in both Flats A and B the Respondent engaged a [COMPANY_22], [NAME_28], to inspect the building and devise a course of action to remedy the damp. In her statement [NAME_3] states that the Respondent initially indicated to the leaseholders that the likely total cost was going to be between £20,000 and £25,000.

10. According to [NAME_17]’s written evidence he first inspected the building in December 2021 including the interior of Flats A and B and prepared a report which is exhibit B to his evidence. He noted the presence of high levels of localised dampness in both Flat A and Flat B, some of which he attributed to rising damp and some of which he attributed to degraded pointing in the exterior walls. He noted that most of the exterior walls had no visible evidence of a damp proof course, save for evidence of a past application of DPC injections to the front building wall which formed the exterior wall to Flat A’s lounge. He recommended the installation of a chemical damp proof course, the application of waterproof render to the interior damp affected walls and repairs to the exterior pointing. He was unable to say definitively whether the rising damp was due to there being no damp proof course at all, or due to an ineffective damp proof course.

11. In early 2022 [COMPANY_22] oversaw a tendering process and by letter dated 6 May 2022 recommended that the Respondent engage [COMPANY_29] who had supplied the lowest tender to complete the works at £42,715 plus VAT. [NAME_21] considered that the dampness could be remedied by carrying out a mix of exterior repointing and repairs together with interior damp proofing works. The works recommended by [NAME_21] underwent a number of changes in response, we find, to the discovery of further areas of damp in flats A and B. This additional damp was discovered when the building was inspected by the specialist damp proofing contractor engaged by [COMPANY_29] to carry out the tanking to the walls; [COMPANY_30]. The method which the freeholder eventually chose involved more extensive works to the interior of both flats with reduced external repairs. The damp affected walls of both flats were to be completely stripped back to brick and a chemical damp proof course injected into the affected areas. A layer of waterproof render was to be applied to the walls which would then be replastered and redecorated.

12. There followed a lengthy period of delay throughout 2022 and 2023 due to objections from the leaseholders regarding the cost and the scope of the works. During 2023 the leaseholders explored the possibility of acquiring the right to manage the building and engaging their own contractors to tender for the works. According to the witness statement of [NAME_11] the leaseholders informed the freeholder in that they were no longer pursuing this avenue in January 2024. Due to the passage of time the Respondent asked its contractor to provide an updated estimate. The cost of the works had increased from £42,715 to £58,890. Again this does not include professional and administration fees or VAT.

13. As stated above the precise total cost of the works has not been calculated but judging by the most recent estimate dated 12 August 2024 is likely to be in the region of £60,000. Together with VAT professional fees and administration costs the total cost of the remedial works will be approximately £85,000, not including the relocation costs for Flats A and B.

14. The Applicants contest their liability to contribute towards any of these costs save for £1087 which was the cost of some minor exterior works which were completed as part of the damp proofing works to Flats A and B. Firstly they submit that the works undertaken do not fall within the landlord’s repairing obligations under the lease. Secondly they submit that the landlord’s decision to address the dampness by carrying out internal damp proofing works rather than external damp proofing increased the overall costs and was unreasonable. Thirdly they are concerned that the works may not have remedied the dampness in the lower ground floor in the long term. Thirdly they consider that the works included works of improvement to Flats A and B which they should not have to contribute towards.

The issues

15. At the start of the hearing the tribunal identified the relevant issues for determination as follows:

(i) Whether all the works fell within the landlord’s repairing obligations under the lease;

(ii) Whether the method chosen by the landlord to remedy the dampness was reasonable in terms of likely cost and efficacy; and

(iii) Whether the additional expenses associated with temporarily moving the occupants of Flat A and B are recoverable as a service charge.

16. We have not been asked to determine whether the cost of the works is reasonable in amount as the final costs is not yet known.

17. Having heard evidence and submissions from the parties and considered all of the documents provided, the tribunal has made determinations on the various issues as follows.

