The Court of Appeal clarifies the statutory test for a “self-contained part” of a building in RTM claims

(1) The Courtyard RTM Co Limited, (2) The Studios RTM Co Limited, (3) X1 The Terrace RTM Co Limited v (1) Rockwell (FC103) Limited, (2) Grey GR LP

(1) 14 Park Crescent Limited, (2) PC Investments Limited v 14 Park Crescent RTM Co Limited

[2026] EWCA Civ 712

The Court of Appeal (“CoA”) has handed down its decision in two important appeals (heard together) on how to apply the statutory test for a “self-contained part” of a building under section 72(3)-(4) of the Commonhold and Leasehold Reform Act 2002 (“the 2002 Act”). The decision will have an impact far beyond the right to manage (“the RTM”). It has implications for the Leasehold Reform, Housing and Urban Development Act 1993 and the Building Safety Act 2022, given the similarity in the relevant statutory tests. A similar statutory test is also included in the draft Commonhold and Leasehold Reform Bill 2026 as part of the Government’s proposed move to commonhold.

A copy of the judgment is available here.

What is the test for a self-contained part of a building?

The 2002 Act provides that the RTM can only be claimed in respect of certain descriptions of “building”. One such description is a “self-contained part” of a building.

Section 72(3)-(4) sets out a three-stage test for establishing that a part of a building is a self-contained part of a building.

First, whether the part constitutes a “vertical division of the building”.

Second, whether the structure of the building is such that the part could be redeveloped independently of the rest of the building.

Third, whether the relevant services are provided to the part independently of the relevant services provided for occupiers of the rest of the building, or could be so provided without significant interruption in the provision of any relevant services for the occupiers of the rest of the building.

Appellate history

The first appeal, (1) The Courtyard RTM Co Limited, (2) The Studios RTM Co Limited, (3) X1 The Terrace RTM Co Limited v (1) Rockwell (FC103) Limited, (2) Grey GR LP concerned three blocks forming part of the Plaza Boulevard in Liverpool. The Plaza Boulevard was developed in phases and, although each phase is separate from each other, all phases are structurally attached to a central concrete podium which spans the area between them. Beneath this concrete podium is a shared car park. The RTM was claimed by the respective RTM companies for each building on the basis that each block was a self-contained part of a building. The First-tier Tribunal (“FTT”) held that none of the blocks is eligible to acquire RTM because none are self-contained. The RTM companies appealed to the Upper Tribunal (“UT”), although the respondents cross-appealed on the issue of vertical division.

The second appeal, (1) 14 Park Crescent Limited, (2) PC Investments Limited v 14 Park Crescent RTM Co Limited concerned 14 Park Crescent and 8 Park Crescent Mews East (“14 Park Crescent”). 14 Park Crescent, while originally built in 1820, underwent redevelopment between 2012-2018 and was demolished except for the front façade and a 1960s steel and concrete frame. As part of the redevelopment, the original foundations of the party walls were excavated, new substantial foundations were inserted and a basement was added. 14 Park Crescent RTM Company claimed the RTM in respect of 14 Park Crescent on the basis that it was a self-contained part of a building. The First-tier Tribunal agreed. The immediate and superior landlords appealed to the UT.

The Upper Tribunal’s decision

The UT found that:

• The FTT was correct to find that the three Plaza Boulevard blocks are not self-contained parts of a building and so the right to manage provisions did not apply to them.
• The FTT was correct to find that 14 Park Crescent is a self-contained part of a building and that the Respondent is entitled to acquire the right to manage it.

Vertical division

On vertical division, the UT found that:

• Vertical division only applies at the points where the ‘part’ immediately adjoins the rest of the building to which it is attached ([53] – [57]).
• The fact that the notional dividing line must pass through a solid structure perpendicular to that line is no obstacle to the premises constituting a vertical division of the building ([61]).

