Flats — Qualifying tenant — Right to acquire new lease — Defendant holding long lease of block of 28 flats — Claimants disputing right to acquire new lease of each flat — Whether defendant qualifying tenant of each flat — Leasehold Reform, Housing and Urban Development Act 1993 — Claim dismissed
The claimants were the freehold owners of a building comprising 28 flats and were the competent landlords under section 40 of the Leasehold Reform, Housing and Urban Development Act 1993. By section 39(1) and (2)(a) of the Act, a tenant of a flat would be entitled to claim a new lease. To qualify, the tenant would have to hold a long lease, that is, one granted for a term exceeding 21 years, and to have been the tenant for previous.
The defendant had been the registered proprietor of a lease of the entire block of flats since 1944. It served notice under section 42 of the 1993 Act to exercise the right to acquire new long leases of each of the flats, to run for 90 years beyond the existing unexpired term at a peppercorn rent. It was not disputed that the defendant’s current lease, which was granted for a term of 80 years, was a long lease.
The claimants sought a declaration under section 46(1) that the defendant was not a qualifying tenant under the Act. They argued, inter alia, that the defendant could not be a qualifying tenant of each flat since the entire building was held under a single lease and the grant of new leases would result in 28 individual leases of the flats in addition to the existing one which would continue in respect of the property that remained after the flats were disregarded. Thus, the new leases would not be in substitution for the existing lease as required by section 56(1)(a) of the 1993 Act.
Held: The claim was dismissed.
There was nothing to prevent the defendant from making simultaneous claims for new leases in respect of each flat in the building. It was possible to be a qualifying tenant of a flat with the right to acquire a new lease even though the lease under which the flat was held also demised additional premises. In any particular case, those other premises might be other flats in the building, the common parts or another type of property but provided that the lease demised a flat, the tenant might claim a new lease of that flat: Crean Davidson Investments Ltd v Earl of Cadogan [1998] 2 EGLR 96 and Earl of Cadogan v Search Guarantees plc [2004] 42 EG 162 considered.
The statutory language was clear and the definition of “qualifying tenant” plainly applied to the defendant in the present case. The court had no difficulty in interpreting section 56(1)(a) as providing that new leases should be granted in substitution for an existing lease, to the extent of those premises covered by the new lease or leases.
No gap would result in the legal situation from such an interpretation. The existing lease would have to be modified so that the consideration payable thereunder was reduced to account for the fact that it no longer covered the flats demised under the new leases. The money that would pass by way of rent under the existing lease would be reduced, but that was covered under existing common law principles.
Kenneth Munro (instructed by Taylor Wessing) appeared for the claimants; Anthony Radevsky (instructed by Teacher Stern Selby) appeared for the defendant.
Eileen O’Grady, barrister
