Background
Southern Land Securities Ltd was the landlord of an eight-flat building in London. Damp-proofing works were needed in two basement flats, requiring plaster removal, installation of a chemical damp-proof course, waterproof rendering, and exterior pointing. The landlord paid for temporary accommodation, removal and storage for the basement occupants while the works proceeded.
Two other leaseholders applied to the First-tier Tribunal under section 27A of the Landlord and Tenant Act 1985. The FTT upheld the works themselves but held that the leaseholders need not contribute to the relocation and storage costs. It considered those costs outside the repairing covenant and not reasonably incurred. The landlord appealed.
The Court’s Holding
The Upper Tribunal allowed the appeal, set aside the FTT’s determination, and held that the respondents must contribute through the service charge to the temporary accommodation and storage costs. The lease permitted recovery of expenditure incurred in performing the landlord’s repairing obligations; ancillary expenditure of this kind was recoverable just as professional supervision, waste disposal, or scaffolding-related costs could be.
Applying McGreal v Wake, the Tribunal held that the basement occupants could not be compelled to leave unless vacancy was essential to carrying out the repairs. On the FTT’s factual view, it was not essential: the work could have been done while they remained, albeit more slowly and expensively. But that did not make the landlord’s decision to pay the occupants’ expenses for voluntary relocation unreasonable. The landlord could reasonably choose the quicker method of completing the repairs, and the FTT’s contrary approach reversed the principle in McGreal.
Key Takeaways
- Service-charge provisions covering repair expenditure can include reasonable ancillary costs, including temporary rehousing, removal and storage.
- A tenant is obliged to vacate for repairs only where exclusive possession is essential to the works.
- Where vacancy is not essential, a landlord may still reasonably pay for voluntary relocation to enable repairs to be completed more quickly.
Why It Matters
The decision confirms that recoverable repair costs are not confined to the contractor’s direct bill. In an appropriate case, leaseholders may be required to contribute to reasonable practical measures that enable substantial repairs to be performed efficiently.
It also distinguishes between whether occupants can be forced to leave and whether a landlord may reasonably fund an agreed move-out. The former depends on necessity; the latter turns on the reasonableness of the landlord’s chosen method of performing its repairing obligations.