Service charges were not recoverable in sheltered housing case

Appeals to the Upper Tribunal have been heard about the entitlement of the landlords of two supported housing developments to recover

contributions towards the cost of providing accommodation for a resident warden in an apartment belonging to the landlord itself and for which it paid no rent.

In Retirement Lease Housing Association Ltd v Schellerup, and Fountain Retirement Housing Association Limited v Martin the landlords appealed against the First-tier Tribunal’s (FTT’s) decisions in favour of leaseholders of apartments that such notional costs were not recoverable. 

The Upper Tribunal concluded that, in each case, the FTT correctly interpreted the relevant service charge provisions.  In neither case was the appellant entitled to recoup a sum in respect of the rental value of the accommodation provided for its employee.

At the crux of the appeals were the meaning of the word “cost” and the importance of the language landlords use in their leases if they were to be sure that they would be able to recover a specific cost through the service charge in future.