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Collective enfranchisement: rights in lieu of a claim to appurtenant land or property

What is appurtenant land or property?

The term ‘appurtenant’ refers to any common land or property that tenants of a leasehold property are entitled to use (or ‘enjoy’) under the terms of their residential lease.

Examples of appurtenant land or property include, but are not limited to:

  1. Any roads or paths on a residential estate
  2. Communal gardens on a residential estate
  3. Swimming pools
  4. Sheds
  5. Fences
  6. Bin storage facilities
  7. Bike storage facilities
  8. Car parking spaces

 

Tenants participating in a collective claim to the freehold of their property are also entitled to make a claim for any appurtenant land and/or property that pertains to their lease at the time of the claim, provided that one of two conditions apply.

These conditions are:

  1. That the right to the appurtenant property or land was transferred under the terms of the lease (‘demised’)
  2. That the appurtenant property or land, though not demised, is used in common with other tenants

 

Do landlords have the right to refuse claims to appurtenant land or property?

It is not unusual for communal areas of a property to become a source of disagreement when a group of tenants make a collective claim. In some circumstances, a landlord does have the right to defeat an appurtenant land and/or property claim.

If the appurtenant land or property was not demised under the lease and is merely common land used by all of the specified tenants, the landlord is legally allowed to offer specific rights to it instead of yielding the freehold.

A landlord may want to retain their rights to the common areas of a property as they may think that those areas have financial value that can be utilised, either now or in the future. This may include selling or renting parking spaces, for example, or even selling the land itself to developers.

However, a landlord cannot retain appurtenant land or property to which tenants are making a claim without offering them equivalent rights. This is known as an ‘offer of rights in lieu’.

 

What are the legal grounds for an offer of rights in lieu?

The 1993 Leasehold Reform, Housing and Urban Development Act, Section 1(4) states that:

‘The right of acquisition in respect of the freehold of any such property as is mentioned in subsection 3(b) shall, however, be taken to be satisfied with respect to that property if, on the acquisition of the relevant premises in pursuance of this Chapter, either:

there are granted by the person who owns the freehold of that property:

 

  • over that property, or
  • over any other property

 

such permanent rights as will ensure that thereafter the occupier of the flat referred to in that provision has as nearly as may be the same rights as those enjoyed in relation to that property on the relevant date by the qualifying tenant under the terms of his lease’

If at any point the tenants disagree with the landlord’s offer, an Equivalence Test must be conducted in order to determine that the tenants have ‘as nearly as may be the same rights’ to the appurtenant land or property as they did under the terms of their lease.

 

How is an offer of rights in lieu applied to appurtenant land or property claims?

Several court cases have helped to clarify how this part of the Act should be applied. A recent notable case is The Corporation of Trinity House 2016 v 4-6 Trinity Church Square Freehold Limited [2018] EWCA Civ 764.

The tenants of Trinity House, a block of flats, made a collective enfranchisement claim to the freehold of their building and its appurtenant land – in this case a communal garden.

Each tenant of the property had a revocable licence to the garden prior to the claim and upon receiving it, the freeholder of the block revoked all of the tenants’ licences.

The freeholder’s initial offer was to grant the tenants a permanent but revocable licence for the use of the garden rather than handing it over, on the grounds that if the licence was not revocable, it would not be ‘as nearly as may be the same’ as their existing right to use it.

The tenants countered with the argument that a revocable right, by its very nature, cannot fall into the category of ‘permanent rights’ stipulated by the Act. The Court of Appeal agreed with the tenants and ruled that a permanent right to access the garden must be granted.

Nevertheless, if rights over appurtenant land or property are granted to tenants in lieu of acquisition, the freeholder can still make rules regarding how tenants may behave on or in the land or property.

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Just wanted to say a big thank you to all at Red Brick Management, not only have you been first class in understanding our needs you've also been a pleasure to work with.
Chessington Mansions
We Directors sat and had a meeting about the development last night and the guys are extremely happy with how Red Brick are managing the development. In particular, the lowering of service charges and quick response times which were the two issues we had with our former managing agent!
Tallis Court
Well done that is a great result and sets a precedent for any further monies that may be due. thank you very much indeed for a great job on our behalf.
Mornington and Silverthorne Lodge
We were unimpressed with our previous management company and decided to give Red Brick a trial period with strict targets to meet - relating to response times, costings, and general maintenance of the development of 238 apartments.
Monument Court

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