Did the works fall with the Respondent’s repairing covenant

18. The leases of Flat 4 and [NAME_23]’s flat, as well as the Flats A and B are in materially identical terms. Clause 1(a) of the lease defines the demise including:

..all that Flat more particularly described in the First Part of the First Schedule hereto and for identification only outlined in red on Plan No. 2 annexed hereto (hereinafter called “the Flat”) which expression includes: -

(i) all drains pipes ventilating ducts and wires solely serving the Flat,

(ii) all windows window frames doors and door frames and all internal non-load bearing walls

(iii) the linings and surfaces of the interior of all walls

(iv) the ceiling of the flat together with the boards or other surfaces of the floors of the Flat (but excluding the floor and ceiling joints) …

to hold the same unto the tenant for the term of one hundred and twenty-five years

19. By clause 1(b) of the lease the tenant covenanted to pay as additional rent

“a proportionate part…as may reasonably be required for expenditure incurred;

(i) In performing the landlord’s obligation as to repair maintenance and insurance hereinafter contained

20. By clause 4(1) of the lease the Landlord covenanted;

At all times during the said term to keep in good and substantial repair and in clean and proper order and condition those parts and appurtenances of the Building which are not included in this demise or in a demise of any part of the Building …”

21. By Clause 3(7) of the lease the tenant covenanted

To permit the Landlord and persons authorised by the landlord …at all treasonable times during the said term at convenient hours in the daytime on giving reasonable notice of not less than three days (except in the case of an emergency) to enter upon the flat for the purpose of executing repairs decorations alterations additions or improvements to or upon the building all such work being done with the maximum reasonable despatch and all damage thereby occasioned to the flat being forthwith made good.

The tribunal’s decision

22. The Applicants consider that the works to the interior of flats A and B do not fall under the Respondent’s repairing obligations because the works were only for the benefit of those flats and not for the building as a whole. [NAME_3] describes the works as extensive internal refurbishments and not essential repairs. She referred us to the report of [NAME_31] of [COMPANY_19] which is included in the bundle. His report was based on an inspection which was carried out on 2 March 2025, i.e. the works were completed. He had been supplied with the schedule of works drawn up by [NAME_21]. He considered that it was likely that a building of this age and construction would have been built with a slate damp proof course. He agreed that the semi subterranean walls adjacent to [ADDRESS] were earth retaining walls and would require internal waterproofing. He considered that most of the dampness in the other exterior walls would have been due to raised external ground levels bridging the original damp proof course, and deterioration to the exterior brickwork and defects to the gutters. He considered that the most effective way to remedy the dampness would have been to lower the exterior ground level and to carry out more extensive repairs to the exterior of the building. He did not consider that an injected DPC would be effective.

23. In his response to this report (undated) [NAME_17] notes that in his view it was not possible to reduce the exterior ground levels due the fact that buildings of this age generally have shallow brick footings and in any event it would not be possible to do this in the case of the semi-subterranean walls adjacent to [ADDRESS]. He reiterated his view that the installation of a chemical DPC together with interior tanking is a well-recognised method of dealing with dampness in Victorian buildings.

24. Both parties agree that the exterior walls do not form part of the demise and that the lease is what is commonly described as an ‘eggshell lease’ where the interior coverings only of the walls and floors are demised. The lease obliges the landlord not just to repair the retained parts of the building but also to keep them in ‘clean and proper order and condition’. In our view an exterior wall which is permitting water to penetrate into the interior of the building, be it attributable to rising damp from the ground or water penetration from another source is not in ‘proper order and condition’. Consequently the Respondent was obliged to address the dampness in flats A and B using any reasonable means.

The Method Chosen by the Respondent

25. We are not satisfied that the methods chosen by the Respondent were unreasonable. [NAME_3] believes that the costs were significantly increased by the Respondent’s decision to carry out internal damp proofing rather than external measures but there is no evidence of this. While we accept that the cost of the works increased between 2022 and 2024, we consider that his was primarily due to the discovery of further areas of dampness in flat A and to the general increase in building costs which occurred following the COVID-19 pandemic. There is no evidence that the method chosen by the Respondent led to an unreasonable increase in costs, or that there was an obvious less expensive or more effective option available to it. [NAME_18] considers that exterior repair works would have been more effective at remedying the dampness in Flats A and B, but he has not estimated the costs of such works. We acknowledge that there is a range of opinion in the building sector as to the long-term efficacy of the method favoured by the freeholder in this instance to remedy cases of rising damp in Victorian basements, but in our view [NAME_17] is right when he describes the method chosen by the freeholder as a well-recognised and well-practiced one.

