Landlord Fails to Recover Cost of Improvement Works

In a ruling that will be required reading for landlords and tenants, the Court of Appeal has given authoritative guidance on the distinction between ‘repairs’ and ‘optional improvements’.

The decision means that tenants’ views will in future be far more influential when it comes to paying for the costs of the latter.

The case concerned a 1960s-built housing estate with 850 residents, many of whom had bought long leases on their homes under the ‘Right to Buy’ scheme. The local authority that owned the freehold had commissioned an £8.3 million refurbishment of the estate and one of the tenants had received a service charge demand exceeding £55,000, representing her contribution to that cost.

After she challenged the demand, the Upper Tribunal (UT) ruled that replacement of windows and cladding were improvements, rather than repairs, and that only part of the sums claimed by the council for those works was recoverable from tenants. Although the lease conferred a right on the council to make improvements, the UT found that it should have taken particular account of tenants’ views on the proposed works and the financial impact upon them of proceeding.

In dismissing the council’s challenge to that decision, the Court noted that, under the lease, the council was bound to make repairs, but that spending on improvements was discretionary. It made sense that, when it came to improvements, the council was obliged to take greater account of tenants’ opinions and any financial hardship that they might suffer. The Court noted that tenants of a luxury block of flats in Central London might find it easier to cope with bills exceeding £50,000 than those living on a former council estate in a relatively deprived area.

The London Borough of Hounslow v Waaler.