Enfranchisement & RTM
A question of proportion!
be included within the non- residential calculation.
Problem areas It is appreciated that
difficulty can arise where a commercial unit is used fully or partly as a dwelling. For example, a caretaker’s flat has been confirmed to be a unit that is residential and a common part (Panagopoulos v Cadogan [2010] EWCA Civ 1259). Further, the use of live/work units causes an issue in the calculations. This is very much debatable. Are specific parts provided for living and provided for work within the lease plans? If there are, then the calculation may be easier, but, the lines may become blurred where there is not a distinction between a living and working area. In KW RTM Co Ltd v Lemonland (Kings Wharf) Ltd, the mezzanine contained live/ work units and the residential parts of the mezzanine were included within the calculation for residential parts. In addition to the points above, the functions of other parts within a building may need to be clarified with further information to assess whether these could potentially be classified as residential: • Business centres, common rooms, games rooms. • Gyms and laundry rooms. • Any rooms used by staff to carry out ad-hoc services for the benefit of the residents. If this is on an ad-hoc only basis it is unlikely to be a common part. Aa cleaning cupboard used on a regular basis is likely to be a common part. In summary, there is no “one size fits all” answer. Where there is a mixed-use building, in respect of determining whether the exclusion applies to a claim for the right to manage, detailed calculations will be required and advice should be sought.
O btaining the right to manage via the Commonhold and Leasehold Reform Act 2002 (“CLRA”) requires the premises to have several characteristics to qualify for such management. CLRA provides that certain premises are excluded: this includes mixed-use premises where more than 25% of the internal floor area is considered non-residential. The calculation as to whether 25% is non- residential is not necessarily straightforward. The building In respect of the calculation of residential and non-residential parts, the common areas will be excluded from the calculations. A part of the building will be non-residential if it isn’t occupied nor intended to be occupied for residential purposes. Various examples of case law have explored what areas of a building form common, residential and non-residential parts. Therefore, an analysis in respect of a building comprising of mixed use will need assessment of each individual area. It should also be noted that an un-demised part cannot automatically be regarded as a common part; for example, the area may form part of the landlord’s retained property and therefore be a non-residential area to be contained within the calculations. Residential The following will be considered to be residential in nature: • The individual flats which have
Katie Edwards considers the issues around calculating whether a mixed-use property qualifies for the right to manage and the distinctions between living and working areas
Non-residential A part of a building is non- residential if it is not demised for residential purposes, not intended to be used for occupation and not a common part. The following would be considered non-residential: • Commercial units • Storage areas or parking spaces that are not allocated to a demised residential area • Un-demised parts of the building which are retained by the landlord but are not a common part, ie some un- demised parts of the building are used for storage. • A mezzanine floor used for non-residential purposes would potentially be considered a non-residential area if there has been an installation within the commercial part of a building. It could therefore be surmised that the non-residential parts of a mezzanine floor that are commercial would
been demised to leaseholders. • Bedsits and studio flats to which ample living accommodation is provided to be considered as a separate dwelling. See Q Studios (Stoke) RTM Co Ltd v Premier Grounds Rents No 6 Ltd and another [2020] UKUT 197 (LC) . Any parts of the building which are used (or intended to be used) in conjunction with a dwelling will be included within the residential areas. This would include a garage, parking space or storage area linked with a flat. An analysis of the leases will be required. Common parts Common parts are generally excluded from the calculation and include the following areas: • Staircases, hallways, passageways, lifts and shafts. This includes common parts in commercial areas. • Corridors, passageways, staircases leading to lift motor rooms, boilers, water tanks, etc as these amount to a common facility.
Katie Edwards is an associate at J B Leitch Ltd
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