Real Estate Bulletin - February 2023

Flat owners successful in private nuisance claim relating to the Tate Modern viewing platform

This case concerns the viewing gallery at the Tate Modern and four flats in the Neo Bankside development next door. Since the viewing platform opened in 2016, hundreds of thousands of people have visited it. The south gallery of the platform provides a direct view into Neo Bankside living accommodation.

The affected residents brought a claim based on private nuisance and sought an injunction requiring the Board of Trustees of the Tate Modern to prevent members of the public from being able to look into their flats from the relevant part of the viewing gallery walkway; or, alternatively, an award of damages.

In a majority decision (3-2), the Supreme Court held that visual intrusion can constitute a nuisance and that the Tate Modern’s use of the viewing platform gave rise to liability.

You can read more about this decision here.

Minimum energy efficiency standards: Rules tighten from 1 April 2023

The minimum energy efficiency standards (MEES) make it unlawful for a landlord to grant a new tenancy or to extend or renew an existing tenancy of certain property having an Energy Performance Certificate (EPC) rating of F or G unless:

• all the relevant energy efficiency improvements for the property have been made; or
• an exemption applies.

From 01 April 2023, the scope of MEES will extend to existing tenancies of most commercial property and will restrict a landlord's ability to continue to let property with an F or G rating.

You can read more about this and the Government’s proposed trajectory for MEES here.

Supreme Court: clause permitting landlord to reasonably determine residential service charge apportionment was valid

The case concerned the service charge provisions in long leases of residential flats in a building in Southsea, Hampshire. The leases specified a fixed percentage of the service charge that was payable by each flat but also allowed for such other apportionment to be applied as was reasonably determined by the landlord. A dispute arose when the landlord demanded service charge on the basis of a different (higher) percentage to that which was specified in the leases.

The tenants argued that that the landlord’s contractual right to determine an apportionment other than that stated in the leases was rendered void by section 27A(6) of the Landlord and Tenant Act 1985 (the Act). As an alternative, the tenants argued that the re-apportionment imposed by the landlord was unreasonable.

What does s. 27A(6) of the Act say?

Against a backdrop of protections for residential tenants in relation to service charge costs contained in the Act, under section 27A, in England, the First-tier Tribunal (FTT) has jurisdiction to review whether a service charge is payable or would be payable if specified costs were incurred.

Section 27A(6) provides that an agreement by a residential tenant is void in so far as it purports to provide for a determination in a particular manner or on particular evidence of any question which may be the subject of an application to the FTT. It is designed to prevent specified types of contractual provisions ousting or limiting the jurisdiction of the FTT and is regarded as an anti- avoidance provision.

What did the Supreme Court say?

The Supreme Court held that the jurisdiction of the FTT under section 27A did not extend to discretionary management decisions such as, in this case, the landlord’s ability (acting reasonably) to determine the service charge proportion. The clause in this case did not impede the jurisdiction of the FTT to review it for its contractual and statutory legitimacy.

The Supreme Court was concerned that if it were to find in favour of the tenant it would extend the jurisdiction of section 27A and produce some unintended consequences by bringing discretionary management decisions within the jurisdiction of the FTT.

The Supreme Court noting “there is, in short, all the difference for a landlord between facing a regime under which the FTT has freedom to make a completely different discretionary decision from that made by the landlord, and one where the jurisdiction of the FTT is limited to deciding whether the landlord acted in breach of contract or in contravention of the statutory scheme regulating residential service charges”.

There was concern that the FTT could become “overwhelmed with prospective applications”, with landlords in effect seeking FTT approval for discretionary decisions.

The Supreme Court found in favour of the landlord, as the FTT had already determined that the landlord had acted reasonably in making the re-apportionment and it was not suggested that it fell foul of any other part of the Act.

Aviva Investors Ground Rent GP Ltd and another v Williams and others [2023] UKSC 6

Online sales tax: response to the consultation

HM Treasury has published its response to the consultation on the possible introduction of an online sales tax which was launched in February 2022. The Government had already announced in the Autumn Statement 2022 its decision not to proceed with an online sales tax and the consultation response document sets out more detail on the responses received and the Government’s decision.

You can read more about this here.