As a landlord, can you charge your tenants for repairs, if a replacement would’ve been more reasonable? Our trainee solicitor, Joel Clendinning, considers this question in the recent case of De Havilland Studios Ltd v Peries & another .
De Havilland Studios, the landlord, let a flat to Cecila Peries and Paul Voysey, for a term of 125 years. During the lease, the landlord approached the tenants about repairing some of the property’s windows. The windows were defective and the landlord wanted to repair them, and would be able to get a percentage of the costs from the tenants, through a service charge.
But, the tenants wanted the windows to be replaced, rather than repaired. The landlord repaired the windows anyway – for a cost of £100,242 – and asked the tenants to share some of the cost. They argued that they shouldn’t have to pay and that replacing the windows would’ve been a better option. Although replacing the windows would’ve been much more expensive, if the landlord had done this instead, the tenants wouldn’t have had to pay anything.
First-tier Tribunal (FTT)
The tenants applied to the FTT to determine whether or not they had to pay the service charge. The landlord argued that the windows were capable of being repaired but the tenants claimed they should’ve been replaced entirely. The FTT accepted that, while both options were reasonable, the replacement option was ‘more reasonable’, and ruled in favour of the tenants. The landlord appealed.
Upper-tier Tribunal (UTT) – The Landlord’s Appeal
The UTT had to determine if it had been up to the FTT to decide that repairing the windows was a reasonable option. The judge considered that:
- Neither side’s expert had suggested repairing the windows was unreasonable
- Replacement was much more expensive
- The repair would extend the window’s life by 15 years
- Replacement would’ve been better but repair would still improve the situation.
The UTT ruled that the decision to repair the windows had been reasonable, in the landlord’s favour. The UTT referenced an earlier case of Waller v Hounslow London Borough Council:‘…the tribunal shouldn’t impose its own decision. If the landlord has chosen a course of action that leads to a reasonable outcome, the costs of pursuing it will’ve been reasonably incurred – even if there was another, cheaper, outcome, that was also reasonable’.The UTT judge said that the FTT’s earlier decision had ‘fallen foul of this principal’. In deciding whether repair or replacement was preferable, it’d taken ‘a course which was not open to it’.
In the Waller case, the judge said that the following factors should be taken into account when determining whether something is reasonable:
- The extent of the tenant’s interest, compared to the landlord’s
- The tenant’s views on the proposed works
- The financial implication on the tenants, and their ability to pay
- Whether the works were improvements that the landlord had a discretion, but not an obligation, to carry out.
Essentially, if two courses of action are reasonable (both in nature, and cost), it’s a landlord’s decision which route to take – not a court or tribunals’.
This decision is relevant to residential landlords, fund/asset managers of residential portfolios, and local authorities.When considering different options, a landlord should look at whether each option is reasonable – regardless of whether it’s the cheapest option or not.Landlords can take comfort in the fact that there are several reasonable options available to them when it comes to maintaining property. And, they’ll be able to get a proportion of costs from their tenants.