The team at Bishop & Sewell impress the importance of understanding obligations when it comes to repairing covenants in long residential leases.

Long residential leases normally contain a repairing covenant which obliges the landlord (or the landlord’s managing agents) to maintain specified parts in good condition of repair – equally as a tenant may be required to for elements demised to them. The lease should set this out, but you would expect the landlord’s retained areas, when it comes to flats, to include the main structure, the common parts, and the external parts / grounds surrounding or connected to the building. There may also be statutory obligations on the landlord subject to what type of tenancy the property is occupied under (particularly relevant for those of you sub-letting).

As with landlord obligations in general, you would expect the landlord to have a contractual provision within the leases to recover the costs of any maintenance from the tenants.

Whilst disrepair may often be simple to identify, with common examples including blocked drains, broken lifts, worn carpets or peeling paintwork, what happens if a particular item is in need of replacement or not currently in disrepair but might possibly give rise to disrepair in the future?

A Case Study

As ever, the starting point of reference is the lease, and the importance of understanding a landlord’s repairing obligations, and any associated service charge provisions, is made clear in the case of Tedworth North Management Limited & Anor v Miller & Ors [2016] UKUT 0522 (LC) (“Tedworth v Miller”).

Tedworth v Miller

This case related to a purpose-built block of 46 flats which was being managed on behalf of the landlord by managing agents. All of the leases stated that the management company was each year to:

‘wash and paint in appropriate colours and in a workmanlike manner all the outside wood iron and cement work of the Building usually painted and also at all times…to keep the interior and exterior walls and ceilings and floors of the Building…and the roof structure and the foundations and main drains thereof in good and substantial repair and condition.’

Also, and even though the lease did not specifically mention window frames or sub-frames, it was common ground between the parties to this dispute that the repair and redecoration of those building elements was the responsibility of the landlord.

The lessees were required to contribute for costs incurred by the landlord in carrying out its obligations, including its annual repair and redecoration obligations as detailed above.

In 2013, the landlord’s managing agents undertook a programme of repair and redecoration works throughout the building, with this programme of works including the replacement of windows in the flats of those leaseholders (28 of the 46 flats) who had previously agreed to pay for the new double- glazed units, which would be fitted within the new window sub-frames, themselves.

The landlord sought to pay for the installations using the contributions of the leaseholders who had elected for replacement windows, and the building’s reserve fund in general, which they then sought to replenish via service charges.

It is worth noting that the service charge sums included the cost of supplying and installing the new window sub-frames, the making good of consequential damage, the cost of scaffolding and other associated costs, and were being sought from all leaseholders – not just those who had elected to pay for the new replacement double-glazed windows.

In response to the service charge demands, two sets of leaseholders applied to the First-Tier Tribunal for a determination of the extent of their liability to contribute towards the works.

The landlord sought to argue that the windows in the building had been in a state of widespread disrepair and that the replacement of the original frames and sub-frames was the most economical way to remedy the same. However, during the Court proceedings it was indicated that the windows at the building were in generally good condition and well-maintained, with no significant repairs required at this time, and that the primary reason for the proposed works was to upgrade windows to double-glazing.

Both the First Tier Tribunal, and subsequently the Upper Tribunal on appeal, held that the replacement of existing window frames by new and improved windows did not constitute repair as per the landlord’s repairing covenant in the leases, and so the costs of such work could not be charged by the landlord to all leaseholders by way of service charges.

Lesson to Learn

In Tedworth v Miller, the Upper Tribunal found that the landlord’s attempt to modernise windows was not in line with its repairing covenant, notwithstanding the benefits provided by double-glazing windows for all of the leaseholders in the landlord’s building.

In turn, the lesson for all landlords to learn from this case is that the obligation to ‘keep in repair’ only applies where there is damage or disrepair that needs to be made good. Therefore, before any repairs take place, it is crucial to ensure that planned works do not fall outside the scope of the specified repairing covenant, and more particularly that the costs are recoverable under the lease. Otherwise, it is possible that a landlord may incur costs which cannot be recovered through service charges, even where the landlord believes they are making a positive change for the leaseholders. To this end, a landlord should always carefully consider the wording of their repairing covenants and if possible seek legal advice from a solicitor about the same.

Leaseholders should also take something away from this case, namely not to blindly accept that service charges being rendered for “repairs” are 100% payable under the terms of their lease and instead to make sure that they are not being asked to pay for improvements or upgrades or modernisation which go beyond the issue of repair. The recoverability of any service charge by a landlord (or its managing agent) will be dependent on what the lease says and what works have actually been undertaken as “repairs”. Again, leaseholders should always carefully consider the wording of any repairing covenants and service charge provisions, and if possible seek legal advice from a solicitor about the same.

The above is accurate as at 26 November 2020. The information above may be subject to change during these ever-changing times. The content of this note should not be considered legal advice and each matter should be considered on a case by case basis.

Lee Stafford is a Partner in the Litigation & Dispute Resolution department. If you need advice or assistance on any of the issues mentioned in this article please contact Lee or another member of our expert Litigation or Dispute Resolution team on 020 7631 4141 or email [email protected].