Porters’ (or caretakers’) flats: are they a valuable addition to a building or a waste of precious floor area? This question often divides landlords and tenants and with tenants being given ever increasing opportunities to control the buildings in which they live, porters’ flats can provide a fertile battleground. However, the statutes conferring this control are silent as to what is to happen to such flats, leaving a gap that has been filled to a certain extent by case law.
Lease extension
Section 39 of the Leasehold Reform, Housing and Urban Development Act 1993 (“the 1993 Act”) confers a right on qualifying tenants to a new lease of their flat. Qualifying tenants being tenants pursuant to a long lease. Although porters’ flats are generally not let on individual long leases and therefore are not, at first glance, covered by the 1993 Act, they are often comprised in headleases.
The 1993 Act does not explicitly deal with such flats. However, in Aggio v Howard de Walden Estates Ltd [2008] UKHL 44; [2008] 2 EGLR 57 the House of Lords held that a headlessee of a building was entitled to the benefit of the 1993 Act in relation to any flats in that building not subject to long underleases. Consequently, where a porter’s flat is comprised in a headlease, the headlessee can claim a new lease of that flat. Such a lease will be for the remaining term of the headlease plus 90 years. In this way a headlessee, who is not otherwise so entitled, can have a continuing interest in a building long after his headlease expires.
As to the other terms of that new lease, section 57 of the 1993 Act provides that they will be the same as those of the existing lease, subject to certain exceptions. Consequently, if the headlease requires the flat to be used only as a porter’s flat, the landlord under the headlease could insist that this restriction remains. Indeed, the headlessee could similarly insist that the restriction remains in order to reduce the premium payable for the grant of the new lease: see Money v Cadogan Holdings Ltd [2013] UKUT 211 (LC); [2013] 3 EGLR 145.
Enfranchisement
When tenants exercise their right under section 1 of the 1993 Act to collectively enfranchise the building in which their flats are situated and where that building contains a porter’s flat, the question often arises as to what is to happen to the flat.
In Panagopoulos v Cadogan [2010] EWCA Civ 1259; [2011] 1 EGLR 33, Cadogan granted a 999-year lease of the caretaker’s flat after the tenants had served a section 13 notice of claim. Roth J, with whom the Court of Appeal agreed, held that the flat was a “common part” within the meaning of section 101(1) of the 1993 Act. As such, the tenants would have been entitled to acquire the lease of it under section 2(1)(b) had it been granted before they served their notice. That being the case, the lease fell within section 19(1)(a)(ii) and was void.
Roth J was of the view that de facto use as a caretaker’s flat at the valuation date was sufficient to render it a common part. However, the Court of Appeal was content to decide the matter on the basis that two of the leases of flats in the building included an obligation to provide a resident caretaker.
In Merie Bin Mahfouz Co (UK) Ltd v Barrie House (Freehold) Ltd [2014] UKUT 390 (LC); [2015] EGLR 22 the freeholder sought a leaseback of the porter’s flat. As the porter’s flat was undoubtedly a “unit” within the meaning of section 38(1), which was not let to a qualifying tenant, prima facie the landlord was entitled to a leaseback of it under paragraph 5 of Schedule 9 to the Act. However, the Upper Tribunal held that a landlord could not have a leaseback of a unit that was a common part and that the porter’s flat constituted one.
Unlike in Panagopoulos, none of the leases of the flats in Barrie House included an obligation to provide a resident porter. However, the tribunal held that de facto use as a porter’s flat was sufficient to render the flat a common part.
Barrie House is the subject of an appeal to the Court of Appeal. However, in the meantime, if legal obligation is not determinative, this does beg the question: when might a porter’s flat cease to be a porter’s flat? If a headlessee obtains a lease extension as set out above with the intention of selling or privately letting the flat or the right to manage is acquired and the freeholder/headlessee no longer wish to provide a flat for use by a porter, as set out below, but in either case a section 13 notice is served while the flat is vacant and has not yet been put to any other use, is the flat still a porter’s flat and liable to acquisition by the tenants?
Right to manage
The Commonhold and Leasehold Reform Act 2002 (“the 2002 Act”) is no better than the 1993 Act in making provision for porters’ flats. The 2002 Act is silent as to what is to happen to a porter’s flat once tenants acquire the right to manage a building containing such a flat. Further, there is, as yet, no authority on the point.
The 2002 Act transfers to tenants acquiring the right to manage various “management functions”. It does not, however, unlike the 1993 Act, transfer any interest in land. Indeed, if an RTM company does acquire the freehold of the building, section 73(5) provides that it ceases to be an RTM company. Consequently, an RTM company does not acquire any interest in any porter’s flat and arguably, therefore, has no right to use it.
If the flat leases require there to be a resident porter and there is a headlease restricting the use of the flat to that of a porter’s flat only, then it is likely to be in the RTM company’s interest to rent the porter’s flat and the headlessee’s interest to let it. However, where there is no such restriction, it may well be in the interest of its owner, whether that be the freeholder or a headlessee, who is no longer exercising any management function, to end its use as a porter’s flat. In those circumstances, it is not apparent that there is anything the RTM company can do to insist on the use of the flat.
Ellodie Gibbons is a barrister at Tanfield Chambers
