[2025] UKUT 88 (LC)

The application with which this appeal is concerned was made under section 35, 1987 Act which, so far as relevant, provides as follows:

“35.

Application by party to lease for variation of lease

(1)

Any party to a long lease of a flat may make an application to the appropriate tribunal for an order varying the lease in such manner as is specified in the application.

(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;

(b)

the insurance of the building containing the flat or of any such land or building as is mentioned in paragraph (a)(iii);

(c)

the repair or maintenance of any installations (whether they are in the same building as the flat or not) which are reasonably necessary to ensure that occupiers of the flat enjoy a reasonable standard of accommodation;

(d)

the provision or maintenance of any services which are reasonably necessary to ensure that occupiers of the flat enjoy a reasonable standard of accommodation (whether they are services connected with any such installations or not, and whether they are services provided for the benefit of those occupiers or services provided for the benefit of the occupiers of a number of flats including that flat);

(e)

the recovery by one party to the lease from another party to it of expenditure incurred or to be incurred by him, or on his behalf, for the benefit of that other party or of a number of persons who include that other party;

(f)

the computation of a service charge payable under the lease;

(g)

such other matters as may be prescribed by regulations made by the Secretary of State.

(3)

For the purposes of subsection 2(c) and (d)the factors for determining, in relation to the occupiers of a flat, what is a reasonable standard of accommodation may include—

(a)

factors relating to the safety and security of the flat and its occupiers and of any common parts of the building containing the flat; and

By section 38(1), if the grounds of an application under section 35 are established the tribunal may make an order varying the lease; the variation may either be the variation specified in the application or such other variation as the tribunal thinks fit (section 38(4)). That power is subject to subsections (6) and (7) of section 38; subsection (6) is relevant to the current application, and 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.

Under section 37(1), 1987 Act an application may be made to the tribunal in respect of two or more leases for an order varying the terms of those leases. Section 37(5) provides that such an application shall only be made if, in a case where the application is in respect of more than eight leases, it is not opposed for any reason by more than 10 per cent of the total number of the parties concerned and at least 75 per cent consent to it. Under section 37(3) the grounds on which an application may be made are that the object to be achieved by the variation cannot be satisfactorily achieved unless all the leases are varied to the same effect. It is not a requirement that the terms of the leases be unsatisfactory in any particular respect.

Provision is made by section 102(1) and paragraph 10 of Schedule 7 to the 2002 Act for the procedure for obtaining a variation of a lease to be available to an RTM company.With one immaterial exception, sections 35, 36, 38 and 39 of the 1987 Act have effect as if references to a party to a long lease included the RTM Company. Thus, although it is not a party to a lease, an RTM company may apply to the FTT for a variation of the lease.

As originally enacted, section 35 provided for applications for an order varying a lease under Part IV of the 1987 Act to be made to the court. In England, the jurisdiction was transferred to tribunals with effect from 30 September 2003 (initially to leasehold valuation tribunals but since 2013 to the First-tier Tribunal). In Wales, the reallocation of jurisdiction took place in 2013. Subsection (3A) was introduced as one of a number of amendments made by section 162, 2002 Act, with effect from 26 July 2002.