Enfranchisement & RTM
Lessons in student housing & leaseholder rights
to acquire the management of the building. The landlords resisted that application. They contended that, in order to qualify for the RTM, the building had to comprise “flats”; that was defined in the Commonhold and Leasehold Reform Act 2002 as something which was “constructed or adapted for use of the purposes of a dwelling”. “Dwelling” was further defined as “a part of a building occupied or intended to be occupied as a separate dwelling” (s112). Applying JLK – or so the landlord argued – the studystudio and the communal facilities was the dwelling. The upper tribunal disagreed. 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. The lounge and other facilities were merely an ancillary benefit available to the occupiers of the studystudios. It may seem odd that student housing fell outside the statutory service charge regulations provisions in JLK but was subject to the right to manage in Q Studios. The answer seems to be two-fold. First, the physical differences between the “pods” and “studystudios” mattered, with the latter being larger and better equipped. Secondly, the policy of the RTM legislation was said to be to afford those with the greatest financial stake in the building (ie the leaseholders) to take control and there is no similar policy drive in service charge disputes.
P rivately developed and run student accommodation has seen a significant growth in England in recent years. The model involves a developer constructing a building comprising a number of student rooms, together with communal living space and facilities, for example gym, laundry facilities, etc. The rooms are then let on long leases to investors who, in turn, underlet those rooms to students at commercial rents. The intention is that the rent produces enough money to meet the service charge liabilities and return a profit to the leaseholder. Such schemes have twice come before the upper tribunal in recent years. In JLK Ltd v Ezekwe [2017] UKUT 277 (LC); [2017] L. & T.R. 29, the building comprised 93 “pods”, the majority of which were single bedrooms with en-suite showers and toilets. There were communal lounge and kitchen facilities. The lease demised the “pod” to the leaseholder (who then underlet to the student) and also granted a right to use the communal facilities. The leaseholders sought to challenge their service charges and the landlord denied that the leaseholders were tenants of “dwellings”. That was because, in order to be a dwelling, the pod had to be “…occupied or intended to be occupied as a separate dwelling" (s38, Landlord and Tenant Act 1985). The upper
Justin Bates looks at issues that can arise with student accommodation
(Stoke) RTM Co Ltd v (1) Premier Ground Rents No.6 Ltd (2) North Street (Management Company) Ltd [2020] UKUT 197 (LC), the building was a purpose-built block of student accommodation and comprised 292 “studystudios” Each studystudio was let on a long lease and then underlet to a student. The studystudios were large enough for a bed and desk, and were equipped with a shower, toilet, fridge and two-ring hob for cooking. The building also contained a communal lounge/cinema area and a laundry room, with a right to use them granted under the terms of the leases. Some of the leaseholders formed a right to manage (RTM) company and sought
tribunal agreed.
The requirement that a “dwelling” must be “occupied as a separate dwelling” was not satisfied. The leaseholders of the pods had to share a kitchen and lounge with other leaseholders. The “dwelling” was the pod and the communal space and the leaseholder was only the tenant of the pod, ie only part of the dwelling. More recently, in Q Studios
Justin Bates is a barrister at Landmark Chambers
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