However, with respect to the Plaza Boulevard blocks, it was held that, at basement level, the car park beneath the individual blocks was not a self-contained premises with a vertical ‘division’ in the ordinary sense because it is open-plan and undivided. Relying on FirstPort Property Services Ltd v Settlers Court RTM Co Ltd [2022] UKSC 1, [2022] 1 WLR 519 the UT held that it seems unlikely to have been intended that the management of the undivided car park would be split between the building owner and the relevant RTM companies. Moreover, another practical difficulty is that others who are not tenants of the block have been granted rights, including of parking spaces, within the areas of which the RTM company claims the exclusive right to manage ([74]-[76]).

On the second appeal, the UT held that it was irrelevant that the foundations of 14 Park Crescent spanned under in the voided areas of neighbouring properties since there is no sense in which the foundations on one side of a party wall “belong” to another’s building. Each owner owns up to the midpoint of the party wall and the foundations beneath it. Thus, a vertical line could be drawn between No 14 and No 12 and the spanning foundations were irrelevant. Furthermore, even though there were movement joints, it was decided that as section 72(3)(a) says nothing about the need for a perfectly straight boundary between the premises and its neighbour, no such requirement can be read into that section ([78]-[82]).

Independent redevelopment

The UT found that the independent redevelopment test could be met even if support was needed to the adjoining structures ([93]-[96]) or if part of the structure of the self-contained part had to be retained. As such, the UT held that each of the three Plaza Boulevard blocks could be independently redeveloped as could No 14.

Provision of services

This issue was only relevant to the Studios. The UT held that the FTT was entitled to reach the conclusion that the fire alarm service shared between these blocks could be provided independently without significant interruption ([98]-[103]).

The Court of Appeal’s decision

The RTM companies in the first appeal appealed the decision of the UT to the CoA and the respondents cross-appealed on the issue of the independent redevelopment test.

In the second appeal, the immediate and superior landlords appealed the decision of the UT to the CoA.

The CoA dismissed both appeals, noting that the decision of the “Deputy President [of the UT] was correct for the reasons he gave in his admirably clear and well-reasoned decision” ([131]).

• General considerations

The CoA considered that despite the differences between the statutory regimes, section 3 of the Leasehold Reform, Housing and Urban Development Act 1993, which contains materially the same definition of “self-contained part”, and the authorities which consider that provision, assist in construing section 72 of the 2002 Act.

• Vertical division

In respect of the first appeal, the CoA concluded that section 72 is concerned with actual, physical, divisions of a building; a notional line could not be drawn through thin air to create a “vertical division”. Accordingly, there was no “vertical” division in the parking area which was open plan. The CoA also reached this conclusion on the basis that the court should seek to read the 2002 Act so as to minimise the practical problems that might arise from the management of shared estate facilities. Such practical problems would, in the CoA’s view, materialise in the first appeal.

In respect of the second appeal, the CoA noted that the test is a purely physical test and that there was no problem with drawing a notional line through a physical feature such as a party wall or foundations.

The CoA also rejected the need for a perfectly straight vertical division; dog legs are permissible.

• Independent redevelopment 

The CoA concluded that the independent redevelopment test concerned whether the relevant part of the building could be redeveloped without the rest of the building being redeveloped at the same time. The test is about the building and its structural features. The test is not about whether others would be affected by the redevelopment.

The CoA also rejected the notion that redevelopment of the part of the building which required the use of props or temporary supports was a disqualifying feature; this did not, in the CoA’s view, prevent there being independent redevelopment.

In addition, the redevelopment, in the CoA’s view, need not involve the complete removal of every element of the relevant part of the building, top to bottom. The question of whether something amounts to redevelopment is a question of fact and degree in every case, which the FTT, as a specialist tribunal, is qualified to address.

Wider significance of the decision

The decision is one of very few to consider the statutory test for a “self-contained part of a building”. It also has wider significance: the language of section 72(3)-(4) is almost identical to that used in section 3(2) of the Leasehold Reform, Housing and Urban Development Act 1993 and in section 117(5) of the Building Safety Act 2022. Therefore, the decision has wider implications for both collective enfranchisement and building safety.

The decision is also an example of the courts adopting a purposive construction to statute.

Simon Allison KC and Sophie Gibson acted for Grey GR Limited Partnership, instructed by JB Leitch Ltd.

Justin Bates KC and Peter Sibley acted for 14 Park Crescent Ltd and PC Investments Ltd, instructed by Northover LLP.