Service Charge: Whether Service Charge was Payable in Respect of Roof Repairs (Crisplane Ltd v Plymouth Community Homes Ltd – 2024)

Where roof repairs have been excluded from service charge provisions, is the landlord obliged to repair the roof at a property and are its costs for doing so recoverable from leaseholders?

The background

In Crisplane Ltd v Plymouth Community Homes Ltd [2024], the appellant was the leaseholder of two flats located in two separate buildings on a development. The respondent was the landlord under the leases, which were granted under the Housing Act 1985. The Housing Act scheme generally requires landlords to repair the structure and exterior of the flats, and leaseholders repair the interior.

The two leases were largely in the same standard terms, save that one flat was on the ground floor of its building and the other was on the upper floor of the other building meaning that repairing obligations differed slightly in each. The leaseholder was required to contribute to the repair and replacement of the roofs of the flats through the service charge.

In 2018, the roofs were replaced in both buildings. The FTT determined that the appellant leaseholder was liable for the payment of £7,965.60 under its leases. Para 12 of the Third Schedule required the leaseholder to contribute on half of the costs and expenses incurred by the landlord in carrying out its repairing obligations, which extended to the costs of complying with an implied repairing covenant at para 14(2) Sch 6 of the Housing Act 1985. This implied covenant required the landlord to keep the structure and exterior of the building in repair, and the FTT found that the landlord was bound by this implied covenant.

The leases stated that “The Lessor shall keep and maintain the exterior of the property (excluding the roof thereof) in good and tenantable repair decoration and condition.” The Tribunal found that roof repairs could not be excluded. Under the terms of the Housing Act, the parties may not contract out of the implied covenant other than by a county court order. The leaseholder appealed.

The decision

The Upper Tribunal allowed the appeal, finding that the leaseholder was not liable for service charges in respect of the roof repair works.

The leaseholder forwarded two arguments:

1. In respect of the lease of the upper floor flat, that the lease contained an implied covenant on the part of the landlord to repair the roof under para 14(2) Sch 6 of the Housing Act 1985, which was not comprised within the repair obligations of the lease and the costs of which were not comprised within the service charge provisions of the lease; and
2. In respect of the lease of the ground floor flat, that the roof formed part of the premises that the landlord was obliged to repair, the costs for which were expressly excluded from the leaseholder’s service charge obligations.

The leaseholder also referred to the express exclusion contained in the lease of repairs to the roofs.

The UT found that the leaseholder was not obliged under the ground floor flat lease to contribute towards the roof repair costs, because the roof had been excluded from parts of the property covered by the landlord’s repair obligations.

Considering the lease of the upper floor flat, the leaseholder was not obliged to repair the roof as this did not form part of the reserved premises. There was no obligation to repair the roof, and therefore no obligation for the leaseholder to contribute towards any costs of repairs or work carried out.

The Housing Act 1985 allows the parties to agree their own terms regarding costs incurred by the landlord in carrying out implied obligations, but the leases in the present case made no express statement as to such costs and no obligation to contribute would be implied. The landlord’s repairs to the roof of the building containing the upper-floor flat were not undertaken in order to discharge an obligation. Replacement of the roof in the building containing the ground floor flat complied with an implied covenant and the landlord’s obligations to keep the premises in repair, but such repairs were excluded from the obligation on the leaseholder to contribute.

The decision of the FTT was set aside and the leaseholder was found to have no obligation to pay service charges in respect of the landlord’s roof repairs.

Advice and action for landlords

This decision supports the principle that obligations implied by statute are read independently of the lease and do not have to be read as forming part of any particular lease terms or obligations.

Reinforcing Arnold v Britton [2015], the leading authority in interpretation of contractual provisions, the court “should not bring within the general words of a service charge clause anything which does not clearly belong there”, strengthening the industry’s understanding of service charge provision interpretation and construction.