Real Estate - Tip of the Week: Enfranchisement - There's something in the Airspace

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Real Estate - Tip of the Week: Enfranchisement - There's something in the Airspace

Published 4 February 2019

The recent ruling by the Upper Chamber of the Lands Tribunal in LM Homes Ltd and others v Queen Court Freehold Company Ltd reconfirms how difficult it is for landlords to ring fence parts of residential buildings for future development due to the provisions of the Leasehold Reform, Housing and Development Act 1993 (the “1993 Act”).

Queen Court comprised a purpose built 7 storey block of flats with 45 units. The freeholder had previously sold long leases of the airspace, part basement and subsoil to third parties wishing to develop the space. The tenants of the majority of flats issued a notice exercising their collective enfranchisement rights under the 1993 Act, including the long leases of the above areas as part of the common parts. Unsurprisingly the holders of the long leasehold interests did not acquiesce to their transfer to the nominee purchaser and the matter went for determination to the First-tier Tribunal and then to the Upper Chamber.

‘Common parts’ are defined in section 101(1) of the 1993 Act as including ‘the structure and exterior of that building or part and any common facilities within it’. This has been interpreted widely by the Courts, including caretaker’s flats and lightwells.

Here the Upper Chamber concluded that the airspace, part basement and subsoil also constitute common parts for the purposes of this legislation. It was not necessary for residents to have ‘access’ to a part of a building for it to constitute a common part. Nor does it matter if the area is not required for management or maintenance in the medium term. In this case although the communal boiler was located elsewhere in the basement, the maintenance of it would have been rendered more difficult in the event of the envisaged development and its associated access adjustments.

Developers and investors should take extra care where there is any danger of these wide reaching enfranchisement rights being exercised.

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