[2025] UKUT 56 (LC)

The Landmark Estate is a mixed-use development of five blocks comprising social housing, private sector housing, and commercial and retail space. Endeavour House and Mayflower House are two of those blocks.

The two blocks were completed in 2009 and each was let under a separate Lease for a term of 125 years by Celtic Motors (C.M.) Ltd to Paddington Churches Housing Association Ltd (PCHA). The terms of each Lease obliged PCHA to pay a Block Service Charge and an Estate Service Charge which, amongst other expenditure, were intended to cover costs incurred by the landlord in keeping the main structure of the Block and its service installations in repair, and in maintaining, cleaning and lighting the common areas, roads and service installations of the Estate.

The earliest lettings by PCHA were in one of its two standard forms of assured tenancy. Twenty-eight of the respondents occupy their flats under a tenancy in on one or other of these forms.

In about 2011 PCHA either merged with or renamed itself Genesis Housing Association, and two respondents hold tenancies granted by it. A further merger in about 2015 created NHG and saw the introduction of a new standard form of agreement.

Although there are six different forms of tenancy agreement in use in the two buildings, the basic obligations under those agreements are the same. Each agreement obliges the tenant to pay a weekly rent which comprises a sum variously referred to as “net rent” or “Rent” and a service charge. In return for the service charge element of the weekly rent NHG agrees to provide the services set out in an appendix or schedule. NHG may review the service charge not more than twice a year, increasing or decreasing it on notice. No balancing payment or credit is due at the end of the year but NHG is required to take account of any surplus or deficit when setting the service charge for the next period. As the agreements themselves recite, the service charge component of the weekly rent is therefore a variable service charge for the purpose of the Landlord and Tenant Acts 1985 and 1987.

Although the tenancy agreements are in standard forms, those forms required the addition of a schedule of services which was not standard but, I assume, was intended to take account of the services provided to a particular estate or block. Some of the agreements include a front sheet with a box for the housing association’s staff to tick to confirm that a service charge schedule has been attached to the document. In some examples that box has been ticked, in other it has not.

For some tenancies the documents held by NHG are incomplete and may comprise only the particulars page of the agreement, giving the name of the tenant and the address of the flat, or the whole agreement but not the service charge schedule (if one was ever included). In one case the agreement includes a blank schedule with only the amount of the weekly service charge inserted in manuscript at the bottom; in two cases NHG has no copy of the tenancy agreement. All of the documents which were before the FTT were provided by NHG, and it is a surprising feature of this case that the tenants themselves appear never to have been asked to provide copies of the agreements they are likely to have received when they took their tenancies.

In those cases where a printed schedule is attached to the tenancy agreement it comprise a printed list of services with the name of the building at the top and the initial weekly service charge inserted in manuscript at the bottom. A typical printed schedule looks like this:

The other variety of schedule found attached to some of the agreements comprises a screenshot of a page from a software programme. The screenshot identifies the flat to which it relates. There is then a series of tabs, one of which is labelled rent, and another service charges. Most of the screenshots show the service charge tab, but in two cases the screenshot is of the rent tab and contains no information about service charges. The service charge tab contains thirteen lines, each representing a different service identified by an acronym beginning with the letters PSC. The meaning of some of these acronyms is easier to deduce than others. They include: PSCDOOR, PSCFIRE, PSCLIFT, PSCMANFEE and, last in the list, PSCTP. Each line also records a start and end date (the same for each line and typically 1 April 2009 to 31 March 2010) and a weekly sum for the individual item. In one agreement I was referred to the original PSCTP charge was £2.57, and the sum of the charges was £17.48.

Since its completion in 2009 the Estate has been managed by Rendall & Rittner on behalf of the freeholder, now Adriatic Land 5 Limited. Rendall & Rittner has arranged for the provision of the estate and block services which the lessor covenants to provide in the head leases. The cost of these services has been collected each year from NHG and its predecessors. They in turn have recouped part of the cost from the respondents through the service charge component of their rent, which also meets the cost of services provided by NHG including cleaning of the communal parts of the buildings, gardening and lift maintenance. In the service charge demands provided to the respondents by NHG the charge for services provided by the freeholder has been described variously as ‘managing agent communal cost’, ‘managing agent cost’, ‘third party service charge-tenants’ and ‘third party service charge–leaseholders’. In the annual accounts the description reaches new levels of obscurity, being referred to as ‘s.106 recoverable charge’.

There was no evidence before the FTT of the services provided by the freeholder in 2009 or 2010, on which the contributions included in the original service charges recorded in the schedules might have been based. The only evidence of services provided by Rendall & Ritner was a schedule appended to a letter written to the tenants involved in the 2023 mediation by Mr Milson, NHG’s head of rent and services. The list included services provided to the Estate, including staff costs, utilities, communal heating and hot water and general repairs and maintenance, as well as services supplied to the individual buildings, including the supply of electricity to the common parts, maintenance of cctv and entry systems, fire alarm costs, refuse room cleaning, landscaping, ground maintenance, vermin control and insurance. No information was supplied about the cost of any of these items in any year.