Service charges and other issues
A guide to service charges, administration charges, ground rent, recognised tenants associations and forfeiture.
By Kavita Bharti, Legal Adviser, Leasehold Advisory Service
This particular question was considered in the recent case of JLK Limited v Emmanuel Chiedu Ezekwe (and others)  UKUT 277 (LC) where a landlord successfully appealed against the decision of the First-tier Tribunal (FtT) that it had power to hear applications brought by 56 leaseholders (student accommodation) for a determination of the amount of service charges they were liable to pay.
This case was regarding a large, 4-floor building called Alexander Terrace which was converted into 93 units of residential accommodation in 2012 intended for occupation by students. Each of the units is let on a long lease which demises the unit together with the right to use communal kitchens and lounges, showers and toilets situated on the same floor.
The building had been occupied by students between 2011 and 2014. In 2014 a prohibition order had been served by the local housing authority pursuant to s.20 of the Housing Act 2004because the communal boiler in the building had stopped working and there was no longer any supply of hot or cold water. From then on the use of the building was prohibited and it became an offence for any person to use or permit the building to be used in contravention of the order.
56 leaseholders then brought applications under s.27A of the LTA85 to determine the service charges payable to their landlord for the years 2014-2016.
Is student accommodation classed as a “dwelling” for the purposes of LTA 1985?
The following issues were considered by the FtT.
- Firstly, in order for a unit of accommodation to be considered a “dwelling” for the purpose of the Landlord and Tenant Act 1985, whether it is necessary that the premises should be used as, or be intended to be used as, someone’s home.
- If this is the case, then whether the units at Alexander Terrace satisfy that requirement and
- whether, in any event, each of the units at Alexander Terrace is occupied or intended to be occupied as a “separate” dwelling, or whether the availability of communal facilities to which each tenant has access under the terms of their lease means that the necessary element of separateness is missing.
The FtT ruled that the units were ‘dwellings’ and therefore they had jurisdiction to determine the amount of service charges payable by the leaseholders of those units. The FtT granted permission to appeal given the wider significance of their decision.
The Upper Tribunal
The FtT’s decision was upheld with regards the first and second ground of appeal as it was held that a unit of accommodation does not need to be someone’s ‘home’ to be a dwelling. If part of a building is physically capable of being occupied as a separate dwelling there does not appear to be anything in the language, context or purpose of the relevant passages in the 1985 Act to require additionally that it must be occupied as someone’s home.
However, it was held, under the third ground for appeal, that the accommodation was not occupied or intended to be occupied as a separate dwelling and so they were not dwellings within the meaning of section 38 of the Landlord and Tenant Act 1985 which states that “dwelling” means a building or part of a building occupied or intended to be occupied as a separate dwelling together with any yard, garden, outhouses and appurtenances belonging to it or usually enjoyed with it. The accommodation was not occupied nor intended to be occupied as separate dwellings. The bed-sit rooms that comprised the units were only a part of a tenant’s dwelling, which in fact comprised of a further kitchen and lounge. Therefore the FtT did not have jurisdiction to consider the applications under s.27A of the Act.
- The property was not classed as a separate dwelling as a result of the facilities being shared by other tenants
- The First-tier Tribunal had no jurisdiction to determine the service charge dispute as a result
- Be aware of the importance of the lay out of the individual units. Where the properties are fully self-contained, the layout is unlikely to be an issue.
- Where there are shared areas, you should not assume that you will have the ability to challenge service charge demands further down the line.