Leaseholders not liable for cost of repairing structural defects

The Court of Appeal has ruled that a group of leaseholders were not responsible for the cost of repairs if those repairs also made good fundamental structural defects in their properties.

The leases related to flats situated in a large block constructed in 1957. They were for 125-year terms and were originally granted under the right to buy provisions in the Housing Act 1980.

Each lease contained a service charge covenant requiring the lessee to pay to the landlord a reasonable part of the costs of carrying out “specified repairs”.

The covenants defined “specified repairs” as work needed to keep the structure and exterior of the premises in good condition, “not amounting to the making good of structural defects”.

In 2016 the landlord undertook works to address long-standing water penetration. It argued that where a defect had caused damage to the building, works to repair that damage did not cease to be works of repair merely because they simultaneously eradicated the defect.

The Upper Tribunal (Lands Chamber) disagreed, holding that works would not be “specified repairs” if their effect was to make good a structural defect, even if that defect had caused damage which the works remedied.

The Court of Appeal has upheld that decision.

Please contact us if you would like more information about the issues raised in this article or any aspect of commercial property law.

Leaseholders not liable for cost of repairing structural defects
City of London v Various Leaseholders of Great Arthur House
Court of Appeal (Civil Division)
25 March 2021
Lewison LJ;
Bean LJ;
Arnold LJ