Student housing and leasehold management

Q Studios (Stoke) RTM Co Ltd v (1) Premier Ground Rents No.6 Ltd (2) North Street (Management Company) Ltd [2020] UKUT 197 (LC) Fancourt J, President By Part 2, Chapter 1, Commonhold and Leasehold Reform Act 2002, qualifying long leaseholders of flats are entitled to establish and join a “Right to Manage Company” (“RTM company”) through which they may take over management of their building. A “flat” is defined as, inter alia, something which is “constructed or adapted for use of the purposes of a dwelling” (s.112(1)). “Dwelling” is further defined as “a part of a building occupied or intended to be occupied as a separate dwelling”. The respondents were the owners of a purpose-built block of student accommodation in Stoke. The building comprised 292 “studystudios” (large enough for a bed and desk, and equipped with a shower, toilet, fridge and two-ring hob for cooking). It also contained a communal lounge/cinema area, a laundry room and an office for the on-site manager. Each studystudio was let on a long lease and then underlet to a student. A majority of the leaseholders of the flats formed the applicant RTM company and sought to acquire the management of the building. The respondents contended that the studystudios were not “flats” because they were not “separate dwellings”: the dwelling that was being occupied was the studystudio and the communal facilities. The First-tier Tribunal considered that the case raised issues of wider importance and transferred the claim to the Upper Tribunal  (r.25, Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013). The Upper Tribunal found for the RTM company. Whether the studystudios were flats was an objective test having regard to their physical characteristics. The studystudios had all the necessary space and facilities to be a dwelling; the occupier could sleep, cook, work and wash in the room. Comment This is the second time in recent years that the UT has had to consider the rights of long leaseholders of student accommodation. In JLJ Ltd v Ezekwe [2017] UKUT 277 (LC), it was held that student units of this sort were not “dwellings” for the purposes of the Landlord and Tenant Act 1985, so that leaseholders were not entitled  to the statutory protection afforded to residential service charge payers. It seems odd that leaseholders can exercise the right to manage but cannot seek protection against unreasonable service charges. Justin Bates acted for the respondents. The decision can be found here.