First-tier Tribunal Varies Leases for Service Charges

OUTCOME: Allowed

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FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY) Case reference : LON/00AK/LVT/2024/0008 Property : 1-6 [ADDRESS] [POSTCODE] (Flats 2 and 5 only) Applicant : [redacted] : [COMPANY] Respondents : [redacted] (2) [NAME] and [NAME] ([NAME]

5) Representative : N/A Type of [NAME] : Variation of a lease Tribunal member : Judge Tagliavini Venue : 10 [ADDRESS] [POSTCODE] Date of decision : 17 December 2024

DECISION

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The tribunal’s decision 1. The tribunal determines that the respondents leases fail to make

satisfactory provision for the payment of service charges pursuant to

s.35(4) of the Landlord and Tenant Act 1985. Therefore the tribunal

determines that:

(i) The respondents’ leases of flats 5 and 7 at 1-6 [ADDRESS] [POSTCODE] to be varied in such a way as to provide that

the service charge proportion payable by each of the respondents is as

follows:

16.67 % (service charges)

2.7899% ([NAME] charges)

(ii)The respondents’ leases for flats 2 and 5 respectively be varied in

the manner set out in the draft Deed of Variation provided by the

applicant to the tribunal.

(iii) The amended service charge proportions are to have effect from the

date of completion of the acquisition of the right to manage by the

tenants of bock flats 7-30 and 31-[ADDRESS] being 1 January 2024. _____________________________________________________ The [NAME] 2. The Applicants seek to vary the lease(s) of two flats (flats 2 and 5) at 6

[ADDRESS] [POSTCODE] under

Section 35 of the Landlord and Tenant Act 1987 ("the 1987 Act"). The

leases are said to be defective because:

The present service charge regime in the leases for the two flats

does not enable the Applicant to recover 100% of the service

charges. The background 3. In the witness statement of [NAME] [NAME], Legal Director of

[APPELLANT] dated 26 July 2024 made on behalf of the applicant, Ms

[APPELLANT] stated that the freeholder owner of the flats known as [ADDRESS] [POSTCODE]

(‘the

property’) is [COMPANY]. Pursuant to three

leases dated 4 May 201, the freeholder granted the applicant three

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separate headleases of 999 years for flats 1-6, 7-30 and 31-[ADDRESS]. 4. The applicant is also the long leaseholder of flats 1, 4 and 6 and the leases

for flats 1 – 36 are in a similar form and provide for a contribution

amounting to 100% of the costs incurred by the applicant in respect of

the provision of services. However, in or about 23 August 2023 the

participating tenants of blocks 7-30 and 31-[ADDRESS] exercised

their right to manage and thereafter the applicant no longer undertook

management function in respect of those two blocks. 6. Clause 2(2) or 5(2) of the leases of the flats for the 3 blocks provides that

the lessees will pay and contribute to the service charges (‘the Original

Percentage’) which include costs incurred in respect of the [NAME] known

as 1-[ADDRESS]. The original percentage was calculated on the basis

that the leases 1 to [ADDRESS] would contribute 100% to the

applicant’s expenses. In about 2020, the Residents Association for

[ADDRESS] sought an adjustment to the service charges percentages on

the basis that an additional property known as [NAME] was also

included, as it benefited from the services provided to the [NAME]

although not held on a long lease. 7. This request was accepted by the applicant and the service charge

percentage was adjusted, (‘the Adjusted Percentage’) so that 2.87% was

attributable to [NAME] with the percentages for the flats adjusted

appropriately, although no formal amendment to the leases was made to

reflect this change. However, since the right to manage was acquired by

2 of the 3 blocks this has led to an anomaly arising and a recalculated

percentage is required in respect of the management services as well as

a separate sum for [NAME] charges. 8. The applicant proposed two different service charge percentages be

sought from flats 1-[ADDRESS] – (i) a charge covering those services

provided to the [NAME] as a whole and shared with all [NAME] flats at [ADDRESS] and [NAME] and (ii) a charge relating to the management

services provided to flats 1-[ADDRESS] only. The applicant proposed

the following changes to the percentage charge payable by:

Flats 1-6: 16.666% (service charges)

Flats 1-6: 2.789% ([NAME] charges) The hearing 9. No party requested an oral hearing and the tribunal determined the

[NAME] on the 270 digital bundle of documents provided by the

applicant. The applicant confirmed that all interested parties had been

notified of the [NAME] and had sought their consent to the relevant

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lease(s) being varied by way of a Deed of Variation so as to provide for

the Amended Percentage of 16.67% of the management services payable

for the block [ADDRESS] and 2.7899% of the service charge

payable for the [NAME]. 10. Only a response was received in respect of [NAME] 3, who consented to the

variation sought. No responses were received in respect of flats 2 and 5

either agreeing or objecting to the proposed variation. The applicant

submitted that s.35 of the Landlord and Tenant Act 1987 was

satisfied and the variation sought should be made by the tribunal. The tribunal’s reasons 11. In reaching its decision the tribunal had regard to the relevant statutory

provisions and s.35 of the Landlord and Tenant Act 1987 which states

35.— [NAME] by party to lease for variation of lease.

