A recent court case held that a Landlord was entitled to build two new flats on the roof of its building even though the leases of the flats in the building did not reserve to him an express right to do so.
The Tenants of a block of flats were seeking to buy the freehold of the property and made an application to the court to determine the price payable. The Landlord appealed the decision on the basis that the price payable for the freehold was too low given the Landlord’s right to develop the property.
The court’s decision
On appeal, the court held that:
- The roof was not included in the Tenants’ part of the property and therefore, the Landlord could do what it wants on the roof, subject to not interfering with any rights granted under the Lease,
- A new roof constructed as part of the additional flat would become the roof of the premises and the management company’s obligations in the lease to maintain and repair the roof would apply to the new roof, and
- The Landlord was entitled to a price that reflected the development value.
However, this ruling does not set a precedent for all landlords to start developing on the roofs of their buildings. The decision, at least in part, depended on the facts of this particular case. There are nine flats in the block, all owned by leaseholders on long leases. Each leaseholder owns the internal surface of the walls, the floors, ceilings, and the external walls, but significantly the roof remains in the ownership of the Landlord. Under the lease, the management company agreed to repair and maintain the building, including the roof.
Planning permission to build two new flats on the roof had been obtained in 2018 by a developer. The management company served a notice on the landlord claiming the right to buy the freehold of the building. The Landlord admitted the right and it was only the price payable that was to be determined by the court.
Dispute over freehold price
The court decided that the terms of the lease meant that the Landlord did not have an express right to build two new flats on the roof and held that a price of £49,500 was payable by the tenants for the freehold. However, the court also stated if the lease did not prevent the Landlord from adding two new flats, then the price would rise to £191,225.
The Landlord appealed, arguing that the lease did not prevent the addition of two new flats and therefore, the price payable by the tenants for the freehold should be £191,225.
The Landlord’s appeal succeeded because, even though there was no express right in the lease to build, there was nothing preventing the addition of two new flats on the roof. While, in this case it won’t be the Landlord doing the building (as the tenants are buying the freehold) it is an important decision as the appeal court held that the Landlord was entitled to the higher price even where there was no explicit right in the lease to develop the building.
For more information about this and our wider property and litigation services, please contact the authors or fill in the form below: