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Avon Ground Rents v Canary Gateway (Block A) RTM: Court of Appeal confirms rights of 200,000 shared ownership leaseholders

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30th May 2023

Mark Loveday and James Castle in important right to manage case with wider implications.

Mark Loveday and James Castle secured an important win in the Court of Appeal for the UK’s estimated 200,000 shared ownership leaseholders. In its judgment in Avon v Canary Gateway (Block A) RTM [2023] EWCA Civ 616, (30 May 2023) the Court rejected an appeal by a landlord who argued a group of 12 shared ownership leaseholders were excluded from participating in the statutory right to manage. But the decision is expected to extend to shared ownership leaseholders’ rights under the similarly worded Leasehold Reform Housing and Urban Development Act 1993.

The decision is the latest in the long-running litigation involving the East London Canary Gateway development. Leaseholders first tried to take over the management of their blocks of flats from  landlord, Avon Ground Rents, in 2019. In November 2020, the Upper Tribunal (Lands Chamber) ruled in Avon v Canary Gateway (Block A) RTM Ltd and others [2020] UKUT 358 (LC) that the 12 had “long leases” within the meaning of s.76(2) of the Commonhold and Leasehold Reform Act 2002, but dismissed the application for the right to manage on other grounds. In fresh proceedings, Avon argued the 2020 Upper Tribunal decision was wrong.

The appeal turned on whether the shared ownership leaseholders, who had not yet ‘staircased’ their leases to 100%, fell within the definition of a ‘long lease’ in section 76(2) of the 2002 Act. The RTM company argued leaseholders had leases “for a term of years certain exceeding 21 years” under s.76(2)(a) of the Act. Avon argued they failed to meet the requirements of s.76(2)(e) of the Act, which expressly dealt with “a shared ownership … where the tenant’s total share is 100%”.

In his judgment, Lord Justice Newey (with whom Lady Justice King and Laing agreed) reviewed four previous decisions of the Upper Tribunal and the High Court on the meaning of section 76(2) and the identically worded provisions of s.7(1) of the Leasehold Reform Housing and Urban Development Act 1993. He concluded as a matter of interpretation that:

“On the face of it, the various paragraphs represent, as was submitted by Mr Loveday, a series of gateways. A lease will be a “long lease” if any of paragraphs (a) to (f) is in point. That suggests that, as the Company contends and the Judge held, a shared ownership lease for a term of more than 21 years will be a “long lease” whether or not the tenant has a 100% interest: paragraph (e) will not be applicable, but paragraph (a) will, and that will suffice.”

The court rejected arguments about the policy behind the provisions, based on a 2000 government consultation paper. Instead, it took the view that there:

“seems to me to be force in Mr Loveday’s argument as to the policy underlying section 76. Tenants with long shared ownership leases who have not staircased to 100% will still have an obvious interest in how the premises are managed, the more so since they will typically pay full service charges. That being so, Parliament might have been expected to have intended them to be able to participate in management issues.”

Shared ownership leases (or ‘part-rent, part buy’) are a popular and fast expanding form of low-cost home ownership, with the government currently committed to funding another 90,000 on top of the 202,000 existing numbers[1].  Mark Loveday said:

“This is an important win for the Canary Gateway residents – but more importantly a massive win for tens of thousands of shared ownership leaseholders across the country. The Court of Appeal has sent the clearest possible message they are not a second-rate class of homeowners. They have the same legal rights as any other leaseholder”.

James Castle commented:

“The importance of this case may actually lie elsewhere. Given the definition of “long lease” in section 76(2) of the 1993 Act is identical to section s.5(2) of the 2002 Act, this confirms shared ownership leaseholders have valuable rights to extend their leases and participate in collective enfranchisement.”

The decision means the RTM Company has now acquired the right to manage.

Mark and James appeared for the respondents to the appeal, Canary Gateway (Block A) RTM Co. They were instructed by the leasehold litigation specialists, Jobsons Solicitors of Stafford.

A copy of the judgment is here.

[1] https://commonslibrary.parliament.uk/research-briefings/cbp-8828/

 

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