We look below at Weycroft Weybridge Ltd v Wilson [2025] and 56 Westbourne Terrace RTM Co Ltd v Polturak [2025] in which the Upper Tribunal exercised powers under the Landlord and Tenant Act 1987 to vary the terms of long residential leases that failed to make satisfactory provision with respect to repairs and service charges.
The decisions provide a useful reminder of the ability to seek the variation of long leases, and the approach the tribunal will take when determining such applications.
WolfBite - the key takeaways
• Section 35 of the Landlord and Tenant Act 1987 (LTA 1987) gives the tribunal the power to vary the terms of long residential leases on the grounds that they fail to make satisfactory provision with respect to specified matters.
• Two recent cases – Weycroft Weybridge Ltd and 56 Westbourne Terrace – show how the tribunal will approach such applications.
• The Upper Tribunal confirmed that variations should be made to the leases in both cases, on the basis that the leases failed to make satisfactory provision concerning repairs and service charges respectively, in particular given events that had occurred since the leases were granted.
• It should not, however, be assumed that the tribunal will interfere with contractual arrangements in all cases, or that these decisions signal a lowering of the bar that applicants will need to overcome in order to succeed.
How can long leases be varied under the LTA 1987?
Under section 35 of the LTA 1987, any party to a long lease of a flat can apply to the tribunal for an order varying the lease if it fails to make satisfactory provision with respect to the repair or maintenance of the flat, building, land or installations; insurance; services; recovery of expenditure; or computation of service charges.
In response to an application under section 35, any other party to the lease can ask the tribunal to make an order under section 36 to make corresponding changes to one or more of the other leases in the building.
It is also possible for a majority of leaseholders to make an application under section 37 to vary two or more leases where the reason for the variation can only be satisfactorily achieved if all the leases are varied to the same effect.
There is a separate ability, contained in section 40, to vary the insurance provisions in leases of houses.
The tribunal’s power to vary leases is discretionary.
The tribunal can order that compensation be paid to anyone likely to suffer loss or disadvantage as a result of the variation.
However, the tribunal cannot make an order if the variation would be likely substantially to prejudice anyone and a monetary payment would not afford them adequate compensation.
What happened in Weycroft Weybridge Ltd?
In this case, a single storey extension had been built onto one of the ground floor flats in the 1960s. The extension had a flat roof.
In 2002, one of the upstairs leaseholders created a door that provided access out onto the flat roof. They erected railings around the perimeter of the roof and laid a fibreglass waterproof membrane on which they installed timber decking and artificial grass.
Unfortunately, in or around 2020, water started penetrating the ceiling of the ground floor flat extension, causing it to become stained and to bow.
At the heart of the dispute was whether the landlord or the tenant was responsible for the repair and maintenance of the roof of the extension, which regrettably had not been dealt with expressly when the extension had been built or when the length of the lease had subsequently been increased.
The Upper Tribunal (UT) agreed with the First-tier Tribunal (FTT), albeit for different reasons, that the lease failed to make satisfactory provision for the repair of the flat.
It varied the lease to make it clear that the landlord was responsible for repairing the external structural parts, foundations, roof and external parts of the ground floor extension, and the joists and beams of its roof, in a good and tenantable state of repair decoration and condition.
What happened in 56 Westbourne Terrace?
This case concerned a terraced house in Paddington that had been divided into 11 flats.
Each of the 11 leaseholders also owned a share in the freehold management company. Two of the leaseholders had been appointed as directors of the freehold company.
The leases had originally been granted in the early 1980s, and they had been extended on substantially the same terms in 1991.
The issue concerned the costs recovery clause.
The lease provided that the landlord was entitled to recover from the leaseholders through the service charge the expenses, including solicitors’ costs and surveyors’ fees, incidental to the preparation and service of a notice threatening forfeiture (a “section 146 notice”).
The problem was, however, that there had been a history of disagreements between the freehold company and the other leaseholders. This had resulted in a majority of the leaseholders forming a right to manage (RTM) company that had taken over most of the management functions from the freehold company in 2018.
The legislation governing the RTM regime makes it clear that, whilst most management functions pass to a RTM company once it has acquired the right to manage, this does not include the right to forfeit a long lease. RTM companies are therefore not entitled to serve section 146 notices. Rather, the right to forfeit remains with the landlord.
Accordingly, having acquired the right to manage the building, the RTM company had no effective way to recover the costs it might incur in enforcing its right to receive the service charges.
This presented a particular problem for the RTM company because the two leaseholders who were directors of the freehold company had not paid their contributions towards the service charge.
The individual members of the RTM company could have, but were understandably unable or unwilling, personally to fund any proceedings to recover unpaid service charges from the two leaseholders, or to cover their share of ongoing costs of necessary repairs to the building.
This resulted in a stalemate.
