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£50,000 service charge on Right-to-Buy leaseholders declared unreasonable by Tribunal

DATE: 06 Oct 2017

The First-Tier Tribunal (Property Chamber) has determined, pursuant to an application by Oxford City Council under section 27A of the Landlord and Tenant Act 1985, that almost all the items in a £50,000 service charge demanded from each Right to Buy leaseholder in a 15-storey tower-block in Oxford were unreasonably incurred and not payable by the leaseholders.

Save for lift works and concrete repairs to the exterior (which the leaseholders accepted), the FTT found that the Council’s major refurbishment project for the tower-block – costing nearly £4m plus design and management costs – went beyond what could reasonably fall within the Council’s covenant to “maintain” the building. The works included new doors and windows for each flat, a new roof, new enclosed balconies, a new external cladding system, and a complete upgrade of the communal and individual flat fire safety systems.

The FTT accepted the submissions made on behalf of the Oxford Tower-Block Leaseholder Association that there was no evidence of actual disrepair so as to justify these works under the covenant to “maintain”. Unlike other Right to Buy leases, the leases in this case did not allow the Council to recover a service charge for works of “improvement”.

Very similar works are being undertaken in four other tower-blocks in Oxford, with equally high service charges demanded of leaseholders. The FTT’s decision is expected to be applied consistently to these other tower-blocks, and will be an important precedent for other similar cases around the country.

Matthew Fraser acted for the Oxford Tower-Block Leaseholder Association, instructed by Solomon Taylor Shaw.