In the recent case of Lehner v Lant St Management Co Ltd [2024] UKUT 135 (LC), two significant clarifications were provided by the Upper Tribunal (UT) in relation to (a frankly obvious point on) what constitutes a valid service charge demand and a far more detailed look at the approach that should be adopted when assessing whether a leaseholder will or will not benefit from the provisions of the Building Safety Act 2024 (“BSA 2022”) that protect a leaseholder from liability for costs relating to fire safety works. This update outlines the key points from the judgment and their implications for landlords and leaseholders.

Demand for Service Charges

The UT emphasised that for a demand for the payment of service charges to be valid (and enforceable) it must, in compliance with s.47/48 Landlord and Tenant Act 1987,  include the correct name and address of the landlord. If the landlord's address is not in England or Wales, an address within these jurisdictions where notices can be served must be provided. 

Failure to comply with this requirement renders the service charge unenforceable until the correct information is supplied. 

See our Legal Update on this specific point here - Section 47 and 48: What it really requires? – KDL Law

Fire Safety Risks and Remedial Works

Most of us will now be very much aware that numerous buildings across England and Wales have been identified as being affected by fire safety risks due to construction materials or building quality. For buildings containing long-lease flats, the landlord can typically use service charge funds collected from the leaseholders of those flats to pay for necessary remedial works arising form the need for repairs, improvements, statutory compliance, or directives from public authorities in relation to those identified fire safety risks.

However, to alleviate the financial burden on leaseholders, the government established the Building Safety Fund, to fully or partially fund essential fire safety related works to such buildings.

As of 28 June 2022, Schedule 8 of the Building Safety Act 2022 prevents certain landlords from charging specified leaseholders for certain types of fire safety works, including the removal of specific types of cladding applied to buildings (such as those that caused the issue at Grenfell Tower (Sch.8, para.8, BSA 2022).

These issues both arose in the case of Lehner vs. Lant St Management Co Ltd, the subject of this legal update and both are useful reminders of what any landlord/RMC/RTM and their agent should look out for prior to embarking on expensive enforcement steps.

Background

Mr Lehner, an owner of a leasehold flat, contested a service charge demand of £1,244.85 levied by his landlord, Lant St Management Co Ltd, for costs relating to the removal and replacement of items such as cladding panels at his block. The First-tier Tribunal (FTT) rejected Mr Lehner’s protestations and found the charges to be validly due to the landlord. 

Mr Lehner appealed to the UT.

Appeal and Decision:

The UT, in granted permission to appeal, was critical of the FTT for not adequately considering the relevant law or evidence in this matter and, as it turns out, ultimately making the wrong decision and wholly missing the most valid point in relation to the protections provided to the leaseholder under both Landlord and Tenant Act 1987 and the BSA 2022.

There were two issues at play.  

Firstly, no service charge was due from Mr Lehner because the landlord had failed to provide Mr Lehner with a demand that complied with s.47 LTA 1987. Accordingly, the landlord's action must fall at the very first hurdle there was no valid demand and thus no ability to enforce.

Secondly, and although academic given the first point above, the UT identified that the FTT had entirely overlooked, and so had not properly considered, that the works for which the charges were imposed upon Mr Lehner were works to which the protections of Sch.8, para.8 of the BSA 2022 applied. Accordingly, no service charge could be levied against Mr Lehner for those works in any event.

Implications for Landlords and Leaseholders

This case underscores the importance of landlords adhering to statutory requirements when demanding service charges - see here - Getting your service charge demands right – KDL Law.

Additionally, it highlights the protective measures for leaseholders under the BSA 2022. The UT set out a “a sequence of questions which a decision maker should address when determining whether service charges are payable in respect of work to which the leaseholder protections [under Sch 8 BSA 2022] may apply”.  That list is extensive and so not included in this Legal Update but is found within the decision seen at the link above.

Accordingly, the case highlights the need for professional managing agent Landlords, RMC’s and RTM’s to check thoroughly what has been demanded and how that has been demanded from a leaseholder before incurring costs in enforcement steps taken where a charge is unpaid.

For further guidance, landlords and leaseholders should consult legal experts to navigate the complexities of service charge demands and compliance with fire safety regulations.

Disclaimer

This Legal Update describes the position in law as at the date of this article and care should be taken to note any subsequent amendments to the position as set out above.  The Legal Update is provided free of charge for information purposes only; it does not constitute legal advice and should not be relied on as such. No responsibility for the accuracy and/or correctness of the information and commentary set out in the article, or for any consequences of relying on it, is assumed or accepted by any member of KDL Law or by KDL Law as a whole.

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