The extent of the works

26. We are not satisfied that the works that were undertaken inside Flat A and B were more extensive than required under the terms of the lease. It was apparent that [NAME_3] was concerned that both Flats A and B were substantially refurbished and that the other leaseholders were being asked to contribute to improvements for the benefit of those flats alone. They did not consider that the freeholder was obliged to redecorate either flat. However when we examined the schedule of works prepared by [NAME_32] it was clear to us that the only works undertaken were the damp proofing works and the subsequent making good which the Respondent was obliged to undertake by virtue of Clause 3(7) of the lease.

27. The Applicants are particularly concerned by the fact that Flat A has been completely refurbished with new kitchen and bathroom fitted. We were told by [NAME_11] that the owners of Flat A took the opportunity to completely refurbish the flat including upgrading the kitchen and bathroom, but that the Respondent did not pay for those works. There is no allowance for new kitchen or bathroom fittings in any version of the schedule of works prepared by [COMPANY_21] and completed by [COMPANY_29].

Additional Costs

28. We are not satisfied that the Respondent was obliged to pay for the costs of alternative accommodation for the occupants of Flats A and B or for the cost of removing and storing their belongings under the terms of the leases. [NAME_6] could not identify any specific clause in the lease which required this. He argued that as it was reasonably necessary for the occupants to vacate the flats while the works were ongoing, the costs were recoverable as part of the cost of the works themselves.

29. We disagree. Firstly as a matter of general principal there is no obligation on a landlord to pay for a tenant’s alternative accommodation while works of repair are ongoing to demised premises if it is necessary for the tenant to vacate for the works to be completed; see McGreal v Wake [1984] 13 H.L.R 107. Secondly the leaseholders are obliged to contribute towards the landlords costs of ‘repair and maintenance and insurance herein after contained’ (Clause 1(b)). We do not consider that this would be understood by a reasonable person to extend beyond the cost of carrying out the works of repair and maintenance themselves.

30. However even if the costs were in principle recoverable, we consider that they were not reasonably incurred. Firstly there is no evidence that it was strictly necessary for the occupants to vacate, and we note that initially [NAME_17] was of the view that the works could be undertaken with the occupants in situ, although we accept that it was certainly more convenient for all concerned for the flats to be vacant while the works were ongoing. Secondly the leaseholders of both Flat A and Flat B were obliged under the terms of their lease to permit reasonable access to the premises on provision of 3 days’ notice. Had the leaseholders of Flat A and B refused to comply with their covenant to give or arrange for reasonable access to their respective properties, the Respondent could simply have declined to carry out the work until such access was granted; a refusal on the part of the tenant to give access to the demised premises operates as a defence to any claim against a landlord for disrepair; see Granada Theatres Ltd v Freehold Investment (Leytonstone) Ltd [1959] Ch. 592

31. For the above reasons we find that the claimed relocation costs are not recoverable from the Applicants as a service charge.

Application under s.20C and refund of fees

32. The Applicants applied for an order under section 20C of the 1985 Act and paragraph 5A of Schedule 11 to the Commonhold and Leasehold Reform Act 2002. They have been partially successful in their application however in our view the Respondent is primarily the successful party. We bear in mind that it was primarily the failure on the part of both parties to prepare proper bundles which led to the adjournment of the hearing listed on 25 January 2025. We consider that it is just and equitable in the circumstances for an order to be made under section 20C of the 1985 Act and Paragraph 5A in respect of the Respondent’s costs of and occasioned by that hearing. We consider that this reflects the degree to which the applicants have succeeded and the fact that they were not solely to blame for that adjournment.

33. We make no order in respect of the fees paid by the Applicants.

Name: Judge N O’[NAME_8] Date: 21 July 2025

Rights of appeal

By rule 36(2) of the Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013, the tribunal is required to notify the parties about any right of appeal they may have.

If a party wishes to appeal this decision to the Upper Tribunal (Lands Chamber), then a written application for permission must be made to the First-tier Tribunal at the regional office which has been dealing with the case.

The application for permission to appeal must arrive at the regional office within 28 days after the tribunal sends written reasons for the decision to the person making the application.

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.

The application for permission to appeal must identify the decision of the tribunal to which it relates (i.e. give the date, the property and the case number), state the grounds of appeal and state the result the party making the application is seeking.

If the tribunal refuses to grant permission to appeal, a further application for permission may be made to the Upper Tribunal (Lands Chamber).