Collective enfranchisement claims: a win for tenants as to what is included within the common parts

In the case of LM Homes Ltd and others v Queen Court Freehold Company Ltd [2018] UKUT 367 (LC) (20 December 2018) the Upper Tribunal (Lands Chamber) (UT) held that existing leases of the basement, airspace above and subsoil below a block of flats could be acquired as part of a collective enfranchisement claim.

The tenants of the basement, airspace and subsoil leases (the appellants) had appealed against the decision of the First-tier Tribunal (FTT) as they did not wish the tenants to acquire their leases.

Section 2(1)(b) and 2(3) of the Leasehold Reform, Housing & Urban Development Act 1993 ( the Act) states that the nominee purchaser has the right to acquire any lease whose demise includes common parts of the relevant premises, “where the acquisition of that interest is reasonably necessary for the proper management or maintenance of those common parts”.

The UT concluded that each of the basement, subsoil, and airspace constituted common parts, within section 101 of the LRHUDA 1993. The UT also held that the acquisition of the appellants' leases was reasonably necessary for the proper management or maintenance of these common parts, as any development by the appellants would significantly affect the tenants' ability to maintain them in the future.

What makes this decision important is that it continues to widen the interpretation of common parts, as seen in Westbrook Dolphin Square Ltd v Friends Life Ltd [2014] L&TR 28. A decision which will no doubt come as good news to tenants and in keeping with the spirit of the Act. The decision is also interesting in that it highlights to landlords and investors the problems they may face in trying to earmark parts of the property for future development, where there is potential for the tenants to bring a collective enfranchisement claim.

If you are a tenant or landlord and would like advice/assistance on enfranchisement matters then please feel free to contact our Head of The Lease Extensions & Enfranchisement Team Ahmed Anwar on 020 7722 9909 or email: ahmed.anwar@attwells.com