(1) Any party to a long lease of a [NAME] may make an [NAME] to the

appropriate tribunal for an order varying the lease in such manner as is

specified in the [NAME].

(2) The grounds on which any such [NAME] may be made are that the

lease fails to make satisfactory provision with respect to one or more of

the following matters, namely—

(a) the repair or maintenance of—

(i) the [NAME] in question, or

(ii) the building containing the [NAME], or

(iii) any land or building which is let to the tenant under

the lease or in respect of which rights are conferred

on him under it;

(b) the insurance of the building containing the [NAME] or of any

such land or building as is mentioned in paragraph

(a)(iii);

(c) the repair or maintenance of any installations (whether

they are in the same building as the [NAME] or not) which are

reasonably necessary to ensure that [NAME]

enjoy a reasonable standard of accommodation;

(d) the provision or maintenance of any services which are

reasonably necessary to ensure that [NAME]

enjoy a reasonable standard of accommodation (whether

they are services connected with any such installations or

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not, and whether they are services provided for the benefit

of those [NAME] or services provided for the benefit of

the [NAME] of a number of flats including that [NAME]);

(e) the recovery by one party to the lease from another party

to it of expenditure incurred or to be incurred by him, or

on his behalf, for the benefit of that [NAME] party or of a

number of persons who include that [NAME] party;

(f) the computation of a service charge payable under the

lease ;

(g) such [NAME] matters as may be prescribed by regulations

made by the Secretary of State.

(3) For the purposes of subsection (2)(c) and (d) the factors for

determining, in relation to the [NAME] of a [NAME], what is a reasonable

standard of accommodation may include—

(a) factors relating to the safety and security of the [NAME] and its

[NAME] and of any common parts of the building

containing the [NAME]; and

(b) [NAME] factors relating to the condition of any such common

parts.

(3A) For the purposes of subsection (2)(e) the factors for determining, in

relation to a service charge payable under a lease, whether the lease

makes satisfactory provision include whether it makes provision for an

amount to be payable (by way of interest or otherwise) in respect of a

failure to pay the service charge by the due date.

(4) For the purposes of subsection (2)(f) a lease fails to make satisfactory

provision with respect to the computation of a service charge payable

under it if—

(a) it provides for any such charge to be a proportion of

expenditure incurred, or to be incurred, by or on behalf of

the landlord or a [NAME]; and

(b) [NAME] of the landlord are also liable under their

leases to pay by way of service charges proportions of any

such expenditure; and

(c) the aggregate of the amounts that would, in any particular

case, be payable by reference to the proportions referred to

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in paragraphs (a) and (b) would either exceed or be less

than the whole of any such expenditure.

(5) Procedure regulations under Schedule 12 to the Commonhold and

Leasehold Reform Act 2002 and Tribunal Procedure Rules shall make

provision—

(a) for requiring notice of any [NAME] under this Part to

be served by the [NAME], and by any

respondent to the [NAME], on any person who the

applicant, or (as the case may be) the respondent, knows

or has reason to believe is likely to be affected by any

variation specified in the [NAME], and

(b) for enabling persons served with any such notice to

be joined as parties to the proceedings.

(6) For the purposes of this Part a long lease shall not be regarded as a

long lease of a [NAME]

if—

(a) the demised premises consist of or include three or more

flats contained in the same building; or

(b) the lease constitutes a tenancy to which Part II of the

Landlord and Tenant Act 1954 applies.

(8) In this section “service charge” has the meaning given by section

18(1) of the 1985 Act.

(9) For the purposes of this section and sections 36 to 39, “appropriate

tribunal” means—

(a) if one or more of the long leases concerned relates to

property in England, the First-tier Tribunal or, where

determined by or under Tribunal Procedure Rules, the

Upper Tribunal; and

(b) if one or more of the long leases concerned relates to

property in Wales, a leasehold valuation tribunal. 12. The tribunal is satisfied that the acquisition of the right to manage the

two blocks containing flats 7-30 and 31-36 materially affected the

applicant’s ability to recover 100% of the costs incurred in respect of the

services provided to flats 1-6. Consequently, the tribunal finds that the

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provisions of s.35(4) have been made out by the applicant and the

tribunal makes the determination sought by the applicant

Name: Judge Tagliavini

Date: 17 December 2024

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 ([NAME]), then a written [NAME] for permission must be made to the First- tier Tribunal at the [NAME] which has been dealing with the case. The [NAME] should be made on Form RP PTA available at https://www.gov.uk/government/publications/form-rp-pta-[NAME]-for- permission-to-appeal-a-decision-to-the-upper-tribunal-lands-chamber The [NAME] for permission to appeal must arrive at the [NAME] within 28 days after the Tribunal sends written reasons for the decision to the [NAME]. If the [NAME] is not made within the 28-day time limit, such [NAME] 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 [NAME] for permission to appeal to proceed, despite not being within the time limit. The [NAME] 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 [NAME] the [NAME] is seeking. If the Tribunal refuses to grant permission to appeal, a further [NAME] for permission may be made to the Upper Tribunal ([NAME]).

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