The Upper Tribunal (Lands Chamber) (the UT) has issued an important decision concerning the Right to Manage (RTM) under the Commonhold and Leasehold Reform Act 2002 (CLRA 2002) and in particular, what constitutes a self-contained part of the building for the purposes of the RTM.
Background
The decision in The Courtyard RTM Co Ltd & Ors v Rockwell (FC103) Ltd & anor [2025] UKUT 39 (LC) involved two appeals in respect of multiple blocks of apartments.
The first appeal involved a property known as Plaza Boulevard, Liverpool (Plaza Boulevard). Plaza Boulevard is a development consisting of multiple blocks, including three blocks of flats which at ground level appear to be separate, but which all have the benefit of a single underground car park which extends beyond the three blocks in question.
The second appeal concerns 14 Park Crescent and 8 Park Crescent Mews East, West London (Park Crescent). Park Crescent was originally constructed in 1820 and was redeveloped into offices in the 1960s and further redeveloped 11 years ago into residential flats. The re-development was carried out in stages and 14 Park Crescent was almost demolished with the original foundations excavated and new more substantial foundations inserted which effectively underpinned the party walls.
The Legal Question
Under the CLRA 2002 "qualifying tenants" have the right to acquire, via a RTM company, the management functions of a "qualifying premises", provided that statutory requirements are met.
The key legal issue in this case was the interpretation of section 72 of CLRA 2002 as to what constitutes a "self-contained part of a building" for the purposes of a RTM claim.
Under section 72 of CLRA 2002, a part of a building is a self-contained building if it (a) constitutes a vertical division of the building (b) the structure of the building is such that it could be redeveloped independently of the rest of the building and (c) section 72(4) applies in relation to it.
Before the First-tier Tribunal (the FTT) it was held that, in respect of Plaza Boulevard, the RTM company was not entitled to acquire the RTM as the blocks were not "qualifying premises" for the purposes of CLRA 2002; they were not self-contained. Whilst each block could be independently developed from the remainder of the development, the presence of the underground car park meant each block individually was not a qualifying premises.
In respect of Park Crescent the FTT agreed that the premises was a qualifying premises and the RTM company was entitled to acquire the RTM.
The decision
The UT held that the FTT was correct in respect of both blocks but for different reasons; the Plaza Boulevard blocks were not qualifying premises, and Park Crescent was a self-contained part and was therefore a qualifying premises.
The decision was made on the following basis:
1. "Vertical division" requirement
To qualify as a self-contained part of the building, that part must constitute a vertical division of the building. The UT clarified:
- The existence of parts of the premises which are unconnected to the rest of the building but otherwise project into airspace (such as balconies and parapet projection) do not disqualify a claim. The UT was only concerned with the vertical division between the "part" and the rest of the building.
- That a notional dividing line between the premises and remainder of the building which would have to pass through a solid structure running perpendicular to it would not prevent the premises from being a self-contained part of a building.
- That the undivided underground car park in respect of Plaza Boulevard where the tenants could move through the area unimpeded, meant that the blocks were not "qualifying premises". The UT also noted that third parties would also have rights over the car park, and it was impossible to delineate between the areas; this would provide a logistical nightmare with management. Further, the car park couldn't be excluded from the "qualifying premises", as in order to achieve a notional vertical line, the premises had to incorporate part of the car park otherwise there would be an impermissible overhang.
- In respect of Park Crescent a question was raised in respect of the boundaries deviating from the notional vertical line. The UT held there was no requirement in CLRA 2002 for the division to be straight between the properties.
2. Structural support
As to whether the part of the building could be redeveloped independently, for the purposes of section 72(3) of CLRA 2002 the UT held that even if structural support was needed, this could still be sufficient for independent redevelopment.
3. Independent services
The UT considered the provision of independent services in the block. The UT held that the FTT, in respect of Plaza Boulevard, was correct to find that the shared services could be provided independently without significant interruption.
Conclusion
Interpreting whether a part of a building is a "self-contained part" for the purposes of CLRA 2002 is not a straight-forward question. The clarification provided by the UT provides useful guidance. It will also likely have wider relevance for interpreting the "self-contained" parts of buildings for the purposes collective enfranchisement and building safety.
