National housing association Accent Housing is involved in a legal battle over four leases on an estate in the North East that could have wider implications across its housing portfolio.
Accent is in a prolonged legal dispute with Howe Properties (NE) Ltd, a company that owns four of the long leaseholds on an estate that the housing association manages in Stockton-on-Tees.
Howe has been challenging a £300 management fee that Accent charges each year on each property. In the legal action it is disputing fees charged from 2017 to 2019.
Accent charges different levels of service charge to different categories of tenant, and Howe’s properties are in “tier 3”.
Howe argues that the £300 fee levied on them does not reflect the service they receive and does not comply with the specific terms of their four leases.
While the dispute is relevant to all of the tenants on the estate, it might have an even bigger impact on Accent, according to Lord Justice Snowden, one of the Court of Appeal judges who wrote a judgment handed down today (27 March).
“In addition to the implications for the tenants on the estate, whose leases are all in the same or very similar terms, we are told that the result has significant implications for Accent and the administration of its business, because similar terms are in use in respect of over 1,000 properties in its nationwide stock of housing of over 20,000 properties,” he said.
The case has already been heard in the specialist courts of the First-tier Tribunal and Upper Tribunal before reaching the Court of Appeal.
Significantly, following a decision in the Upper Tribunal, Accent stated that the £300 service charge comes from calculating its national corporate payroll costs and dividing it across its national portfolio of properties.
“Realistically this is how the management fee must be calculated as the people involved with the management deal with a number of leasehold schemes, not just [the estate],” Accent told the court, according to today’s ruling.
There are more than 3,000 tier 3 properties in Accent’s national portfolio, meaning that the company levied more than £900,000 in management charges over the three-year period.
The Court of Appeal heard the case in January, and in today’s ruling found that the four leases in question did not permit Accent to levy a management charge that took into account costs of dealing with properties outside the estate.
The judges did not say what a reasonable management charge would be.
“Following circulation of our judgments in draft, the parties agreed that the outstanding challenge by Howe to the payability and reasonableness of the management charge for the three years in question (ie ending 31 March 2017, 2018 and 2019)… should be remitted for further consideration by the First-tier Tribunal,” the ruling said.
The dispute will now go back to the First-tier Tribunal for reconsideration.
Howe Properties (NE) Ltd v Accent Housing Ltd
[2024] EWCA Civ 297
Court of Appeal (Jackson, Dingemans and Snowden LJJ) 27 March 2024
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