The status of Shared Ownership Leases – where are we now?
15 June 2023
Facts
The recent case of Avon Ground Rents Limited v Canary Gateway (Block A) RTM Company Ltd [2023] EWCA Civ 616 concerns the status of “shared ownerships leases” and whether they can be considered a “long lease”.
The Appellant, Avon Ground Rents Limited, the freehold owner of the development and the Respondent, Canary Gateway, is an RTM (Right to Manage Company) established with a view to acquire the right to manage Block A.
The RTM first gave notice of its intention to manage Block A in 2019 but this was opposed by Avon Ground Rents on multiple grounds. The key ground related to the status of some of the occupants, specifically whether shared owner occupants were “qualifying tenants” and therefore able to manage the Block. At first instance, the FTT (First Tier Tribunal) held that shared ownership leases of terms exceeding 21 years were “long leases”, even where tenants had not “staircased” up to 100%. This meant that shared owners did qualify to help manage the Block.
Following this determination, the RTM again gave notice in March 2021 to manage the Block, but this was opposed on similar grounds by Avon Ground Rents again, in part, on the basis that occupants were not “qualifying tenants”. The FTT again found in favour of the RTM in a decision dated 2 March 2022. This was then appealed to the Upper Tribunal (Lands Chamber) and again to the Court of Appeal.
Outcome
The principal judgment was given by Lord Justice Newey. He dismissed the appeal and upheld the decision of the FTT. He considered that there are a series of legal tests by which a lease is to be determined as a long lease, and in the context of shared ownership leases there was nothing to prevent a shared ownership leaseholder from being a qualifying tenant under Right to Manage rules and legislation, even in circumstances where the leasehold interest had not been “staircased” up to 100% and providing the lease exceeds 21 years in length. The Court of Appeal took the view that Right to Manage legislation had been drafted in such a way to have sufficiently wide applicability in relation to shared ownership leases, seemingly because that is what Parliament had originally intended.
Furthermore, as a policy consideration, all shared ownership leaseholders have an interest in management as it affects their service charge and Parliament would have intended for them to be able to participate in management issues.
If you have any questions about this case or more general queries, then please do contact the Birketts Social Housing Team; [email protected] or [email protected] . We will be very happy to assist.
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Lee Stone
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Jenny Stevens
Sectors
The content of this article is for general information only. It is not, and should not be taken as, legal advice. If you require any further information in relation to this article please contact the author in the first instance. Law covered as at June 2023.