Repair Or Replace? Residential Service Charge Update

The decision of the Court of Appeal in London Borough of Hounslow v Waaler [2017] EWCA Civ 45 will have a significant impact on a landlord's ability to recover the cost of improvement works.

An issue often encountered by a Landlord is whether to repair or replace. The usual principle behind a long lease of a flat is that a landlord is responsible for repairing the main structure and it will recover the costs through a service charge payable by a tenant.

Mrs Waaler was a long leaseholder of a flat owned by the London Borough of Hounslow. The building in which Mrs Waaler's flat was situated was in need of repair. The authority served the relevant notices to carry out works of repair which included replacement of a flat roof with a pitched roof, replacing wooden framed windows with metal framed units and external cladding. Some of the windows had been identified as requiring repair where rot had been discovered and all of the wooden window frames required redecoration. It was accepted that the wooden frames could be repaired but the authority considered that it would be more economical for the leaseholder in the long-term to replace the wooden frames with metal units.

The authority expected to recover the cost by adding it to the service charge. The costs the authority was seeking to recover from the leaseholder were just over £55,000.

The leaseholder applied to the First-tier Tribunal to determine whether this was reasonable. The issue was whether the costs incurred by the authority were reasonably incurred.

The First-tier Tribunal found that the replacement of the roof, the windows and cladding could be recovered via the service charge. The leaseholder appealed to the Upper Tribunal which approved the decision in...