The RTM company applied to vary the leases to include new clauses entitling the landlord (and therefore the RTM company) to recover the reasonable costs and expenses incurred in connection with the enforcement of any of the leaseholder’s covenants either from any defaulting leaseholder (as an administration charge) or, if they were unable to recover the costs from that particular leaseholder, from all of the leaseholders (through the service charge).
These proposed new provisions would accordingly widen the entitlement so that enforcement costs could be recovered without needing to relate to the threat of forfeiture.
The FTT had originally refused to allow the proposed variations. It did not consider that it had the power to introduce a new administration charge, and refused to exercise its discretion to vary the service charge provisions.
The UT did not agree with the FTT, however, and made its own decision instead.
The UT considered that the correct approach to the proposed variations was to ask whether:
• there are grounds under section 35 for making the variation;
• the variation would substantially prejudice any person;
• if so, whether money would be adequate compensation for that prejudice;
• there was any other reason it would not be reasonable in the circumstances for the variation to be effected;
• any variation should take effect retrospectively, or only from the date of the application or the decision;
• compensation should be paid to any person in respect of any loss or disadvantage they are likely to suffer as a result of the variation.
The UT considered that the subject leases failed to make satisfactory provision for the recovery by the RTM company of the costs that it would incur, such that there were grounds for varying the leases.
The right to manage procedure did not exist when the leases were granted, or extended, so the drafting would not have been problematic then. If a leaseholder defaulted, the landlord would have been confident of recovering its costs as a matter of contract or as a condition of the leaseholder obtaining relief from forfeiture. The original parties had, in the UT’s view, therefore bargained on the landlord being reimbursed for its costs. However, statute had since intervened.
The UT concluded that the provisions that were previously satisfactory had become unsatisfactory now that the RTM company had taken over the management, in that the lease no longer achieved what the parties originally intended.
The parties could not have foreseen or catered for the right to collect service charges becoming vested in a RTM company which had no assets of its own and that could not enforce payment by forfeiture.
With no funds of its own, if an RTM company was unable to recover enforcement costs either from the defaulting leaseholder, or from all of the leaseholders collectively via the service charge, day-to-day management would grind to a halt. The building may not be maintained properly and works may be delayed or cancelled.
The UT did not consider that variations that would make individual leaseholders liable for the consequences of their own default, or which enabled the costs to be met from the service charge, were likely substantially to prejudice the leaseholders. In fact, it believed that being able to recover its costs was to the benefit of all leaseholders in that it would enable the RTM company to perform the functions it was set up to discharge. Everyone would benefit from the building being properly maintained.
Importantly, leaseholders would still benefit from other available statutory protections in that they would retain the entitlement to seek a determination from the FTT of their liability to pay administration or service charges under rights given to them in the Commonhold and Leasehold Reform Act 2002 and the Landlord and Tenant Act 1985.
They could also apply for orders directing that the costs of proceedings should not be passed on to them via the service charge.
They would in due course benefit from provisions in the Leasehold and Freehold Reform Act 2024 that will reverse these protections so that the onus will shift onto the landlord to apply for an order allowing it to recover such litigation costs via the service charge.
In short, no leaseholder would be likely to be substantially prejudiced by the proposed variations because they would be able to use the statutory protections to ensure that no liability would fall on them unless the relevant court or tribunal considered it just and equitable.
On the question of compensation, the UT found that there was no need to compensate anyone for the variation to allow enforcement costs to be recovered through the service charge.
However, the two leaseholders were likely to be substantially prejudiced by the introduction of the proposed new administration charge because they would be exposed to a new obligation to pay the costs of the existing service charge dispute. They could not be adequately compensated for that. The proposed variations were modified accordingly to avoid this.
Having heard argument on the point, the UT did not consider that there was any other reason not to exercise its discretion to make the variations.
The UT accordingly varied the long leases to:
• Introduce a new administration charge obliging a defaulting leaseholder to pay enforcement costs in connection with the determination or recovery of sums that became payable after 18 March 2025 (after the date of the UT’s order).
• Vary the service charge provisions to enable recovery of solicitors’ and other professional fees incurred after 23 October 2023 (being the date on which the variation application was made) in connection with the enforcement of any of the leaseholder covenants where such fees could not be recovered from a defaulting leaseholder.
Comment
Although the tribunal was prepared to vary the long leases in these two cases, it would be too simplistic to draw the conclusion that it might now be easier for landlords to successfully apply to vary leases were there is a gap in the existing drafting.The decisions are more nuanced than that and turn on their particular facts.
In the first case, there had been physical changes to the building since the leases had been granted the impact of which on the repairing and service charge obligations had seemingly not been fully appreciated, or catered for, at the time. The current landlord and tenant needed certainty one way or the other.
In the second case, the legal landscape had changed since the leases had been granted, and the original parties could not have foreseen, or therefore allowed for, the creation of an entirely new right to manage regime. The RTM company could not manage the building effectively unless the leases were varied.
Both judgments indicate that there remains a high bar to persuading the tribunal to exercise its discretionary power to vary leases and it will continue to be slow to interfere with contractual arrangements that have been freely made.
