In this article, the team at specialist property solicitors JB Leitch provide an update on some significant cases which hold major implications for the property management sector.
Leasehold Reform
As readers are aware, the Leasehold & Freehold Reform Act 2024 (LAFRA) has been subject to legal challenge.
Following the dismissal of the case brought to the High Court by freeholders in October 2025, which argued the reforms violated property rights, (including the ground rent cap limiting the amount of ground rent that can be considered when calculating the price payable for an extended lease, proposed marriage value reform and costs recovery reform to prevent legal and administrative costs being payable by leaseholders), the claimants have been granted permission to appeal on all grounds.
While outcomes are uncertain, there are key areas of legislation that may be subject to delay. If the case is subsequently brought before the Supreme Court, the impacts of the decision – and implementation – may even take a number of years.
Although the government has previously indicated it would wait for legal clarity before launching consultations on valuation rates (deferment and capitalisation rates), an ongoing appeal may lead ministers to further postpone these consultations and the drafting of the required secondary legislation.
This is further compounded by previous government statements which have indicated that it has already identified “serious flaws” in LAFRA that require “further primary legislation” to fix. The appeal process may delay these legislative “fixes,” pushing full implementation even further back, although the removal of the two-year ownership requirement for lease extensions and the Right to Manage reforms are likely to remain in effect.
The matter is now due to be heard by 13 June 2026.
The High Court Clarifies the Scope of Building Liability Orders
In early April, the High Court delivered an important judgment in Crest Nicholson v Ardmore, regarding the building liability order (“BLO”) regime under sections 130–131 of the Building Safety Act 2022 (“BSA”) and the circumstances in which Building Liability Orders (“BLOs”) can be made against associated companies.
Specifically, Crest applied for two BLOs: An Anticipatory BLO which required ACL’s associated entities to assume any future relevant liability for building safety risks under the Defective Premises Act, and secondly an adjudication BLO to make the defendants jointly and severally liable for the c.£14.9 million adjudication award obtained against ACL.
Both applications were resisted, with the Defendants arguing that the adjudication and BLO regimes were incompatible adding that adjudicators lack jurisdiction over DPA claims.
Crest successfully obtained both an anticipatory BLO and an adjudication BLO against solvent group companies in the Ardmore group, with the judgment noting that “it is just and equitable that each of the BLO Defendants is jointly and severally liable for the sums owed by ACL to the First and Third Claimants under the Adjudicator’s Decision”.
This determines that BLOs can pursue wider liability before a trial and that Courts are prepared to grant the Orders before final decisions on liability.
What the Decision Will Mean in Practice:
Claimants will now be able to seek recovery from solvent group companies at an early stage, even where the original contracting party has become insolvent, meaning in short that enforcement can effectively move beyond the potential dead-end of insolvent entities.
This highlights that early risk assessment on potential exposure and liabilities is essential for both historic and live projects and that potential restructuring or whether a company is in administration, may not protect associated organisations form scrutiny and potential liability under the regime – and where corporate groups can be held responsible for historic defects.
Service Charges
The Upper Tribunal recently considered an appeal by a landlord in respect of a costs order made against it by the First-tier Tribunal in a dispute concerning a demand for service charges. The Tribunal considered the effect of s.47 Landlord and Tenant Act 1987, and whether the absence of an address for the landlord rendered the demands invalid.
In Simon Birch v Paul Meredith [2026], the landlord was the freeholder of a mixed use property comprising a ground floor commercial unit with 6 residential flats above. The respondent leaseholder held a long lease of the six residential flats, each of which were sublet.
The leaseholder made an application to the First-tier Tribunal (“FTT”) for determination as to the payability of service charges in respect of the service charge year 2023-24, which comprised charges for drainage works, legal fees, pointing and scaffolding.
The FTT determined that the service charge demands were invalid as they had not included an address for the landlord in accordance with s.47 Landlord and Tenant Act 1987, and considering whether service charges would have been payable if they had been properly demanded, concluded that the costs of the works had been reasonably incurred, but reduced legal fees by a small amount. The leaseholder was found to be liable for service charges.
The leaseholder successfully applied to the FTT for an order under s.20C Landlord and Tenant Act 1985 and para. 5A Sch. 11 Commonhold and Leasehold Reform Act 2002, preventing the landlord from recovering legal fees through the service charge, and a further order seeking reimbursement of his Tribunal application fee. The landlord appealed the FTT’s decision with regards to costs and fees.
The Upper Tribunal (“UT”) agreed to set aside the s.20C and para. 5A costs orders, and refused to make an order that the landlord reimbursed the leaseholder’s FTT application fee.
The landlord argued that the failure to comply with s.47 of the 1987 Act had been an irrelevant consideration taken into account by the FTT and that a relevant consideration as to his success in demonstrating that works costs had been reasonably incurred had not been taken into account. The landlord stated that the FTT should not have made the s.20C and para.5A orders, or alternatively that orders should have been made only in respect of part of the costs incurred.
The UT found that the FTT had demonstrated its awareness of the principle that s.20C and para.5A orders interfered with the contractual rights of the landlord, but that the FTT had erred in its approach to the s.47 issue. The UT found that the leaseholder had not successfully challenged the service charges save for a small reduction in legal fees, and concluded that the landlord had been “overwhelmingly successful” in respect of the issue of reasonableness of the service charges.
The UT substituted the FTT’s decision. The service charge demands had not been invalidated, and the landlord should be able to exercise its contractual rights to recover costs through the service charge.
Key points to note include that a minor failure to comply with the provisions of s.47 was not fatal to the service charge demand and did not render it invalid, and that where a landlord has successfully proven its case in respect of the reasonableness of service charges, it should not then be prevented from exercising its contractual right to recover its costs through the service charge.
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