Real Estate Update - May 2011

Service Charge Recovery – Repair v Improvement

The recently reported case of Craighead v Homes for Islington Ltd & Anor [2010] is a useful reminder to Landlords to check the cost of works is recoverable through the service charge.

This case involved an estate comprising three blocks of flats let on long leases, in three different forms. One form of lease allowed the recovery of service charge expenses incurred in the 'repair, maintenance and renewal' of the premises. The other two forms of leases went further – also including 'improvements'.

The flats were originally built with single glazed windows. The landlord replaced the windows with modern double glazing and sought to recover the expenses from all tenants. The tenants with the form of lease not including recovery for 'improvements' sought direction from the Leasehold Valuation Tribunal (LVT) as to whether the works amounted to an 'improvement' and were therefore irrecoverable.