[2025] UKUT 39 (LC)

A useful general statement of principle which should be kept in mind when considering the issue of self-containment can be found in Assethold v Eveline Road RTM Co Ltd, [2024] EWCA Civ 187, a case under section 72 of the 2002 Act in which the issue was whether premises could qualify as a self-contained part of a building even if they were capable of being subdivided into smaller parts. Lewison LJ explained, at [36], that:

“Whether premises satisfy the definition of ‘self-contained building or part of a building’ is a purely physical test. The definition is concerned only with the structure of the built envelope, its internal structure, and the separability of services.”

In emphasising that this is a “purely physical test” Lewison LJ was ruling out any need to consider the entitlement of any person to carry out works to redevelop the building, in whole or in part, or separate the services provided to it. The same point had previously been made in Oakwood Court (Holland Park) Ltd v Daejan Properties Ltd [2007] 1 EGLR 121 (a 1993 Act case) and in St Stephens Mansions RTM Co Ltd v Fairhold NW Ltd [2014] UKUT 0541 (LC), at [88], but on each occasion in relation to the third condition alone. It can now be seen that the same focus on what is physically achievable, whether or not it is legally or contractually permissible, should be applied generally to each limb of the test of self-containment.

The requirement that, to be a self-contained part of a building, premises must constitute “a vertical division of the building” (section 72(3)(a)), has been considered only once at this level, by the Lands Tribunal in Re Holding and Management (Solitaire) Ltd [2008] L & TR 16. The premises in that case comprised a block of flats which formed part of a terrace, beneath which was an underground carpark. Access to the car park from the premises passed under the neighbouring building in the terrace, and two of the parking spaces allocated to the premises were also under the neighbour. The proportion of the premises which lay below the adjoining premises was only 2% of the whole by area. The leasehold valuation tribunal had decided that this layout did not prevent the premises from being a vertical division of the terrace as a whole, but the Lands Tribunal (George Bartlett QC, President) disagreed and held that while a de minimis departure from a vertical plane through the building could no doubt be ignored, the requirement of vertical division was otherwise unqualified. In particular, section 72(3)(a) did not invite consideration of the materiality of any overlapping parts of the building (unlike the corresponding provision of the Leasehold Reform Act 1967) and none should be imported.

The only other consideration of vertical division to which I was referred was an aside by Smith LJ in a case under the 1993 Act, Craftrule Ltd v 41-60 Albert Palace Mansions (Freehold) Ltd [2011] EWCA Civ 185, in which the Court of Appeal determined that premises can qualify as a self-contained part of a building even if capable of being subdivided into smaller parts, each of which also satisfied the test of being self-contained in section 3, 1993 Act. In the course of her judgment in Craftrule, Smith LJ observed:

“… I interpose to say that, in my view, the expression ‘vertical division’ is rather odd. A division is a line of no thickness. It seems to me that what section 3(2)(a) means is that the premises must be a vertical slice of the building.”

The second aspect of self-containment, in section 72(3)(b), is that the structure of the building must be such that the part of the building which is said to be self-contained could be redeveloped independently of the rest of the building. This requirement has not previously been the subject of consideration on an appeal. In the only case at first instance to which I was referred (Stamford Hill Mansions RTM Co Ltd v Daejan Properties Ltd, a 2007 decision of a leasehold valuation tribunal) it was suggested that the concept of redevelopment as used in the 1993 Act need not mean total redevelopment but could also include the demolition or reconstruction of, or carrying out substantial works of construction to, the whole or a substantial part of the premises (each of which is an operation identified in section 23(2), 1993 Act, as sufficient to defeat a tenants’ claim to enfranchise). The LVT adopted the same approach and determined that a building which could be redeveloped internally, without disturbing the exterior structure, satisfied the requirement of section 72(3)(b).

The third requirement of self-containment, namely the ability to provide services to the relevant part of the building independently, without significant interruption to the services provided to the remainder of the building, has been considered more often. Each case has turned on its own facts, and only general guidance on how the issues should be approached has been suggested.

The St Stephens Mansions appeal in this Tribunal concerned separate RTM claims in respect of connected blocks of flats. These were served by a single metered mains water supply pipe which ran underground to a pump house housing shared water tanks and pumps from which water was distributed through separate outflow pipes. In agreement with the leasehold valuation tribunal, it was held that the storage of water in shared tanks and its distribution through shared pumps meant that the water provided to one part of the building was not provided independently of the water provided to the remainder of the building. The availability of the right to manage therefore turned on the separation of the relevant services and whether water could be supplied independently to the subject premises “without involving the carrying out of works likely to result in a significant interruption in the provision of any relevant services for occupiers of the rest of the building” (section 72(4)(b)).

In addressing that issue I adopted, with slight adaptation, the five step approach suggested by HHJ Hazel Marshall QC in the Oakwood Court case (a decision of the County Court under the 1993 Act). Those steps are: