[2025] UKUT 64 (LC)

Part IV of the Landlord and Tenant Act 1987, comprising sections 35 to 40, makes provision for the variation of long leases. Section 35 permits an application to be made for variation of an individual lease of a flat which fails to make “satisfactory provision” with respect to repair, insurance, the provision of services, the recovery of expenditure by one party for the benefit of others, or the computation of service charges. Section 36 allows other leases to be varied to achieve consistency with a variation under section 35. Section 37 allows for the variation of a number of leases with the consent of at least 75% of the holders of those leases where the variation is not opposed by more than 10%. Sections 38 and 39 are concerned with the making of orders and their effect on third parties, and section 40 allows for the variation of leases of dwellings other than flats.

This appeal is concerned with an application under section 35. The relevant ground under section 35(2) which is relied on is ground (a), which is as follows:

“(2)

The grounds on which any such application may be made are that the lease fails to make satisfactory provision with respect to one or more of the following matters, namely—

(a)

the repair or maintenance of—

(i)

the flat in question, or

(ii)

the building containing the flat, or

(iii)

any land or building which is let to the tenant under the lease or in respect of which rights are conferred on him under it; …”

By section 38(1), if the grounds of an application under section 35 are established the tribunal may make an order varying the lease. That power is subject to subsections (6) and (7) of section 38; only subsection (6) is relevant to the current application, and it provides as follows:

“38(6) A tribunal shall not make an order under this section effecting any variation of a lease if it appears to the tribunal –

(a)

that the variation would be likely substantially to prejudice –

(i)

any respondent to the application, or

(ii)

any person who is not a party to the application,

and that an award under subsection (10) would not afford him adequate compensation, or

(b)

that for any other reason it would not be reasonable in the circumstances for the variation to be effected.”

By section 38(10), where a tribunal makes an order varying a lease it may, if it thinks fit, order payment of compensation to any person, including a party to the lease, whom it considers is likely to suffer loss or disadvantage as a result of the variation.