Luxury Flats – Leaseholders’ Right to Manage Hopes Stymied

May 29, 2014

Luxury Flats – Leaseholders’ Right to Manage Hopes Stymied

In a case which vividly illustrates the difficulties faced by leaseholders wishing to take over management of their homes, residents of a block of luxury riverside apartments hit a fatal stumbling block when the Upper Tribunal (UT) ruled that the building was not 'structurally detached' from its neighbour.

The visually striking modern building on the south bank of the River Thames comprised 185 high-specification apartments benefiting from a communal pool, gym, underground parking and other desirable facilities. Residents had set up a 'Right to Manage' (RTM) company with a view to taking over management of the premises from the landlord.

However, in objecting to the proposal, the landlord argued that the building formed an integral part of a larger structure and thus could not be viewed as self-contained or structurally detached, a pre-requisite for obtaining a right to manage laid down by Section 72(1)(a) of the Commonhold and Leasehold Reform Act 2002.

That argument failed before the Leasehold Valuation Tribunal. However, in allowing the landlord's appeal, the UT ruled that the building was part of a 'single structural entity' with a neighbouring building and thus could not, 'by any stretch of the imagination', be viewed as structurally detached.

The building stood atop a very large underground car park which spread far beyond its footprint and was shared by commercial and housing association tenants of the neighbouring building. The RTM company argued that their application only related to those parts of the building that were above ground level.

However, the UT ruled, "We do not accept the submission that, as a matter of ordinary language, a building comprises only so much of a built structure as is visible above ground level; the ordinary householder whose property includes a basement, or the flat owner who has the use of storage or refuse areas beneath a block of flats, would be equally surprised by the suggestion that the basement was not part of their building."

The UT added, "Even if the RTM company is entitled to define the premises to which the claim relates as only so much of the building as is visible above ground, it cannot satisfy the requirement that the premises must be a self-contained building by designating the structures below ground level, to which the building is clearly attached, as appurtenant property."